Licensing is a contract between a minimum of 2 parties wherein the licensor agrees to allow the licensee to share the rights enjoyed by the former subject to consideration by the latter. In an intellectual property license, the licensee is permitted to use the intellectual property, however it is subject to conditions and payment of consideration.

A patent may be transferred by the patentee to another person in the following ways:

  1. by License
  2. by Assignment and ,
  3. by Transmission of patent by operation of law

The patent is entitled to give license of right for making use of the patent to any person in accordance with the procedure prescribed in the patent act and rules. The Patents Act allows a patentee to grant a License by the way of agreement under section 70 of the Act. A patentee by the way of granting a license may permit a licensee to make, use, or exercise the invention. A license granted is not valid unless it is in writing.

There are two types of licenses:

  1. 1. compulsory license
  2. 2. license of right

Let us know more about the types of license:

(A) compulsory license:-

Under section 84 of the Indian Patents Act 1970, any person can make an application for grant of a compulsory license for a patent after three years, from the date of grant of that patent.

Whenever the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price, any   person who is interested may take, an application to the controller, at any time after the expiration of three years from the date of sealing, praying for the grant of a compulsory license to work the patented invention.

The controller may grant a compulsory license while considering the following-

  1. Nature of the invention and the measures already taken by the patentee or any license to make full use of the invention.
  2. Ability of the applicant to work the invention to the public advantage and,
  3. Capacity of the applicant to undertake the risk in providing capital and working the invention.

The power to grant a compulsory license is exercised in case of public need. If the patentee or his license fails to produce the patented article within the period of three years, the controller is empowered to issue license on public need. Any person including a licensee and the central government may make an application for compulsory license.

  1. license of right:

License of Right Proposal means the patent proprietor can request for making an entry in the Register of Patents maintained by Patent Office that the Patent is available for license. Thereupon, interested parties can apply for getting license under the Patents of their interest which are endorsed with ‘License of Right’ in the Register of Patents.

If the controller is satisfied that the patented invention has not been satisfied or that the patented invention is not available to the public at a reasonable price, he may make an order that the patent be endorsed with the words “license of right”. Such an endorsement may be made only in the interest of public at large.

 Where a patent has been endorsed with the words “license of right”, after expiry of 3 years any person who is interested in working the patented invention in India may require the patentee to grant him a license for the purpose on such terms as may be mutually agreed upon. The controller also may decide the terms on which the licensee shall be granted by the patentee. Patents deemed to be endorsed with the” license of right”:-

Under section 87 of the act, there is non obstante clause which provides that certain patents of greater public use are deemed to be endorsed with the words of “license of right”.

The patents with greater public use which were mentioned at the commencement of this act in respect of inventions are:-

(I) Substances used or capable of being used as food or medicine or drug,

(II) The methods or processes for the manufacture or production of the food or medicine or drug and,

(III)The methods or processes for the manufacture or production of chemical substances including alloys, optical glass, semiconductors and inter-metallic compounds.

License of Rights in Patents seems a good opportunity for Patentees to license their patented inventions for commercialization. The Patentees too benefit as they get rebate in renewal fee for registering their Patents to be endorsed with ‘License of Rights’. Such provision can help Patentees to license their invention easily and to a good mass to make benefit out-of Patents.

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Contributed by Shivalika Pratap Chauhan and Shreya Marwaha