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Published by Enhelion, 2019-12-10 09:24:01





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6.1 INTRODUCTION specified terms by the Patentee that must be
met for the licensee.
Patent means monopoly right granted to a person by
the Patent Office to exploit his invention for limited 6.2 LICENSING OF PATENT
period of time. In India, a patent is granted for a
period of 20 years. During this period, the inventor is A patent is considered as a transferable property that
entitled to exclude anyone else from commercially can be transferred from the original patentee to any
exploiting his invention. other person by assignment or by operation of law. A
An invention is patentable only when it is (i) new, (ii) patent can be licensed or assigned only by the owner
involves an inventive step, and (iii) capable of of the patent. In case of co-owners or joint-owners, a
industrial application. co-owner can assign or license the patent only upon
consent of the other owner(s).
Once a patent for an invention is granted, it is
important to consider: Section 68 of the Indian Patents Act 1970 provides
for the mortgage of, license or creation of any interest
1. if the patentee/proprietor of the patent is in the patent.
going to manufacture, market, sell and/or
distribute the invention, "Assignments, etc., not to be valid unless in writing
and duly executedi —An assignment of a patent or of
2. whether the patentee/proprietor of the a share in a patent, a mortgage, license or the creation
patent is going to sell all rights in his/her of any other interest in a patent shall not be valid
invention to someone else for a sum of money, unless the same were in writing and the agreement
or between the parties concerned is reduced to the form
of a document embodying all the terms and
3. if the patentee/proprietor of the patent will conditions governing their rights and obligations and
license someone else to produce and bring duly executed"
the patented product to market under

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6.2.1 Requirementsii: 5. Minimize research and development
1. The assignment, mortgage or license should expenditures.
be reduced to writing in a document
embodying all the terms and conditions 6.2.2 MANNER OF LICENSING OF PATENT IN
governing the rights and obligations between INDIA:
the parties; The Patents Act allows a patentee to grant a License
2. An application for registration of such by the way of agreement under Section 70 of the Act.
document should be filed in the prescribed A patentee by the way of granting a license may
manner in Form-16 within the time permit a licensee to make, use, or exercise the
prescribed under section 68. The document invention. A license granted is not valid unless it is in
when registered will have effect from the writing. The license is contract signed by the licensor
date of execution. and the licensee in writing and the terms agreed upon
by them including the payment of royalties at a rate
By licensing, the patentee retains ownership to the mentioned for all articles made under the patent.
rights and thus retains control of who manufactures
and who sells it. A license is a contract with certain Types of Patent Licenses:
performance obligations and any breach or failure to 1. Voluntary License
comply with the agreed obligations may lead to the 2. Statutory License (such as compulsory
termination of the license. A license is revocable. The License)
main advantages of licensing are: 3. Exclusive/Limited License
4. Express/Implied License
1. Enables the inventor to optimally utilize the
invention; 1. Voluntary Licenses:
It is the license given to any other person to
2. Enables an inventor to share risk of make, use and sell the patented article as
manufacturing, promoting and selling of agreed upon the terms of license in writing.
invention; Since it is a voluntary license, the Controller
and the Central government do not have any
3. A cost-effective way to enter market; role to play. The terms and conditions of such
4. Competitive advantages through technology agreements are mutually agreed upon by the

transfer and cross-licensing;

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licensor and licensee. In case of any ii) The patented invention is not available to
disagreement, the licensor can cancel the the public at a reasonably affordable
licensing agreement. price.

2. Statutory Licenses: iii) The patented invention has not worked in
Statutory licenses are granted by central the territory of India.
government by empowering a third party to
make/use the patented article without the Under Section 92 A of the Act, compulsory
consent of the patent holder in view of public licenses can also be granted for exporting
interest. Classic example of such statutory pharmaceutical product(s) to any country
licenses is compulsory licenses. Compulsory incapable of manufacturing pharmaceutical
licenses are generally defined products for the benefit of the people in that
as "authorizations permitting a third party to country, further when working of the patent
make, use, or sell a patented invention required another related patent under
without the patent owner's consent. Section 88 of the Act or on notification by the
Central Government, the controller can grant
3. Compulsory Licenses: a license to an interested person. The Central
Though Compulsory Licenses works against or State Government can use the invention or
the interest of the patent holder, it is granted its process for its own purpose either with or
under certain provided conditions under the without royalty.
Patents Act. Under section 84 of the Indian
Patents Act 1970, any person can make an 4. Exclusive Licenses and Limited Licenses:
application for grant of a compulsory license Depending upon the degree and extent of
for a patent after three years, from the date of rights conferred on the licensee, a license may
grant of that patent, on any of the following be Exclusive or Limited License. An exclusive
grounds: license excludes all other persons including
the patentee from the right to use the
i) The reasonable requirements of the invention. Any one or more rights of the
public with respect to the patented patented invention can be conferred from the
invention have not been satisfied; bundle of rights owned by the patentee. The
rights may be divided and assigned,

