This final draft is submitted for the partial fulfilment of the course of INTELLECTUAL PROPERTY RIGHT of

B.A. L.L.B (Hons.)

Patent Licensing

Submitted To: Submitted By:

Prof. Dr. Md Jafar Ekbal

Professor of law Roll NO- 2337

6th Sem B.A. L.L.B

2ND FEBRUARY 2023

CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR, PATNA-800001

DECLARATION

I, Md Jafar Ekbal hereby declare that this research work titled “Indo Bhutan

Relation Since 1950” is my own work and represents my own ideas, and where

others’ ideas or words have been included, I have adequately cited and referenced

the original sources. I also declare that I have adhered to all principles of academic

honesty and integrity and have not misrepresented or fabricated or falsified any

idea/data/fact/source in my submission.
 Acknowledgement

I would like to thank my faculty Dr.Shivani Moham Jha , whose assignment of such a relevant
topic made me work towards knowing the subject with a greater interest and enthusiasm and
moreover he guided me throughout the project. I owe the present accomplishment of my
project to my friends, who helped me immensely with sources of research material throughout
the project and without whom i couldn’t have completed it in the present way. I would like to
extend my gratitude to my parents and all those unseen hands that helped me out at every
stage of my project.

THANK YOU

Md Jafar Ekbal
AIMS AND OBJECTIVES

RESEARCH METHODOLOGY

The researcher will do doctrinal type of research in which he will go through the primary as well
as secondary sources. the doctrinal method helps in doing a comparative study of the topic.

LIMITATIONS

Since the researcher is a student of law, he has very less time to analyse something of this very
vast stature. the topic being very specific has made it difficult to study the nuances and
subtleties of the topic. however the researcher has tried his best to analyse and study the topic

Patent is an exclusive right granted to the inventor for his invention which is either a process or
a product. Receiving grant for an invention or possessing exclusive rights over an intellectual
property offers several advantages to the patentee which includes financial benefits. One of the
ways to take financial benefit of patent is patent licensing.

Licensing is a major facet of intellectual property. A license agreement is a partnership between

two persons, one patent owner and other known as licensor who is authorized to use patent.

Patent Licensing

License is a commonly used term for a document representing a written

authorization or the act of authorization. Licensing, in the context of patents is an
act of granting or obtaining the written authorization to use the patented
technology for performing a specified act, in a specified markets and for a
specified period of time. A patent license is an agreement between a first party
("licensor") and a second party ("licensee"). This agreement authorizes the second
party to exercise certain rights and privileges held by the first party. The scope of
such an agreement depends on the terms and conditions proposed in the patent
license.

Patent licensing is a process of granting permission to a third party to extract

benefits by selling and using the licensed product. The patent owner gives license
to a third party to use his patented invention based on the agreement and
royalty. The license can be given for a period of time as per the mutual
understanding between patent owner and licensee. During this time period, the
licensee can use patented invention and can take financial benefits.

A patent holder has the exclusive rights to exclude others from manufacturing,
using, offering for sale or selling or importing the invention protected by the
patent. The term patent holder refers to an individual inventor or a patent
holding company tha No individual or company other than the patent holder may
have these rights without the permission of the patent holder. The patent holder
grants a license to others for practicing the patent holder’s invention. The process
of granting a license for patent is known as "out-licensing" and the process of
obtaining a license for a patent is called "inlicensing". A patent license is
negotiated between the licensee and the licensor. Thereafter, the licensee and
the licensor agree on a license fee and, terms and conditions. The payment mode
for the license may be a "paid-up license" or a "royaltyt manages, maintains, and
licenses patents or info license". In a paid-up license agreement, the agreed
license fee (lump sum) is paid-up during the agreement. In case of a royalty
license agreement, the license fee is decided as a share of licensee's revenue
generated as a result of commercialization of the patented technologyrces patent
rights.

Licensing is a contract between two parties where licensor agrees the terms and
conditions of patent owner. Since it is a contract or agreement, it must follow the
Sections 10 and 11 of Indian Patent Act 1970. As per Section 68 of the Patent Act
1970, the agreement must be in writing.

Types of Patent Licensing

There are eight types of patent licensing as described below;

Exclusive License

In Exclusive licensing, all the rights except title of the invention are given to the
licensee. Patent owner transfers the ownership of the patent to the licensee.
Patent owner has only the title of the invention. Thus licensee acquires all the
responsibilities related to the invention. However, licensee cannot license the
patent to anyone else. It is exclusively granted to him/her. Thus licensee is only
the authorized person to use the patented invention.

