Patent License Agreement Template

Below is a comprehensive English-language patent license agreement template. It includes optional clauses and alternative approaches for flexibility, along with relevant examples and references to case law.

Patent License Agreement

This Patent License Agreement (“Agreement”) is entered into on [DATE] by and between:

Licensor: [NAME], a company organized under the laws of [JURISDICTION], with its principal place of business at [ADDRESS].

Licensee: [NAME], a company organized under the laws of [JURISDICTION], with its principal place of business at [ADDRESS].

The Licensor and Licensee are collectively referred to as the “Parties” and individually as a “Party.”

1. Definitions

1.1. Licensed Patents:
The term “Licensed Patents” refers to the patents and patent applications listed in Exhibit A, including any continuations, continuations-in-part, reissues, or extensions.

1.2. Field of Use:
The term “Field of Use” means [SPECIFIC APPLICATION/INDUSTRY, e.g., automotive sensor technology].

1.3. Territory:
The term “Territory” means [e.g., worldwide, European Union, United States].

2. Grant of License

2.1. License Grant:
The Licensor grants the Licensee [optional: an exclusive, non-exclusive, or sole] license to use, manufacture, sell, and distribute products incorporating the Licensed Patents within the Field of Use and Territory.

Optional Clause – Sub-Licensing Rights:
2.2. The Licensee is authorized to grant sub-licenses to third parties, provided that such sub-licenses comply with the terms of this Agreement.
Alternative Approach: Sub-licensing is prohibited unless expressly approved in writing by the Licensor.

2.3. Improvements:
The Licensee shall have the right to use any improvements to the Licensed Patents developed by the Licensor during the term of this Agreement.
Alternative Approach: Improvements remain the exclusive property of the Licensor, and the Licensee may negotiate separate rights to use such improvements.

3. Royalties and Payments

3.1. Upfront Fee:
The Licensee shall pay the Licensor a non-refundable upfront fee of [AMOUNT].

3.2. Running Royalties:
The Licensee shall pay royalties of [PERCENTAGE, e.g., 5%] on the net sales of licensed products.

Optional Clause – Milestone Payments:
3.3. The Licensee shall pay milestone payments upon achieving the following:

• [E.g., €50,000 upon FDA approval of a product].
• [E.g., €100,000 upon achieving €1,000,000 in annual sales].

Example: Brulotte v. Thys Co., 379 U.S. 29 (1964)
Royalties based on sales beyond the expiration of the patent are not enforceable. Ensure that royalty obligations are limited to the term of the Licensed Patents.

4. Reporting and Audit

4.1. Royalty Reports:
The Licensee shall submit quarterly reports detailing sales, net revenue, and corresponding royalty payments.

4.2. Audit Rights:
The Licensor may audit the Licensee’s records related to royalty calculations upon [reasonable notice/every six months].

5. Confidentiality

5.1. Both Parties agree to maintain the confidentiality of proprietary information disclosed during the term of this Agreement.

5.2. Confidentiality obligations shall survive for [e.g., five years] after the termination of this Agreement.

6. Representations and Warranties

6.1. Licensor Warranties:
The Licensor warrants that it is the owner of the Licensed Patents and has the authority to grant the rights specified in this Agreement.

6.2. Licensee Warranties:
The Licensee warrants that it will use the Licensed Patents in compliance with applicable laws and regulations.

Optional Clause – Indemnification:
6.3. The Licensee shall indemnify the Licensor against claims arising from the Licensee’s use of the Licensed Patents.

Example: Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015)
Parties cannot extend patent royalty payments beyond the life of the patent unless structured as a non-patent-based agreement.

7. Term and Termination

7.1. Term:
This Agreement shall remain in effect until the expiration of the last Licensed Patent unless terminated earlier under this Agreement.

7.2. Termination for Breach:
Either Party may terminate this Agreement upon [e.g., 30 days] written notice if the other Party materially breaches the Agreement and fails to cure such breach within the notice period.

Optional Clause – Post-Term Use:
7.3. Upon termination, the Licensee may sell off existing inventory for [e.g., six months] under the terms of this Agreement.

8. Governing Law and Dispute Resolution

8.1. Governing Law:
This Agreement shall be governed by the laws of [e.g., Germany, New York State].

8.2. Dispute Resolution:
Disputes arising under this Agreement shall be resolved by [e.g., arbitration under ICC rules, litigation in the courts of [JURISDICTION]].

9. Miscellaneous

9.1. Entire Agreement:
This Agreement constitutes the entire understanding between the Parties and supersedes all prior agreements.

9.2. Force Majeure:
Neither Party shall be liable for delays caused by events beyond their reasonable control.

Exhibit A – List of Licensed Patents

• Patent No. [123456]: [Title/Description]
• Patent Application No. [7891011]: [Title/Description]

Best Practices for Using this Template

1. Tailor to Jurisdiction: Customize the template to reflect local laws and court precedents.
2. Consider Case Law: Incorporate lessons from relevant judgments, such as Brulotte and Kimble, to avoid unenforceable clauses.
3. Negotiate Optional Clauses: Use optional clauses to align with the specific goals of the Licensor and Licensee.