Licensing your patent without giving it away

The clauses that decide the value

Scope - field of use and territory, defined by application rather than by industry label, and covering which of making, using, selling and importing are licensed.

Enforcement - who may sue an infringer, who pays, who controls settlement and who keeps recoveries. Without this an exclusive licensee may find they cannot act while the patentee has no incentive to.

Improvements - who owns what the licensee develops on top, and whether there is a licence back.

Validity - what happens to royalties if the patent is revoked or narrowed, and whether the licensee may challenge validity at all.

Recordal - licences should be recorded, and the agreement should say who is responsible.

Before you negotiate a rate

Value the patent honestly. If a licensee could design around claim 1 in a month, the rate is not the issue - the scope is. And remember that licensees have working statement obligations under section 146 too; put it in the agreement and remind them at each three-year block.

What to actually do

• Draft the enforcement clause before the royalty clause.
• Define field and territory by application, not by industry label.
• Address revocation, narrowing and lapse separately.
• Record the licence and say who is responsible for doing it.