License your Patent

A licence is a contract whereby the owner of the patent gives permission to a licensee to use that patent. Choosing to license your patent to another party can be a very effective way to exploit your patent, particularly if you do not have the resources or experience to develop and market your product or service.

A licensing arrangement is a common method of commercially exploiting all forms of intellectual property (IP), not just patents. Trademarks, registered designs, copyright material and any associated knowhow can all be licensed. Deciding to license your patent gives the licensee the right to use (but not own) the IP. The owner of the patent will usually receive payments in the form of royalties. Royalties are typically paid over the tenure of the patent, such as the maximum 20 year term.

The decision to license your patent(s) may extend to all aspects of commercialisation, from developing it in respect of the manufacturing processes, to mass manufacturing products and marketing, promoting and selling those products.

Should you license your patent exclusively or non-exclusively?

• Licensees often require an exclusive patent licence agreement.
• Non-exclusive patent licence agreements allow licensors to license IP to competitors (decreasing the commercial value of the licence to the licensees).

Should you license your patent with manufacturing control?

• For new inventors, it is often easiest for the licensee to handle manufacturing of the product.

Should you license your patent overseas?

• A patent can be licensed to different parties in different countries.
• Sales based royalty rates and manufacturing based royalty rates can be defined for each country or region.

Should you license your patent on a per unit royalty basis

• The financial terms of a patent licence agreement are varied and can be arranged as:
  1. an upfront licence fee;
  2. a once-only or per unit royalty; or
  3. a combination of 1 and 2.
• Other financial terms are possible.

Links to Helpful Sites

• Baxter IP Patent Attorneys Sydney — information about licensing.
• Baxter IP — the international website of Baxter IP, Patent Attorneys.
• Commercialisation Australia — an Australian Government initiative that assists researchers, entrepreneurs and innovative companies to convert ideas into successful commercial ventures.
• Austrade — Austrade is an online Australian government agency that assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
• ausinvent — ausinvent is the NSW Government's online Innovation Advisory Service, offering services and programs designed to assist inventors and innovators develop their bright ideas.
• Ideas2Market — Ideas2Market is an online initiative of the Queensland Government’s Department of Tourism, Regional Development and Industry, establishing a small business program delivered by the AIC to assist entrepreneurs and small business owners to take their ideas to market.
• IP Australia Commercialisation Strategies Factsheet — a page outlining the various commercialisation strategies available.
• business.gov.au — an online government service providing essential information on planning, starting and running your business.
• Commercialisation Australia — Commercialisation Australia is an Australian Government initiative that assists researchers, entrepreneurs and innovative companies to convert ideas into successful commercial ventures.
• Patent Search Online — service for discovering whether your idea is patentable
• Patent Attorney Directory — current information on main Australian patent attorney firms

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