Exclusive license is a patent license provided to the licensee by the licensor

granting all the rights and privileges exclusively to the licensee. The licensor
retains no rights or privileges to practice the invention covered by the patent. The
licensee has the exclusive rights to the invention. Therefore, the licenses are
termed as exclusive licenses. Further, the rights and privileges granted to the
licensee may be within a scope or field. The scope or field refers to a geographical
area, technological application, method of production, or production of a specific
product, a market. Licenses having the rights within the same scope or field of the
exclusive license cannot be granted to other licensees. So, licensor can grant
licenses with rights of different scope or field to various licensees.

Non Exclusive License

In Non Exclusive Licensing, the license of the patent can be granted to more than
one party and all of them can commercialize the patent into the market. Thus,
patent owner has rights to license his patented invention to more than one party.

Non-Exclusive license is a patent license that can be granted by a licensor to

multiple licensees. The multiple licensees will have the rights and privileges to
practice the invention within the same scope or field of the license. Moreover, in
this case the licensor is also allowed to practice the invention. Therefore, such
licenses are termed as non-exclusive licenses.

Sub License

Licensee has rights to issue Sub license to different organizations for making the
product of patented invention. Patent owner give rights to licensee and the
licensee has the right to issue the license further to a third party that can use
patented invention. The financial benefits will depend on the contract between
the primary licensee and third party.

Cross-Licensing

Cross-Licensing is the exchange of licenses between different organizations and

creators. When invention requires the support of other products to make its place
in the market, Cross-Licensing process is used. Cross license is patent license that
facilitates a licensor and licensee to have rights and privileges to practice each
other’s inventions. Further, cross licensing may involve more than two parties
granting a license to each other for exploiting an invention having its aspects
covered in multiple patents owned by different parties. Such cross licensing is also
called patent pooling. Thus, a product having its features covered in various
patents may be developed and marketed by each party entering into a cross
license. The parties entering into the cross license may not pay royalties to each
other.

Voluntary Licensing
Voluntary licensing is an act of goodwill towards the society. It is also applicable
for pharmaceutical patents. In Voluntary Licensing, patent owner can license his
patented invention to other parties on exclusive or non-exclusive basis and give
right to manufacture, import or distribute a pharmaceutical product. According to
the agreement, licensee can sale and distribute the product in a market. Patent
owner gets its royalty as per the terms and conditions mentioned in the
agreement.

Compulsory Licensing

In Compulsory Licensing, the authorization is given to a third party to make, use

or sell a patented invention without the consent of patent owner. According to
the Sections 84 and 92 of Indian Patent Act 1970, if the specified conditions are
satisfied, license can be granted to a third party without permission of patent
owner. According to Section 84 of IPA 1970, any person who is interested or
already the holder of the license under the patent can request to the Controller
for grant of Compulsory License after three years from the date of grant of that
patent. The patent office considers the nature of the invention, ability of the
applicant to use the invention for the public interest, any measures already taken
by the patentees or any licensee to make full use of the invention and time
elapsed from grant of the patent. Compulsory Licensing is usually reserved for
pharmaceutical patents. Government allows someone to practice patented
invention to make, use or sell patented invention without taking permission of
patent owner for the public benefits.

Carrot Licensing

Carrot Licensing is one of the approaches of patent licensing. This approach is

suitable when prospective licensee is not in the practice of the patented invention
and not falls under any obligation to take a license. In this case, patent owner has
to convince the party to use his product and how licensing the product can be
beneficial for them. Carrot Licensing is a marketing policy where the patent owner
tries to show the licensee what could be achieved by taking a license for his
patent.
Stick Licensing

Stick Licensing is another approach of licensing which is totally contrast of the

carrot licensing. In Stick Licensing approach, prospective licensee is already using
the patented technology and thus infringing the patent. The patent owner can file
a suit against the infringer or settle with the infringer agreeing to license his
patent.

Patent Licensing Agreements

Patent License agreement a partnership between an intellectual property rights

owner (licensor) and another who is authorized to use such rights (licensee) in
exchange for an agreed payment (fee or royalty).