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restrained entirely or in part. In a limited invention and wherever limitation is provided, it is
license, the limitation may arise as to persons, generally a limitation related to persons, time, place,
time, place, manufacture, use or sale. manufacture, use or sale. Section 2(f) of the Act
defines an “exclusive license” as “a license from a
5. Express and Implied Licenses: patentee which confers on the licensee, or on the
licensee and persons authorized by him, to the
An express license is one in which the exclusion of all other persons (including the
permission to use the patent is given in patentee), any right in respect of the patented
express terms. Such a license is not valid invention, and ‘exclusive licensee’ shall be construed
unless it is in writing in a document accordingly.” The exclusivity may depend on the
embodying the terms and conditions. In case geographical extent of the licensee’s right, time
of implied license though the permission is factor, and/or the exclusivity to exercise the rights
not given in express terms, it is implied from licensed.iii
the circumstances. For example: where a
person buys a patented article, either within 6.3.1 TEMPLATE FOR PATENT LICENSING
jurisdiction or abroad either directly from the AGREEMENT
patentee or his licensees, there is an implied
license in any way and to resell it. PATENT LICENSING AGREEMENT

6.3 PATENT LICENSING AGREEMENT THIS AGREEMENT (hereinafter referred to as the
"Agreement") is made by and between XYZ
A licensing agreement is a partnership between a (hereinafter referred to as "Licensor"), having its
patent holder (licensor) and another who is office at [●] and ABC Company, a limited company
authorized to use such rights (licensee) in exchange (hereinafter referred to as "Licensee"), having its
for an agreed payment (fee or royalty). A patent office at [●].
licensing agreement can be either be an “exclusive
license agreement”, a “non-exclusive license WHEREAS, Licensor is the owner of all right, title, and
agreement” or a “compulsory license”. A patent interest in [●] (which is hereinafter referred to as the
holder, by a license, permit others to make, use, or "Licensed Patent");
exercise, the invention which otherwise would not be
allowed. An exclusive license excludes all other WHEREAS, Licensee is in the business of making [●],
persons including the patent holder from the use of and desires to obtain an exclusive license to make,

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use, and sell products and to practice the inventions Agreement shall, if not terminated sooner,
covered by the Licensed Patent; terminate at the end of the Term.
1.5. Licensed Product. "Licensed Product" as
WHEREAS, Licensor and Licensee desire to enter used in this Agreement shall mean [●].
into a license agreement covering the Licensed
Patent; and 2. LICENSE
2.1. License Grant. Subject to the terms and
WHEREAS, Licensor has the right to grant an conditions of this Agreement and the due
exclusive license to Licensee under the Licensed performance by Licensee of Licensee's
Patent and is willing to do so on the terms and obligations under this Agreement and in
conditions recited in this Agreement. reliance on Licensee's representations and
warranties set forth in this Agreement,
The parties agree as follows: Licensor hereby grants to Licensee an
exclusive, nontransferable license under the
1. DEFINITIONS Licensed Patent for the Term in the Territory
1.1. Licensed Patent. "Licensed Patent" as used to make, use, import, offer to sell, and sell
in this Agreement shall mean claims derived Licensed Product, with no right to sublicense.
from [●], and any patent issued in the future This license shall not extend to any third
from any reissue, re-examination, divisional, party, subsidiary, division, or any entity
continuation, and/or continuation-in-part of acquired after the Effective Date.
the Licensed Patents. 2.2. Basis. The foregoing license is granted solely
1.2. Territory. "Territory" as used in this under the Licensed Patent. No license under
Agreement shall mean the Republic of [●]. any other patents or intellectual property of
1.3. Effective Date. "Effective Date" shall mean Licensor is granted, either expressly or by
[●]. implication
1.4. Term. "Term" as used in this Agreement shall
mean the period beginning on the Effective 3. CONSIDERATION
Date and ending with the expiration of the 3.1. In consideration for the grant of this
Licensed Patent or the termination of this commercial license, licensee agree to comply
Agreement, whichever occurs first. This

