Patent licensing is a rather broad topic and it’s easy to get lost in theoretical discussions of it. However, fundamentally, a patent license is nothing more than a legally-binding contract spelling out certain conditions and actions that each party is responsible for taking. Perhaps the best way to move from the abstract to the specific is to examine an actual patent license and discuss what the most important parts of it mean.

The sample license discussed below can be read in full at: http://contracts.onecle.com/occulogix/brunner.lic.2004.10.25.shtml

PATENT LICENSE AND ROYALTY AGREEMENT

THIS AGREEMENT (the “Agreement”) is made by and between OccuLogix, Inc. (formerly Vascular Sciences Corporation), a Delaware Corporation (the “Licensee”), and Prof. Dr. Richard Brunner (“Brunner”) living in Germany and listed as inventor along with Prof. Dr. Helmut Borberg (“Borberg”) in US patent application 09/000,917, which is the parent application of US letters patent 6,245,038 issued June 12, 2001 (the “Patent”).

Seen above is the beginning of the patent license. It begins by specifying who the agreement is between (OccuLogix, Inc. and Professor Dr. Richard Brunner), which patent is involved, and when the patent was issued. Consider this the bedrock of any patent license. No matter whom you license your patent to or license a patent from, any legally-binding agreement will need to spell out who the contract is between and the patent(s) in question before going into any more detail.

Consider this priority number one!

WHEREAS, Borberg assigned all his right, title and interest to the Patent and the Patent Rights to Dr. Hans Stock (“Stock”);

WHEREAS, Stock originally licensed any and all of his rights, title and interests to the Patent and the Patent Rights to the Licensee in an undocumented oral agreement;

WHEREAS, Stock executed a patent license and royalty agreement with Licensee as of August 6, 2004 and amended and restated that agreement as of the date hereof;

WHEREAS, Brunner executed a patent license and royalty agreement with a predecessor of the Licensee as of May 6, 2002 and amended and restated that agreement as of the date hereof;

WHEREAS, Brunner continues to desire to license any and all of his rights, title and interest to the Patent and the Patent Rights derived there from to Licensee, and

WHEREAS, Licensee continues to desire to obtain an exclusive license to all of Brunner’s interest in the Patent and the Patent Rights derived there from and to exclusively own the License to any and all of his rights, title, interests and ownership to the Patent and any and all related patents, rights and inventions that specifically relate to the Patent whether owned now or at any time in the future by Brunner (the “License”), and

WHEREAS, Brunner shall be eligible to receive any and all consideration and compensation from the Licensee, such as those pledged to be made by the Licensee to Brunner under the terms of this Agreement.

NOW THEREFORE, in consideration for guaranteed Advance Royalty Payments and Royalty Payments as described below, and other good and valuable consideration, the parties agree as follows:

This part of the license spells out some basic facts pertaining to the license, such as:
“The licensee (OccuLogix) will be obligated to make payments to him according to terms set forth later in the agreement”.

Consider this a basic framework of expectations, setting the table for more detailed requirements that come later in the contract.

2. License Grant. Brunner confirms that he has exclusively licensed, and does hereby continue to exclusively license, in accordance with the terms set forth below, unto Licensee, Brunner’s entire undivided right, title, ownership and interest in and to the Patent and the Patent Rights, throughout the Territory, to be held and enjoyed by Licensee the same as it would have been held and enjoyed by Brunner if this Patent License and Royalty Agreement had not been made and entered into. The exclusive license granted herein also includes an exclusive right for the Licensee to grant expressly or implicitly, directly or through its subsidiaries or affiliates, sublicenses to the Patent and the Patent Rights without the requirement to pay any additional royalty fee or sublicense fee to Brunner, to end users of the patented method including medical practitioners and medical clinics.

This is an area where not all patent licenses will say exactly the same thing: the specifying of what, exactly, are the rights being granted by the license. In this case, Professor Brunner is granting his “entire, undivided right, title, ownership and interest in and to the Patent and the Patent Rights, to be held and enjoyed by Licensee the same as it would have been held and enjoyed by Brunner if this Patent License and Royalty Agreement had not been made.” Not every patent license grants such a wide scope of rights, but this one does, and if you don’t want yours to, this is the place to make the statement.

5. Advance Royalty Payments. Licensee agrees to pay Brunner Fifty Thousand Dollars ($50,000 USD) annually as an advance and credited against any and all Royalty Payments paid in accordance with this Agreement. Such Advance Royalty Payments shall be non-refundable and be paid to Brunner and in equal payments of Twelve Thousand Five-hundred Dollars ($12,500 USD), made quarterly, on or before the expiration of Forty-five (45) days after the reporting close of each prior calendar quarter.

Advance royalty payments are spelled out in this section of the license. In this case, OccuLogix is paying Professor Brunner $50,000 each year as an advance in exchange for the patent license. This number is not set in stone and is completely negotiable between you and whomever you enter into a license with. Just remember that this is the place to specify whichever number you do agree on.

