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What are the models of patent licensing?

Release Time：

2022-09-07

A: Patent license is divided into exclusive license, exclusive license and general license, and there are sub-licenses and cross-licenses extended based on the above three ways, as well as special licenses stipulated in the Patent Law.

1. Exclusive license

Licensor can only allow one licensee to use the technology within a certain area and within the validity period of the contract at the same time.

The exclusive license generally occurs between the parent and subsidiary companies, and the patents are generally critical patents and basic patents. For example, of the 113 patents licensed and filed by BYD Company, 49 (43.36%) are licensed exclusively to Shenzhen BYD Auto Co., LTD., BYD Auto Industry Co., LTD., BYD Auto Co., LTD., Shaoguang BYD Industrial Co., LTD., and other affiliated companies.

2. Exclusive license

An exclusive license gives the licensee the right to use the technology within a certain territory and within the validity period of the contract. At the same time, the Licensee has no right to interfere with the Licensor's right to use the technology in a certain area and within the validity period of the contract. The cost of exclusive licensing is also higher, second only to exclusive licensing.

Enterprises often license part of their core patents to their subsidiaries through exclusive licensing, which is conducive to the sharing of technical resources. For example, in 2018, Chongqing Changan Automobile Co., Ltd. licensed 12 patents to Chongqing Changan New Energy Vehicle Technology Co., Ltd. through exclusive licensing, promoting resource sharing between the two sides and accelerating industrial development.

3. General permission

A general license means that the licensee grants a patent to the licensee within a certain territory and the duration of the contract, while reserving the right to implement the patent itself and enter into a license contract with others.

General license can choose more license objects, the license is flexible; The broader scope of implementation is conducive to obtaining more economic benefits, but also to accelerating technology diffusion and promoting industrial innovation. Chery Automobile Co., LTD., Chongqing Changan Automobile Co., LTD., Guangzhou Xiaopeng Automobile Technology Co., LTD., and BYD Co., LTD., have all licensed relevant patents under ordinary licenses.

4. Cross-licensing

Cross-licensing means that the parties to a transaction will license the right to use their own patents and proprietary technologies to each other, and they are technology suppliers and recipients of each other. Within the term and territory of the contract, both parties shall have the right to use the license rights of the other party and the right to produce and sell the products. The licensing rights of the parties may be exclusive or non-exclusive. Both parties have equal rights and generally do not need to pay royalties.

Cross-licensing is an effective way for enterprises to realize technology interoperability and joint development, prevent patent infringement and resolve patent disputes. For example, in 2021, Nokia entered into a multi-year, multi-technology patent cross-licensing agreement with Lenovo Group, ending six patent dispute cases since 2019.

5. Special permission

Open license

Updated in 2020 Patent law of China Article 50 Where the patentee voluntarily declares in writing to the patent administration department under The State Council that he is willing to license any entity or individual to exploit his patent and specifies the method and standard of payment of the license fee, the patent administration department under The State Council shall make a public announcement and implement the open license. Patent open license can make up for the disadvantages of high transaction cost, long transaction time and difficult access to information in the form of general license, exclusive license and exclusive license, and has the advantages of improving the efficiency of patent transaction, reducing the cost of patent transaction, breaking the "island" situation of patent transaction information, and achieving the balance between the legitimate interests of the patentee and the social public interest.

Compulsory license

Patent law of China Articles 53 to 63 specify a variety of circumstances regarding compulsory licensing, including the prevention of abuse, public interest needs, the manufacture and export of patented medicines, and the need for the exploitation of subordinate patents.

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