CHAPTER § 3.06 Licensing Intellectual Property

JurisdictionUnited States

§ 3.06 Licensing Intellectual Property

[1] Exclusive and Non-Exclusive Licenses

Implicit in a patent owner's right to exclude others from practicing the patent owner's invention is the ability to waive that right by granting a license to another party or parties.411 In granting a license, the patent owner is essentially promising not to sue the licensee for activities that would otherwise constitute infringement of the patent. A license is distinguished from an assignment, because the patent owner retains title to the patent.

A patent license can cover an entire patent portfolio (including both issued patents and pending applications), a particular patent or patent application or even just a particular claim. The license may include rights in future patents, including continuations, continuations-in-part, and provisional patent applications. It may include patents in a single country or multiple countries. A license to "know-how" (e.g., unpatented but confidential information resulting from research and development) may also be included with a patent license.

A patent license can be exclusive or non-exclusive. However, exclusive licenses can be limited to a particular field of use, such that it remains possible to have more than one exclusive licensee to a particular patent. An exclusive licensee can sue others for infringement and can be awarded patent damages.412

A patent owner can grant more than one non-exclusive license in a given patent or patent portfolio. Unlike an exclusive licensee, a non-exclusive licensee has no standing to sue for infringement or to receive damages because the non-exclusive licensee does not have proprietary rights in the patent.413

[2] Entering into a Successful License

Licensing, whether receiving licenses (in-licensing) or granting licenses (out-licensing), is an important aspect of the business model of many pharmaceutical companies. Successful licensing generally involves due diligence as well as strategic negotiation and drafting of license agreements.

The scope and depth of issues evaluated in due diligence can vary, but typically include evaluation of both the chain of title and also the substantive coverage provided by the patent or patents to be licensed, with reference to a particular product or products.

With respect to the chain of title, the prospective licensee should confirm that all patents to be licensed are properly in possession of the licensor and identify all documentation that proves possession, including assignments or licenses. Any lien or other encumbrance of the patents should be noted.

Claim coverage should be evaluated with reference to the marketing plan for a particular product or products. The marketing plan should identify the countries in which the product will be...

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