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   Licensing before national phase entry
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   Author  Topic: Licensing before national phase entry  (Read 1347 times)
sans
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Licensing before national phase entry
« on: Mar 19th, 2007, 11:28pm »
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For an invention in a PCT  published application, which has been licensed, before national phase entry
 
1. Is it required to keep the licensee as a co-applicant for the patent during the national phase...?
 
2. Will the licensee infringe if he start manufacturing and selling the product of the invention, before the grant of patent
 
3. Is it required to submit the license agreement to the Patent Office, during filing the national phase application..?
 
4. Will the licensee share the official and attorney fees in respect of the application made
 
thanks in advance
 
sans
 
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Wiscagent
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Re: Licensing before national phase entry
« Reply #1 on: Mar 20th, 2007, 5:55am »
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1)  Generally a licensee is NOT a co-applicant on a patent application.  Whether or not the licensee would be a co-applicant on various related patent applications would depend on the language of the licensing agreement and local and national laws.
 
2)  What would the licensee be infringing if there is no patent granted?
 
3)  In the US, no.
 
4)  It depends on the terms of the license agreement.  But in many scenarios it would be advantageous to the licensee for the patent to NOT be granted; in that situation it would a peculiar clause in the licensing agreement to have the licensee pay for legal services against their self interest.
« Last Edit: Mar 20th, 2007, 6:00am by Wiscagent » IP Logged

Richard Tanzer
Patent Agent
sans
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Re: Licensing before national phase entry
« Reply #2 on: Mar 20th, 2007, 11:25am »
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Thanks. If I understand what you say, the license assumes significance only after the grant of patent, am I right? Then why would anyone get a license before grant..?
 
Regards
 
Sans
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Wiscagent
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Re: Licensing before national phase entry
« Reply #3 on: Mar 20th, 2007, 3:54pm »
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".. why would anyone get a license before grant..? "
 
A couple of reasons:
 - There may be other business reasons, unrelated to patents.  For example, a fast food franchise includes rights to use trademarks, access to training, equipment, and supplies.  There may also be a license to practice already granted patents and pending patents.  The value of the license to use the pending patents would probably be a very small factor in the value of the franchise.
 - Purchasing a license to practice a pending patent can make sense to both the licensee and the licensor.  The licensee gets some early income, and the licensor may be able to lock-in a low-cost license.  Depending on whether or not the patent grants, the license could end up being worthless, or quite valuable.
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Richard Tanzer
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JimIvey
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  jamesdivey  
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Re: Licensing before national phase entry
« Reply #4 on: Mar 22nd, 2007, 9:45am »
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on Mar 20th, 2007, 11:25am, sans wrote:
why would anyone get a license before grant..?

Suppose the licensee perceives the most value in the license if it's exclusive and knows competitors are considering taking an exclusive license.  Would you wait and let your competitor take an exclusive license during pendency?  Then, when the patent issues, there's no license available.
 
In addition, prior to issuance, there's more risk associated with the IP relative to after issuance.  So, the price would presumably be lower.  You could lock in a lower rate if you buy (a license) during the period of greater uncertainty.
 
Of course, it depends largely on the IP itself.  If the ultimate value is obvious, it may be apparent that licensing rights will no longer be available for purchase at the time the patent ultimately issues.  So, you can pretty much forget about waiting that long as an option.
 
Lastly, suppose a large licensee would like to have enforceable rights outside the US (or whereever the application starts).  Taking a licensee early -- exclusive or even an outright assignment or just exclusive in certain region -- allows the licensee/assignee to possibility to control prosecution in foreign jurisdictions.  My thinking is that a small entity applicant might not file abroad unless the licensee/assignee is willing to fund it.
 
While I like that theory, I have yet to see any potential licensee/assignees take that issue seriously.
 
My general perception of dealing with the business community with respect to patents and patent applications is that the business community really hasn't the foggiest idea what they're about and how to evaluate them.  You might as well be selling a handful of magic beans.
 
Regards.
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James D. Ivey
Law Offices of James D. Ivey
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