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with all the provision of this agreement, to pay proceedings, demands, and liabilities of any
all fees, royalties, costs, and all other kind whatsoever, including legal expenses
consideration within the time period and reasonable attorneys' fees, arising out of
specified and manner specified in Exhibit A. the death of or injury to any person or out of
3.2. Confidentiality: Licensor and Licensee any damage to property, or resulting from
acknowledge that the amount of Licensee's the production, manufacture, sale, use, lease,
payments actually made to Licensor under or advertisement of Licensed Products or
this Agreement is confidential and arising from any obligation of Licensee under
proprietary information relating to this this Agreement.
Agreement and the business of Licensor and 4.2. Licensor Indemnification: Licensor shall at
Licensee. Accordingly, the parties agree that all times during the term of this Agreement
each of them shall keep that information and thereafter indemnify, defend, and hold
confidential and shall not disclose it, or permit Licensee, its directors, officers, employees,
it to be disclosed, to any third party (other and affiliates harmless against all claims,
than to agents or representatives who need proceedings, demands, and liabilities of any
to know such information). Licensor shall kind whatsoever, including legal expenses
have the right, however, to disclose that and reasonable attorneys' fees, arising out of
Licensor and Licensee have entered into this any breach of any representation, warranty,
Agreement, the royalty rate(s) set forth in this or covenant expressly made by Licensor in
Agreement, and that Licensee has consented this Agreement.
to the validity, enforceability, and
infringement of the Licensed Patents. 5. TERMINATION
5.1. Termination by Licensor. In addition to all
4. INDEMNIFICATION other remedies Licensor may have, Licensor
4.1. Licensee Indemnification: Licensee shall at may terminate this Agreement and the
all times during the term of this Agreement licenses granted in this Agreement in the
and thereafter indemnify, defend, and hold event that:
Licensor, its directors, officers, employees, i. Licensee defaults in its payment to
and affiliates harmless against all claims, Licensor and such default continues

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un-remedied for a period of thirty 5.3. Effect of Termination. After the termination
(30) days after the Due Date of this of this Agreement, Licensee shall have no
Agreement; rights under the Licensed Patent.
ii. Licensee is liquidated or dissolved;
iii. Any assignment is made of Licensee's 5.4. No Discharge on Termination. No
business for the benefit of creditors; termination of this Agreement for any
iv. Licensee liquidates a substantial reason shall relieve or discharge either
portion of its business or engages in a Licensor or Licensee from any duty,
distress sale of substantially all of its obligation, or liability that was accrued as of
assets; the date of the termination (including,
v. A receiver, or similar officer, is without limitation, the obligation to
appointed to take charge of a indemnify or to pay any amounts owing as of
substantial part of Licensee's assets; the date of termination).
vi. Licensee is unable to pay its debts as
vii. Any petition in bankruptcy is filed by LICENSOR
or against Licensee that remains un- 6.1. Right to Grant License. Licensor represents
discharged for sixty (60) days. and warrants that Licensor has the right and
authority to grant the licenses granted to
5.2. Termination by Licensee. If the Licensed Licensee in this Agreement and that this
Patent is determined to be invalid or Agreement and the licenses granted in this
unenforceable by any court or tribunal of Agreement do not and will not conflict with
competent jurisdiction, and the the terms of any agreement to which
determination becomes final in that it is not Licensor is a party
further reviewable through appeal or 6.2. Disclaimers. Except as otherwise expressly
exhaustion of all permissible petitions or set forth in this Agreement, Licensor, its
applications for rehearing or review, directors, officers, employees, and agents
Licensee may terminate this Agreement at make no representations and extend no
will and shall have no further obligations warranties of any kind, either express or

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implied. In particular, and without limitation, 7. REPRESENTATIONS AND WARRANTIES OF
nothing in this Agreement shall be construed LICENSEE:
as: Licensee represents and warrants that Licensee
has the right and authority to enter into this
i. a warranty or representation by Agreement and that this Agreement and the
Licensor as to the validity or scope of exercise of the licenses granted hereunder do not
the Licensed Patent; and will not conflict with the terms of any
agreement to which Licensee is a party. Except as
ii. a warranty or representation by otherwise expressly set forth in this Agreement,
Licensor that anything made, used, Licensee, its directors, officers, employees, and
sold, or otherwise disposed of under agents make no representations and extend no
any license granted in this warranties of any kind, either express or implied.
Agreement is or will be free from In particular, and without limitation, nothing in
infringement of patents of third this Agreement shall be construed as an
parties; obligation on the part of Licensee to furnish any
manufacturing or technical information.
iii. an obligation on the part of Licensor
to bring or prosecute actions against 8. RELATIONSHIP OF THE PARTIES
third parties for infringement of the Nothing in this Agreement will be construed to
Licensed Patent or other proprietary constitute the parties as partners or to have
rights; entered into joint venture or constitute either
party as agent of the other, nor will any similar
iv. an obligation on the part of Licensor relationship be deemed to exist between them.
to furnish any manufacturing or Neither party shall hold itself out contrary to the
technical information; terms of this paragraph and neither party shall
become liable by reason of any representation,
6.3. Limitation of Liability. In no event shall act, or omission of the other contrary to the
Licensor, its directors, officers, employees, or provisions of this paragraph. This Agreement is
affiliates be liable for incidental or not for the benefit of any third party and shall not
consequential damages of any kind, including
economic damage or injury to property and
lost profits, regardless of whether Licensor
shall be advised, shall have other reason to
know, or in fact shall know of the possibility.

