Patent Licensing

Copyright, BananaIP (BIP) Counsels, 2021
Patent Licensing
Dr. Kalyan C. Kankanala
BananaIP Counsels
contact@bananaip.com

Licenses and Assignments
• Assignment - Full or Partial
• License - sole, exclusive and non-exclusive
• Writing and Execution
• Registration and Evidence
• Time limit
• Confidentiality

Assignment Form
• Assignment and Transfer
• Consideration
• Inventor Assignment
• Employee Assignment
• Registration

License Example
X grants a license to sell his patented bicycle to Y in
Karnataka, Z in Punjab, and A in West Bengal.
X grants a license to sell his patented bicycle only
to Z in India, Bangladesh and Pakistan.
X grants a license to sell his patented bicycle to Y, Z
and A in India.
Exclusive or Non-Exclusive License?

Transaction
Nayla invents an adjustable cane for maintaining social distancing
to avoid viral and bacterial infection. She acquires a patent over
the stick in India and China, and the patent is pending in US, UK
and Japan. One of the patent claims covers an automated self
adjusting technology based on infection rate in a particular locality.
Two companies, Stikpro and WalkEasy, approach Nayla for a
license. Stikpro has extensive sales and distribution networks in
China, Japan and Australia, and is a well known company.
WalkEasy is a small company having presence in India and United
States. Both companies are willing to license the patent only if Nayla
is willing to grant an exclusive license.
Nayla has approached you for advice. What would you suggest?

Transaction
Nayla decides to proceed with Stikpro, and you have been asked to
draft the license agreement.
Basic terms are as follows:
• Exclusive license for China, Japan and Australia, and Non-Exclusive
license for India, US and UK.
• Royalty - Lumpsum: Rs. 1 Crore, Running: 5 percent of Net Sales
• Term - 3 years, extendable on mutual agreement
• Disputes - Discussion, Mediation and Arbitration
• Software/Hardware Upgrades - Nayla must license to Stickpro only
• Improvements by Stickpro belongs to Nayla.
• ...

Definitions
• Important terms
• Consistently and continuously used
• Give specific meaning
• Clarity and Certainty

Example
"Licensed Product" shall mean the Automated Cane that is claimed in
the Licensed Patent(s), and shall include the technical knowhow,
software, and proprietary information/data that is required to work,
use and commercialize the Automated Cane, the details of which are
provided in Schedule 2 of this agreement.
"Licensed Patent(s)" shall mean the patents and patent applications
provided in Schedule 1 of this agreement, and shall include patents or
applications directly or indirectly related to them including but not
limited to PCT applications, conventional applications, divisional
applications, continuation applications and patents of addition.

Grant
• Parties
• Subject of grant
• Rights granted
• Type of license
• Territory
• Term

Example
Nayla hereby grants Stickpro an exclusive, revocable license to make,
use, sell, offer for sale, and import the Licensed Products and Licensed
Patents for a period of three (3) years from the Effective Date within
the territories of China, Japan and Australia for a consideration as
provided in this agreement.

Royalty
• Types of royalty
• Payment modes and means
• Time of payment
• Consequences of delay or non-payment
• Taxes

Example
In consideration of the license grant, Stickpro hereby agrees to
pay Nayla a sum of Rupees One (1) Crore as lumpsum royalty
within fourteen (14) days of the Effective date of this
agreement. Stickpro shall also pay Nayla a royalty of five (5)
percent of the Net Sales of the Automated Cane(s) at three
(3) month intervals from the Effective Date. All payments by
Stickpro shall be by way of bank transfers to the bank accounts
provided in Schedule 5, and shall be made within fourteen days
(14) days of receiving an invoice from Nayla for each of the
licensed territories.

Termination
• Term
• Modes of Termination
• Consequences of termination
• Pending actions

Example
The term of this agreement shall be three (3) years from the
Effective Date unless terminated earlier or extended by the
Parties as provided herein.
Nayla may terminate this license agreement if Stickpro fails to
pay the royalty within fourteen (14) days as stipulated in clause
xxx after giving Stickpro a fourteen (14) days notice to cure the
default.
Either Party may terminate this agreement without assigning any
reason by giving the other party a notice of six (6) months in
writing.

Dispute Resolution
• Applicable law
• Jurisdiction
• Alternative Dispute Resolution

Example
Parties agree to endeavour to resolve any disputes arising
under this agreement through good faith discussions and
negotiations. If such discussions fail to resolve a dispute, Parties
may choose to resolve the dispute by way of mediation by a
mutually agreed mediator. On failure to resolve a dispute by
mediation, Parties shall resolve the dispute by arbitration of a
single arbitrator in english language. The arbitration shall be
carried out as per the WIPO Arbitration Rules, 2020.

Prohibited Clauses
• Restrictions to purchase or use other
products/processes
• Exclusive Grant Back
• Coercive Packaging
• Prevention to Challenge Validity

Exceptions
• Exclusive sale of patented products
• Exclusive supply of parts
• Validity after severance

Examples
Licensee shall exclusively license any patents over inventions
relating to the Licensed Patents only to the Licensor.
Licensee shall sell only the Licensor's masks and sanitizers along with
the Licensed Products.
Licensee shall purchase Licensed Products and parts of the said
products only from authorized sellers of the Licensor.
Licensee shall not assert its patent rights against the Licensor, or
challenge the validity of any of its patents.
Valid?

Resolution of Patent Disputes
• Negotiation
• Arbitration
• Mediation

Intro to WIPO ADR Services

Download Dr. Kalyan’s books

Thank You
Contact us
BananaIP Counsels
No 40, 2nd floor, JC Industrial Estate,
3rd Main Road, Kanakapura road,
Bangalore – 560062.
Email: contact@bananaip.com
Intellepedia IP News Updates: https://www.bananaip.com/ip-news-center/

Patent Licensing

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