 Term (agreement length)

 Rights to modify and combine with other products, if any
 Prohibited uses
 Transfer and sublicense rights
 Rights to source code
 Acceptance, testing and training procedures
 Warranties
 Limitations on the licensor's liability
 Support and maintenance services
 Nondisclosure of confidential information
 Indemnity for infringement
 Enforcement of remedies
 Contract termination.
 GPatent licensing agreement generally covers following points

Advantages/Disadvantages of Patent Licensing

Once patent license procedure is completed, both licensee and licensor have few
advantages and disadvantages. The patent owner can transfer risk of
manufacturing /production of a design or a product to licensee. The patent owner
need not worry about mass production and global market. If the patent is licensed
to a well established company having a large customer base, then patent product
will have a large market and patent owner can get good financial benefit.
However, lots of efforts are required to find the appropriate licensee for the
invention.

It is very important to get a potential licensee and have a written agreement so

that chances of success will be more. The main disadvantage of patent owner is
that he loses his own control either partially of fully on his own invention for the
period of license. It is always a risk for patent owner as he has to believe on
licensee, his strategy, quality management and commercialization the patent
product to get more financial benefits. The licensee may have to pay more
royalties if he wanted to expand the production/sale of patent product into other
markets. The patent owner gets his exclusive rights over his invention once the
license duration expires.
LICENSING UNDER INDIAN PATENT ACT 1970

Sections 84-92 of IPA 1970 are related to Licensing of a patent. According to the
IPA 1970, patent licensing should be in writing between the licensor and the
licensee. Section 84 of IPA 1970 states the terms and conditions required for
issuing Compulsory Licensing. The Act has the provision and empowers the
Controller to issue the Compulsory Licensing to a third party. Compulsory
Licensing is possible only if the patented invention is useful to public health or in
National Emergencies or health crisis. According to the 84 Section of IPA 1970,
after three years from the grant of the patent, any interested person can write an
application to the Controller for grant of Compulsory License on the following
grounds:

I. the reasonable requirements of the public for the patented invention have
not been satisfied
II. Patented invention is not available to the public in affordable price
III. Patented invention is not worked within the territory of India.

After receiving the application, the Controller can grant a Compulsory License to
that party/person.

However, before granting the Compulsory License, the Controller has to

consider several factors such as:

1. Royalty/remuneration for the patentee are reasonable

2. Licensee will use patented invention properly
3. Patented invention will be available to the public at reasonable prices
4. The license is non-exclusive and non-assignable
5. The license will not be longer than the term of the patent
6. Licensing the patented invention is for the better supply in Indian market
7. If patented invention is for semiconductor technology, the license granted
is for non-commercial public use.

Compulsory Licenses can be granted to a pharmaceutical products and export of

certain pharmaceutical products that are necessary for public health of a country
having weak capacity of pharmaceutical industry can be allowed.
Patent License and Patent Assignment

In Patent License, patent owner grants permission to a third party to extract

benefits on the patents for limited period of time. Transfers of rights are
temporary in nature. In Patent License, the licensee has to pay the royalty to the
patent owner for the entire duration of the license period. In Patent Licensing,
patent owner still hold the rights on his patented invention.

In Patent Assignment, patent owner transfers exclusive rights of the patent to a

third party permanently. Such a transfer is recorded in the official patent record.
In Patent Assignment, the assignee has to pay the lump-sum amount to the
patent owner/assignee in the beginning and later can receive profits from the
patented invention.

Patent Assignment is a complete transfer of rights to a third party. Patent owner

do not have any rights on his patented invention once patent is assigned to a third
party.

Limitations of Patent Licensing

Licencing is very convenient way for the patent owner to take financial benefits
from his patented invention.

However, licensing has few limitations and risks as follows:

a. Licensing could be less profitable. It may happen that if patent owner make
the invention available in market can achieve more profit than licensee.
Though investing capital is a risk, but profits can be more than
expectations.
b. Patent owner has to depend on the licensee for profits. Patent owner is
totally dependent on the licensee, his sources, his skills and the efforts for
marketing the patented invention and further for financial benefits. Thus, if
proper licensee is not selected then the product may fail in market.
c. An agreement of licensing should be drafted very carefully. All the terms
and conditions related to royalty and further processing should be stated
 clearly in the agreement. Also agreement should clearly states all the
clauses related to investment and data related to patented invention.
d. The licensee has to pay fixed royalties to the patent owner irrespective of
the status of the product in the market.

CONCLUSION

Patent licensing means granting permission to a third party for using/selling

patented invention. Patent owner can get good financial befits by licensing his
patented invention. According to Indian Patent Act 1970, patent licensing
should be in written format and satisfy the clauses stated in Section 84-92 of
IPA 1970. The license agreement is between two parties, one is licensee and
other is patent owner or licensor. At most care should be taken while selecting
the licensee and drafting the agreement.