A patent license is normally granted by the patent owner to another party allowing the party to use, make, offer for sale or import the specific invention. What the patent license really does is to protect the licensee against being sued by the licensor for exploitation of the patent. As such the patent license is very specific regarding the rights that the licensee will have and the terms and conditions to be met by both parties.
The patent license thus doesn’t confer ownership to the licensee, just certain rights. It can be exclusive or non-exclusive and can be limited to a specific geographical location. The patent license must be in writing to be valid. Patent licenses are frequently granted to manufacturers where the inventors do not have the resources and capacity to produce the invention in mass. It should be noted that a government can force a patentee to grant a license to the government or appointed companies while the holder still receives income by means of royalties.
When it comes to an exclusive patent license, the licensee obtains full usage rights to the invention. As such the licensor agrees not to grant any licenses for the same to other parties in a specific region, for a particular product or for a predetermined timeframe. For this type of patent license, the licensee will have to agree to specific terms such as the production of the invention within a specific time frame and may also be limited by means of a clause stipulating that no sub-licensing may take place. When having to decide upon the type of patent licensing that one wants to do, the expertise of patent lawyers will come in handy. The patent lawyers are familiar with the various pitfalls and what to include in a patent license agreement.