PATENT LICENSE NEGOTIATION: BEST PRACTICES

PATENT LICENSE NEGOTIATION: BEST PRACTICES

1. PREPARING TO NEGOTIATE

   • The Team. The deal team will conduct due diligence and negotiate the license.
   • Initial Team MeetingIn In preparing for the negotiation, the deal team should identify, assess and prioritize the interests of their client
   • The Term Sheet typically covers the major issues in a potential deal in outline form, including: thelicensed product or process.
   • Deadlines. is important because it forces the other party to reveal its true intentions and interests in the licensing agreement.
   • Drafting the contract.The drafting party may be the licensor or the licensee.

2. THE NEGOTIATION

   • Valuation approache: the cost method, the market method, and the income method.
   • Developmental stage of invention.: But high fees and royalties can compromise the future market success of the licensed technology
   • Exclusivity and field of use: It is more advantageous for licensors to grant multiple non-exclusive licenses
   • Payment terms. There are several forms of payment that licensing parties can negotiate to compensate the licensor for the patented technology.
   • Rights to improvements. A licensee will want the right to use any variation of the technology claimed in the patent