6. Royalty Payments. Licensee agrees to pay royalties to Brunner totaling One-Half Percent (0.5% in USD). Royalty Payments shall be non-refundable and be calculated and paid based upon Total Net Revenues that Licensee, or any subsidiary of licensee or any company affiliated with licensee receives from the bona fide commercial sales of its…

This is an extremely important part of the license: the specifying of the amount of royalties that are to be paid. This agreement calls for OccuLogix to pay Professor Brunner 0.5% of all income derived from the patent. Again, this is completely negotiable and subject to what you and your licensee agree on.

8. Accounting and Timing of Royalty Payments and of payments of Sublicense Fees. Upon making each Royalty and Sublicense Fee Payment, Licensee shall provide Brunner with a summary of the accounting used to determine the amount of Royalty Payment and Sublicense Fees due. Royalty Payments and Payments of Sublicense Fees shall be made by wire transfer and shall be computed on Total Net Revenues received by the Licensee by the reporting close of each calendar quarter and distributed and paid to Brunner and on a quarterly basis, on or before the expiration of Forty-five (45) days after the reporting close of each prior calendar quarter.

Another important clause shown above is the specifying of when and how often royalties are paid. In this case, royalties are to be paid by wire transfer and 45 days after the close of each prior calendar year. Decide on a schedule you and your licensee are comfortable with and simply modify this clause to reflect the agreement.

As you can see by reading the full sample license, many of these clauses are generic and can be easily changed to suit your own needs. You can assemble your own patent license just by going through this one and making your desired changes. (Of course, the more complex the deal is, the smarter it becomes to have a patent attorney give everything a once-over before you sign!)

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com

Although it’s not recommended to solely rely on the internet, there is a wealth of information readily available regarding patents. Of the many sites that offer information about patents, some are informative, and some are devious attempts to lure you into spending money. How can you spot a good patent information resource? And what should you beware of?

If the site ends in ‘.gov’, it is a government site and all information is factual. The following is a list of online reliable resources to find information on patent licensing:

1.      United States Patent Office Resources:

USPTO Website- This is your most valuable resource on the Internet, as you can trust it completely. They aren’t trying to sell you anything, and if you are diligent and willing to read through it all, it is a fine patent resource bible, if you will.

The government site is rather modern looking and full of graphics, but also features a text only version for those on dial up who need more speed in their searches or just want to cut to the quick and get straight to the heart of the matter.

Their search page, http://www.uspto.gov/main/profiles/acadres.htm offers several ways to look up patent information and find the answers you are looking for.

The site also features an excellent glossary of terms to help you decipher the legal jargon you are going to have to live with to get a patent for your invention.

In fact, their “Guides” page has a lighthearted page at http://www.uspto.gov/web/offices/ac/ahrpa/opa/kids/special/mumbo.htm which actual uses the term “Mumbo Jumbo” to help you understand the complicated stuff and take some of the wind out of the sails of the three piece suitability you will be running into when you deal with the legal folks. It helps take some of the mystery out of the process and we recommend it for anyone just getting into the patent game.

Also on the web, http://www.tms.org/pubs/journals/JOM/matters/matters-0203.html is an article titled “Using the United States Patent Office Website as a Research Resource,” by David V. Radack, which is like having your own tour guide of the US government site, and is excellent reading.

We could spend this whole article just talking about the USPTO, but let’s look at some other resources as well, to be fair.

2. The World Intellectual Property Organization (WIPO) Resources:

http://www.wipo.int/portal/index.html.en – The home site of the specialized agency established by the United Nations in 1967, and a visit here is recommended for those with international needs and questions.

3.      GOOGLE Resources:

http://www.google.com/patents – Individual patents are given as results to a search, displayed based on relevance to search terms.

The results of your searches on Google consist of seven key elements related to your patent search, which are Patent Title, Patent applications, Sorting options, U.S. Patent Number, Filing Date, Assignee name and a Patent snippet, which is “a snippet of text from the patent to show where the specific search terms were found.”

4.      LawInfo.com Resources:

http://resources.lawinfo.com/letters/frm_patentlicense.cfm?act=fill

This is a GREAT resource for people who already have a patent and need to create an “Exclusive Patent License Agreement.” The web site features an online form to fill out to grant the exclusive right of a licensee to use your registered patent.

If you have a patent on a revolutionary kitchen utensil that you want to exclusively license to a company, you would use this form to grant them the license to use your patent.

There ARE scams out there, and an excellent web page to visit to help determine if an offer to help is legitimate or not is: http://www.inventnet.com/scam.html. In general, the .org and .gov sites are the ones to be trusted the most, but you should also pay attention to legal firms who offer free advice on the web.

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com

Licensing your patent can be a great way to watch your product grow into a business and still be involved. Entrepreneurs are always looking for new concepts to start and grow a business around.

Here are the five steps in licensing a patent to an entrepreneur:

1.    Research the entrepreneurs in your market.

a.    Find out if there is an entrepreneurship group in your area.

b.    Post your patent onto websites, making them aware that it is available for purchase. (IdeaBuyer.com is one that I would use. They have several members that are well known entrepreneurs.)

c.    Look for start-up companies that could use your product.

d.    Go to meetings and network. Meet people, find out what they are working on and tell them what you are doing. When you create those contacts, they will keep you in mind for their next business venture.

