A patent license is an agreement between a patent owner (licensor) and a person or entity that wants to use or benefit from the patent (the licensee) in which the licensor grants the licensee the right to use the license in the manner and for the period of time (the term) described in the license agreement.
The licensor grants the licensee a license to use the patent in exchange for royalty payments (royalties) from the licensee—often based on a percentage of sales of the goods or services in which the licensee uses the patent.
There are different types of licenses, including exclusive licenses, nonexclusive licenses, and partially exclusive licenses. A license may also grant the licensee the right to sublicense the patent rights to other persons or entities—often when the original license is an exclusive license.
In Texas, as in all states, patent licensing is governed primarily by federal law, as patents are a matter of federal jurisdiction under the United States Patent Act (Title 35 of the United States Code). A patent license in Texas allows the licensee to use the patent as per the terms of the agreement, which is negotiated between the licensor and the licensee. The agreement typically specifies the scope of the license, the term for which the license is granted, and the financial arrangement, often involving royalties based on sales. Exclusive licenses grant the licensee the sole right to use the patent, while nonexclusive licenses allow the patent owner to license the patent to multiple entities. Partially exclusive licenses may restrict certain uses of the patent to the licensee while allowing the licensor to use or license the patent in other ways. Additionally, some licenses may include the right to sublicense, enabling the licensee to grant patent rights to third parties, which is more common in exclusive licensing agreements. It's important for both licensors and licensees to ensure that their agreements comply with relevant laws and that they fully understand their rights and obligations under the license.
