Patent License

A patent license is a contractual grant by the patent owner (licensor) to another party (licensee) of the right to make, use, sell, offer to sell, or import the patented invention — rights that would otherwise infringe the patent under 35 U.S.C. § 271. A license is NOT a transfer of ownership — the patent owner retains title and can license the same patent to others (unless the license is exclusive). The licensee receives a covenant not to sue for using the licensed technology within the scope of the license. Patent licenses can be limited by time, geography, field of use, or any combination of these dimensions.

An EXCLUSIVE license grants the licensee the sole right to practice the patent within the licensed scope — the licensor agrees not to license others (and typically not to practice the patent itself in that scope). An exclusive licensee has standing to sue infringers in its own name without joining the patent owner (WiAV Solutions v. Motorola, Fed. Cir. 2010), because its exclusive rights are being infringed. A NON-EXCLUSIVE license grants rights to practice the patent but does not prevent the licensor from granting identical rights to competitors. A non-exclusive licensee generally cannot sue infringers without the patent owner's participation (lacks standing as a plaintiff). Non-exclusive licenses are common for technology platforms, open standards, and cross-licensing arrangements.

A field-of-use restriction limits the license to a specific application, market, or type of use — for example, 'licensed for use only in medical devices' or 'licensed for use in automotive applications only.' Using the patented technology outside the licensed field is infringement, even under a valid license. Patent Exhaustion does NOT apply to uses outside the licensed field — the Supreme Court in Mallinckrodt, Inc. v. Medipart, Inc. (Fed. Cir. 1992) upheld field-of-use and single-use restrictions on licensed products. However, in Quanta Computer v. LG Electronics (S.Ct. 2008), the Court held that an authorized sale of a product that substantially embodies the patent exhausts patent rights regardless of downstream notice conditions placed on the buyer.

Only if the license expressly grants sublicensing rights. The default rule is that a licensee may NOT sublicense without the patent owner's express authorization — a license is a personal right, not a property right that can be transferred. If the license is silent on sublicensing, no sublicensing right exists. Exclusive licensees may be granted the right to sublicense as part of the deal — this is a key negotiating point that significantly increases the license's value. Sublicense agreements are typically subject to the same terms as the original license, and the sublicensor's license must remain valid for the sublicense to be valid.

A PATENT ASSIGNMENT is a transfer of ownership — the assignee receives title to the patent, the assignor retains no rights (unless retained by contract). An assignment must be in writing to be valid under 35 U.S.C. § 261. A PATENT LICENSE is a grant of permission to use — the licensor retains ownership. Key practical differences: (1) Standing — assignee has full standing to sue infringers; exclusive licensee has standing; non-exclusive licensee generally lacks standing to sue alone; (2) Recordation — assignments should be recorded with the USPTO within 3 months under § 261 to be effective against subsequent purchasers; licenses do not require recordation but can be recorded; (3) Bankruptcy — in licensor bankruptcy, a license may be rejected as an executory contract (licensee loses rights) unless protected under 11 U.S.C. § 365(n) — an assignment survives bankruptcy since title transferred.