We often receive a question about whether you can license out a patent that has not yet been granted, in other words, can you license a patent application?
The process of obtaining a patent can be lengthy, spanning several years from the initial filing of the patent application to the grant of the patent. However, inventors often seek opportunities to license their pending patent applications, even before they are granted. Licensing a pending patent application involves granting permission to another party to use the invention described in the application, subject to certain terms and conditions. In this blog, we will explore the reasons why inventors may choose to license their pending patent applications and discuss the pros and cons associated with such a decision.
Licensing
Through licensing, inventors can share their innovative solutions with companies that have the resources and expertise to bring the technology to market effectively. This mutually beneficial arrangement allows the licensee to access valuable technology and potentially gain a competitive edge, while the inventor can benefit from the licensee’s commercialization capabilities and market reach.
Generating Revenue
One of the primary motivations for licensing a pending patent application is the opportunity to generate revenue while waiting for the patent to be granted. This is particularly advantageous for inventors operating in fast-moving technology fields where they need to keep pace with rapid technological advancements. By licensing the pending patent application, inventors can monetize their invention early on and use the revenue to fund further research and development, protect intellectual property, or invest in marketing and commercialization efforts.
Technology Transfer
Licensing a pending patent application often goes hand in hand with technology transfer. When a patent application is licensed, it provides an opportunity for the transfer of valuable technology to the licensee. This transfer allows the licensee not only to utilize the existing patent application but also to make modifications, file follow-up applications, and further develop the technology.
By licensing the patent application, the inventor enables the licensee to leverage the potential of the invention and incorporate it into their own products or services. This process drives innovation, enhances competitiveness, and expands market opportunities for the licensee. Additionally, the licensee’s commercialization capabilities and market reach can bring added value to the technology.
At the same time, the inventor benefits from this technology transfer through the licensee’s expertise, resources, and potential improvements to the technology. It creates a collaborative environment where both parties can mutually engage in the transfer of knowledge and expertise, leading to the growth and enhancement of the invention.
Considerations When Licensing a Pending Patent Application
While there are potential benefits to licensing a pending patent application, it is crucial to carefully evaluate the associated considerations and potential downsides.
Risk of Patent Non-Grant
One significant risk of licensing a pending patent application is the possibility that the patent may not be granted at all. The patent application may face rejections based on prior art or lack of novelty, leading to a denial of the patent. In such cases, the licensee may have invested resources and time into a technology that is not protected by a granted patent. Therefore, both the licensor and the licensee must assess the strength of the patent application and the likelihood of a successful grant before entering into a licensing agreement.
Uncertainty of Future Prosecution Costs
The process of prosecuting a patent application incurs costs, such as attorney fees and other related expenses. Licensing a pending patent application introduces uncertainty regarding future prosecution costs, making it challenging for the licensee to budget and plan accordingly. The licensee must carefully assess the potential costs involved and negotiate suitable terms to mitigate the financial risks associated with the patent prosecution process.
Useful Know-How not Included in the Application
A patent application may only disclose a portion of the useful know-how related to the invention. In some cases, the inventor may possess additional valuable information that is not explicitly included in the patent application. The licensee may be willing to pay a royalty fee based on this additional know-how, recognizing its potential value in enhancing their understanding of the technology or improving their implementation of the invention. Therefore, the licensor should consider the relevance and value of the undisclosed know-how to determine an appropriate royalty fee.
Type of Invention and Licensing Potential
The type of invention can influence the licensing potential of a pending patent application. Certain inventions with a wide range of potential applications or those deemed high-value are more likely to attract licensees. Licensees are typically interested in inventions that align with their business strategies and have significant market potential. Conversely, inventions with limited applicability or niche markets may face challenges in attracting potential licensees. The licensor should consider the commercial appeal and market demand for their invention to gauge the likelihood of successful licensing.
Relationship Between Licensing and Technology Transfer
Licensing a pending patent application can facilitate technology transfer from the inventor to the licensee. This transfer of technology enables the licensee to leverage the invention’s potential and incorporate it into their products, services, or processes. It can foster innovation, drive competitiveness, and expand market opportunities. Furthermore, licensing provides a framework for the exchange of technical expertise and collaborative development, benefiting both parties involved.
Conclusion
Licensing a pending patent application involves various considerations for both inventors and potential licensees. While it offers opportunities to generate revenue and transfer technology, there are also risks and challenges involved. The licensor must assess the strength of the patent application, the potential value of additional know-how, and the market demand for the invention. Meanwhile, the licensee should evaluate the risks associated with the non-grant of the patent, uncertainties in future prosecution costs, and the compatibility of the technology with their business goals. By carefully weighing these factors, both parties can make informed decisions regarding licensing pending patent applications, maximizing their chances of success in the dynamic landscape of innovation and intellectual property.