Two types of IP Licenses

Patent License:

This normally is in the form of a non-assert agreement that allows the licensee to use a patent(s) without worry of violating the patent(s) licensed under the agreement. Such licenses require a written contract. Normally technology or know-how is not exchanged between the parties associated with this type agreement, however, in some cases access to R&D and future divisionals could be requested.

Process License:

This is a patent, know-how, or combination of both type agreement. These agreements are normally long and complicated and require much effort and thought by both licensor and licensee. Both parties must have a complete understanding of the scope and obligations that will evolve from such an agreement and be prepared to support the agreement long term.

To consider a process license, the licensor must plan for as a minimum the following:

  • Define the scope of license to offer
  • Develop and deliver presentation and sales material
  • Successfully negotiate a fair value contract
  • Prepare a process design package 
  • Make preparations for and hold technology transfer meetings
  • Provide for a contractor liaison
  • Make business decision to enter a license agreement
  • Selection of proper technology and licensor
  • Successfully negotiate a license agreement that achieves full value for fee.
  • Providing adequate staff for project execution
  • Training of staff on technology, operations, and maintenance.

Do I want to:

  • Have access to only a patent?
  • Have access to a technology including patents and know-how?
  • Have a full technology disclosure?
  • Build a grassroots facility to utilize the technology?
  • Access to future developments?

Dealing with IP

Three things that can be done with Patents, Know-how, or a combination of the two: they can be internally used, licensed to others to use, or kept preventing others from using.

If patents and know-how exists within a company technology portfolio, they normally represent a substantial investment in time and money. Patents and other IP not fully utilized internally should be licensed to enhance company value. Licensing generates revenue that can recover R&D costs and add profit to the bottom line.

Patents and/or know-how required to utilize or supplement owned IP, or for a new venture, can be self developed, or licensed (if it exists). Taking a license, (competently negotiated), will generally be more cost effective than self-development, which may or may not accomplish the goal.

The decision to enter into a licensing arrangement must be carefully considered far in advance of initial meetings with suppliers or potential clients. We have enumerated a few of the important decision points where LS can provide valuable input to the senior management group in charge of making these critical business decisions.

Visit the sections on technology transfer and building a marketing organization for further considerations on the decision to license.

Common ground for both “licensing out” and “licensing in” involves arriving at a fair and equitable license agreement, one that is executable, and meets the needs of both parties from an economic and total business perspective. An Intellectual Property, (IP), license is a long-term commitment to a relationship that must be well thought out and committed to paper. Seldom can a contract be redone because one party decides that it is unfair after execution. It must be done properly from the first draft and the first negotiation, making sure that the final agreement is properly scoped and contains all clauses necessary for complete understanding of the business deal. LS is the consultant to provide you with the experience to get it “right the first time”.

  • Give my developments back to licensor?
  • Build an R & D center or purchase from licensor?
  • Have full training for staff and sales organization?
  •  Have commissioning and start up support from licensor?
  • Have a guarantee with fair compensation for failures?
  • Building a sales and marketing organization
  • Decisions on future of R&D
  • Selection of EPC contractors
  • Commissioning and start up of facilities
  • Ongoing organization to operate the facility
  • Share future developments? Be obligated to provide them?
  • Develop a JV?
  • Have a restricted use license?
  •  Warrant the technology? How to? What risks?
  •  Have the liabilities? Can they be minimized?

To take a license, a licensee must plan for or consider as a minimum the following:

  • Train client personnel on technology, operation, maintenance, and customer service
  • Provide technical documentation including: Technology manuals, operating and maintenance procedures
  • Provide for commissioning and start up support
  • Carry out warranty operations

Do I want to:

  • Provide patent access without know-how?
  • Provide know-how with the patent(s)?
  • Provide technology disclosures?
  • Continue with unencumbered R & D?
  • Provide a full service patent and know-how license?
  • Provide process design packages?

LS has been there and done that. LS can take your company through the thought and planning process necessary to make informed decisions about providing and servicing a license agreement or about taking a license from a licensor. No first time licensor or licensee should be without the services of an experienced licensing executive. Economics of doing business normally does not allow most companies the luxury to maintain a licensing staff. LS provides the professional licensing manager service no longer afforded by the smallest to the large size companies.

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