What is a patent license?

Patents can be thought as a “bundle of rights.” An issued patent carries with it a number of exclusive rights, each of which can be divided up individually from the others – removed from the bundle like one of many pick-up sticks and given to another. A patent owner can therefore prevent anyone from making, using, or selling the invention in a way that contravenes their patent rights. And, reciprocally, the patent owner can grant a person an exception by giving them a license. Thus, a patent owner can license, say, the exclusive right to use an invention to Person A, the exclusive right to make an invention in the Southwest to Person B, and the exclusive right to sell an invention for 3 years to Person C. The license essentially says, “I won’t sue you for doing this….”

The bundle can be divided in an enormous number of ways. Generally, though, the license is limited in scope, geography, or time. A license that purports to transfer all the rights in a patent for the life of the patent is really an assignment.