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be deemed to give any right or remedy to any such inure to the benefit of and be binding upon
party, whether referred to in this Agreement or Licensor, its successors, and assigns.
9. ASSIGNMENT Any dispute between Licensor and Licensee
9.1. No Assignment. This Agreement, the rights concerning the amount of royalties payable to
granted to Licensee, and the duties and Licensor under this Agreement shall be subject to
obligations of Licensee are all personal to arbitration and the seat of arbitration is [●].
Licensee and Licensee agrees not to sell,
assign, transfer, mortgage, pledge, or 11. LIMITATIONS OF RIGHTS AND AUTHORITY
hypothecate any such rights in whole or in No right or title whatsoever in the Licensed
part, or delegate any of its duties or Patents is granted by Licensor to Licensee, or
obligations under this Agreement; nor shall shall be taken or assumed by Licensee, except as
any of Licensee's rights or duties be assigned, is specifically set forth in this Agreement.
transferred, or delegated by Licensee to any
third party by operation of law. Any 12. MISCELLANEOUS
purported transfer, assignment, or 12.1. Computation of Time. The time in which any
delegation in violation of the foregoing
sentence shall be void and without effect, act provided in this Agreement is to be done
and this Agreement shall thereupon become shall be computed by excluding the first day
terminable without further notice by and including the last day, unless the last day
Licensor. In the context of this provision, is a Saturday, Sunday, or legal holiday, and
"assignment" shall include the transfer of then it shall also be excluded.
substantially all of the assets of Licensee, or 12.2. Notices. All notices given in connection with
of a majority interest in the voting stock of this Agreement shall be in writing and shall be
Licensee, or the merger, consolidation, or deemed given upon actual receipt by the
reorganization of Licensee with one or more addressee. Notices shall be personally
third parties. delivered or sent by telex or facsimile (with
9.2. Binding on Successors. This Agreement will prompt confirmation by registered or
certified air mail, postage prepaid) or by
registered or certified air mail, postage

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12.3. prepaid, addressed to the party to be notified 12.7. Interpretation. No provision of this
12.4. at the address mentioned above. Agreement is to be interpreted for or against
Survival. The provisions of this Agreement any party because that party or its attorney
12.5. relating to payment obligations, drafted the provision.
12.6. confidentiality, indemnification, remedies,
and arbitration shall survive the expiration or 12.8. Governing Law. This Agreement shall be
termination of this Agreement. construed, governed, interpreted, and
Severability. If any provision of this applied in accordance with the laws of the
Agreement is declared by a court of State of Delaware, United States of America.
competent jurisdiction to be invalid, illegal,
unenforceable, or void then both parties shall 12.9. No Other Agreement. The parties each
be relieved of all obligations arising under represent that in entering into this
such provision, but only to the extent that Agreement, they rely on no promise,
such provision is invalid, illegal, inducement, or other agreement not
unenforceable, or void. If the remainder of expressly contained in this Agreement; that
this Agreement is capable of substantial they have read this Agreement and discussed
performance, then each provision not so it thoroughly with their respective legal
affected shall be enforced to the extent counsel; that they understand all of the
permitted by law. provisions of this Agreement and intend to be
Waiver and Modification. No modification of bound by them; and that they enter into this
any of the terms of this Agreement will be Agreement voluntarily.
valid unless in writing and signed by both
parties. No waiver by either party of a breach 12.10. Entire Agreement. This Agreement
of this Agreement will be deemed a waiver by constitutes the complete and exclusive
such party of any subsequent breach. statement of the terms and conditions
Headings. The headings in this Agreement are between the parties, which supersedes and
for reference only and shall not in any way merges all prior proposals, understandings,
control the meaning or interpretation of this and all other agreements, oral and written,
Agreement. between the parties relating to the subject of
this Agreement.

IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement by their duly authorized

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officers or representatives as of the date above Designation:
Name: Designation:

i Section 68 of The Patents Act, 1970. iiiP. Ganguli –“Anatomy of Licensing Agreements.”
iiPatent Law, Fourth Edition ,P.Narayanan, Eastern Law House,
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Pg: No:268.

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