2.    Send a briefing document to each entrepreneur.

a.    This will give them the information necessary for contacting you in the future.

b.    Use a document with brief information about your product and its market to create interest.

c.    It should be professional looking, and should present information in a short and concise manner.

d.    If they have not responded after 2-3 weeks, call them to remind them that you sent the information and ask if they would be interested in setting up a meeting to talk more about the product and the potential future they may have with it.

3.    Present your product to interested parties.

a.    Set up a meeting to present your materials to interested parties.

b.    A non-disclosure agreement should be signed before you tell them too much about your product.

c.    This is your pitch for a licensing deal. All of the benefits of entering into an agreement should be explained well.

4.    Negotiating the licensing agreement.

a.    You should already have an idea of what you are expecting as far as the terms of the agreement are concerned. (Royalties, length of the agreement, exclusive vs. non-exclusive, etc.)

b.    Keep in mind that the other party will want to have a say in the agreement also.

c.    By allowing them to have an equal part in creating the agreement, they will be more likely to uphold their end of the deal.

5.    Writing up the agreement.

a.    Try to avoid general terms to describe the stipulations. Instead of saying: “The licensee will do X to his/ her best efforts”, the clause should include milestones, “The licensee will do X by Y.”

b.    Set royalty requirements. For example, “The license can be revoked if X percent is not paid in royalties.” Explain how and when the royalties should be paid. Do not get greedy, the royalties need to be reasonable.

c.    Specify a length of the license that you are comfortable with.

d.    Decide on an exclusive or non-exclusive license. An exclusive license will grant the licensee the exclusive right to capitalize on the patent. Non-exclusive licenses allow the licensor to license that patent to someone else.

e.    After you have the agreement well written, take it to a lawyer for review. A patent attorney will be your best help.

Licensing your patent to an entrepreneur will give the product the opportunity to grow into a business, and you will get to be a part of it!

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com

If you have a patent or patent pending for your invention you should think about licensing your patent rights to a manufacturer. This allows you to collect a quarterly royalty. However, there are several things you need to consider and find answers to before you start contacting manufacturers.

First, locate manufacturers that make products like yours. You should compile a list of at least 20-100 manufacturers that answer the following questions:

• What manufacturers are already making products similar to yours?
• Which of these manufactures are looking to license patent rights?

Here are some ways that you can find manufacturers:

1. Go to stores.  See which manufacturers make similar products. For example, if your invention is a drill, go to Lowe’s and see who makes their drills that are like your own. Find information about the manufactures producing these drills and similar items.
2. Search for companies seeking new ideas.  The National Invention Fraud Center has a list of such companies that you can look at. Research which companies are interested in products like yours.
3. Visit Trade Shows.  These can be very helpful because they not only help you discover manufacturers that make similar products to yours, but can also give you ideas to improve your invention.  The Trade Show News Network is a great resource to find these.
4. Talk to local governmental agencies.  Local economic development agencies can help you locate regional manufacturers.
5. Look at magazine advertisements. Look at magazines that relate to your invention’s industry for advertisements by manufacturers. For instance, if your invention is related to cooking, look at food magazines and kitchen supply magazines.
6. Utilize free manufacturer databases. These can be found at your local library and online. The Thomas Register is an excellent resource to find manufacturers.

Once you have made your list, rank the manufactures in order of potential buyers of your patent rights. These will be the manufacturers you will want to focus on and contact first. Before contacting them, you need to research each of them. Find answers to these basic questions:

• Have they purchased other patent rights in the past?
• Who is their biggest customer, and would that customer be interested in your invention?
• What is the best way to reach the manufacturers?

Next, you should prepare a few marketing materials to present to them. First compose a marketing letter that is brief and professional explaining who you are, what your invention is and does, why you chose that particular manufacturer and that you are looking to license your patent rights. Make sure you tailor each letter to the specific manufacturer. One generic letter will not cut it. Wait one month and if the manufacturer has not contacted you, directly contact them via telephone to determine their interest.

Also include a professional looking brochure that is in color and one page in length. This should describe your invention and its benefits and provide a link to the product web site if you have one. If you do not have a brochure, drawings of your invention can be used as an alternative. You should attempt to have the manufacturer sign a Confidentiality Agreement before disclosing your full invention. You should speak with an attorney prior to sending these materials to a manufacturer.

After manufacturers express interest, you should higher an experienced reputable lawyer before discussing any numbers or details with the manufacturers. Have the lawyer draft a non-disclosure agreement for you.

When pitching to manufacturers, remember to include these items:

• What makes your invention unique from other similar products already out there
• How it benefits consumers
• Why customers (retailers and end users) will buy it
• Show proof that customers are already purchasing the product

If manufacturers want to license your patent rights, make sure you have a lawyer who has negotiated licensing agreements before and has been successful in doing so.

It is likely that you already know some manufacturers. Use these people to help you get your foot in the door. Once you do that, you just need to research them and pitch to them.

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com