PATENT LICENSE AGREEMENT
THIS AGREEMENT, effective this ___ day, of _________________
(month), _____ (year), is entered into by ________________________
(hereinafter “LICENSOR”) and ________________________ (hereinafter
WHEREAS, LICENSOR has designed and developed a
___________________________________ (hereinafter “INVENTION”).
WHEREAS, LICENSOR is the owner of all right, title and interest in a
United States Letter of Patent filed ______________ and issued _________ as
United States Patent Number ______________.
WHEREAS, LICENSOR desires to transfer to LICENSEE and LICENSEE desires to
acquire from LICENSOR an exclusive license to manufacture and market the
INVENTION covered by the patent rights in all other countries, territories and
jurisdictions on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, parties agree as follow:
SECTION 1. DEFINITIONS
GROSS SALES. “Gross Sales” shall mean the aggregate compensation the
LICENSEE, or its subsidiaries, receives for goods sold under the Patent Rights
without a reduction for taxes, transportation, returns, depreciation or other
CLOSING. “Closing” shall
occur when both LICENSOR and LICENSEE have applied their respective signatures
to this Agreement.
PATENT RIGHTS. “Patent
Rights” means the following listed patents and/or patent applications, patents
to be issued pursuant thereto, and all divisions, continuations, reissues,
substitutes, and extensions thereof:
(a) U.S. Application Serial
Date Filed: ______________
GRANT OF INVENTION AND PATENT RIGHTS
consideration for the up-front monies and royalty to be paid under Sections 3
and 4, LICENSOR grants to LICENSEE:
an exclusive, nontransferable license to manufacture and market the
INVENTION in the United States;
exclusive, nontransferable license to manufacture and market the INVENTION in
all foreign countries;
all rights under the Patent Rights; and
technology, trade secrets and know-how related to the design and manufacture of
the INVENTION, including all design plans, blueprints and any documentation or
software related thereto.
pay to LICENSOR on the date of Closing $__________ in United States funds.
The up-front monies are not to be considered part of the royalties due
under Section 4 of this Agreement.
LICENSEE shall pay LICENSOR a royalty payment based upon the Gross Sales of the
LICENSEE. Said royalty payment shall be calculated based upon ___% of the
Gross Sales of the LICENSEE with regard to the Invention.
TIMING OF ROYALTY PAYMENTS AND MINIMUM ROYALTY
QUARTERLY PAYMENTS. LICENSEE
shall pay LICENSOR a royalty for each quarter of each year during which this
Agreement is in effect. LICENSEE
shall pay LICENSOR quarterly, four times per year, on or before the 30th
day after January 1, April 1, July 1, and October 1 of each year during which
this Agreement is in effect.
PAYMENT. A minimum quarterly
royalty payment of $______ shall be paid each quarter.
REPORTS AND RECORDS
FINANCIAL STATEMENT. LICENSEE
shall provide a quarterly financial statement to LICENSOR showing the number of
units manufactured during each quarter when each quarterly royalty payment is
RECORDS. LICENSEE shall keep
records of the Gross Sales and number of units manufactured and sold pursuant to
this Agreement in sufficient detail to enable the royalty payment to LICENSOR to
ANNUAL INSPECTION. LICENSEE shall allow LICENSOR’s representative, one annual
inspection, during regular business hours or at such other times as may be
mutually agreeable, to inspect LICENSEE’s books and records to the extent
reasonably necessary to determine LICENSEE’s compliance with the terms of this
PENALTY. If the LICENSOR
determines through an annual inspection that the LICENSOR was undercompensated
as required by this Agreement, then the LICENSEE shall pay to the LICENSOR a
Penalty Fee. The Penalty Fee shall
comprise three times the difference between the actual compensation and the
required compensation. The LICENSEE shall still be obligated to pay full
compensation as required under the Agreement.
OBLIGATIONS OF LICENSOR
agrees with the LICENSEE to execute such documents and give such assistance as
the LICENSEE may reasonably require:
to defeat any challenge to the validity of, and resolve any questions
concerning the Patent Rights;
apply for and obtain patents or similar protection for the INVENTION in other
parts of the world at the LICENSEE’s expense;
to do all that is necessary to vest such protection in the LICENSEE;
inform the LICENSEE of all technical information concerning the INVENTION; and
to supply the LICENSEE with any documents or drawings relevant to the
REPRESENTATIONS AND WARRANTIES OF LICENSOR
LICENSOR represents and warrants to LICENSEE as follows:
LICENSOR is the sole and exclusive owner of the INVENTION and the Patent
Rights. No other parties have any
right or interest in or to the INVENTION nor to the Patent Rights;
rights to the INVENTION and the Patent Rights are free and clear of all liens,
claims, security interests and other encumbrances of any kind or nature;
The LICENSOR has not granted any licenses to use the INVENTION to any
has the right and power to enter into this Agreement, and has made no prior
transfer, sale or assignment of any part of the INVENTION, patent rights
pertaining to the INVENTION or the Patent Rights;
As of the date hereof and as of the Closing date, LICENSOR is not aware
of any parties infringing on the patent rights transferred hereunder;
LICENSOR is not aware that the INVENTION infringes upon any patent, but
LICENSOR does not otherwise warrant or guarantee the validity of the Patent
Rights or that the INVENTION does not infringe any valid and subsisting patent
or other rights not held by the LICENSOR; and
The INVENTION was not procured by the use of confidential information,
trade secrets, or in other respects in violation of law, and there is no action,
order or proceeding, to the LICENSOR’s knowledge, alleging any of the
Each of the warranties and representations set forth above shall be true
on and as of the date of Closing, as though such warranty and representation was
made as of such time. All warranties and representations shall survive closing.
INDEMNIFICATION. The LICENSEE agrees to indemnify the LICENSOR and his heirs
successors, assigns and legal representatives for liability incurred to persons
who are injured as a consequence of the use of any INVENTION manufactured by the
LICENSEE or as a consequence of any defects in the INVENTION.
ROYALTY. The LICENSEE agrees to pay
the above stated quarterly royalty without demand.
EFFORTS. The LICENSEE agrees to
utilize all reasonable efforts to manufacture and market the INVENTION.
STATEMENT. The LICENSEE agrees to
provide the financial statement at the end of each quarter without demand.
The LICENSEE agrees to the extent reasonably possible, have all
manufacturing, shipping, and sales performed in a professional and equitable
INSURANCE. The LICENSEE agrees to
maintain liability insurance to cover the INVENTION in an amount greater than or
equal to $1,000,000.
SECRETS. The LICENSEE agrees to
take all reasonable steps to maintain the confidentiality of all trade secrets
provided by the LICENSOR to the LICENSEE during and after this Agreement.
CONDITIONS TO CLOSING
obligation to pay the up-front monies and the royalty shall be subject to the
satisfaction on or before the Closing of the following conditions, any one or
more which may be waived by LICENSEE:
The warranties and representations made by the LICENSOR in this Agreement
shall be true and correct in all material respects on the Closing date as if
such warranties and representations had been given as of the Closing date.
shall have delivered to LICENSEE such instruments of transfer as may be
reasonably requested by LICENSEE to consummate the transactions contemplated
MARKING OF INVENTION
to affix patent pending and patent notices to all INVENTIONs prior to their sale
in accordance with 35 U.S.C. §282. Each
device shall have either the words “PATENT PENDING” or “Patent No.”
followed by the patent number conspicuously marked on each of the goods sold
under the Patent Rights subject to the reasonable approval of the LICENSOR.
DURATION AND TERMINATION
This Agreement shall remain in full force and effect unless and until
termination or cancellation as hereinafter provided.
If LICENSEE shall at any time default in rendering any of the statements
required hereunder, and payment of any monies due hereunder, or in fulfilling
any of the other material obligations hereof, and such default is not cured
within fifteen days after written notice is given by the LICENSOR to LICENSEE,
LICENSOR shall have the right to terminate this Agreement by giving written
notice of termination to LICENSEE. LICENSEE
shall have the right to cure any such default up to, but not after the written
notice of termination.
shall have the right to terminate this Agreement by giving written notice of
termination to LICENSEE in the event of any of the following:
liquidation of LICENSEE;
or bankruptcy of LICENSEE, whether voluntary or involuntary; or
appointment of a Trustee or Receiver for LICENSEE.
shall have the right to terminate this Agreement, by giving three months written
notice, if after the second year of this agreement the previous years total
royalty payment is lower than $________.
shall have the right to terminate this Agreement, by giving three months notice,
if all patent applications, continuation, continuation-in-part or divisional
applications, related to the INVENTION become abandoned without issuing into a
shall have the right to terminate this Agreement, by giving three months notice,
if a court of law determines all of the issued patents to be invalid.
MAINTENANCE FEES AND INFRINGEMENT COSTS
MAINTENANCE FEES. LICENSEE
shall be responsible for paying all maintenance fees for the Patent Rights until
DEFENDING AN INFRINGEMENT LAWSUIT. LICENSEE
shall be responsible for all expenses, including but not limited to legal fees,
associated with defending an infringement action involving the INVENTION.
LICENSEE also agrees to vigorously defend at its own expense any
invalidity actions brought against the Patent Rights.
BRINGING AN INFRINGEMENT LAWSUIT. LICENSEE
shall also be responsible for all expenses, including but not limited to legal
fees, associated with bringing an infringement action involving the Patent
Rights. LICENSEE agrees to initiate
and vigorously prosecute proceedings to the termination of any infringements on
the Patent Rights.
NOTIFICATION. LICENSEE and LICENSOR both agree to notify each other of
any legal action involving the Patent Rights or the INVENTION.
or claim arising out of or relating to this contract, or the breach thereof,
between the LICENSOR and the LICENSEE shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in a convenient location in ___________ (State). The judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof.
shall be governed in accordance with the substantive laws of the State of
__________ of the United States of America.
The parties agree that if any part, term, or provision of this Agreement
shall be found illegal or in conflict with any valid controlling law, the
validity of the remaining provisions shall not be affected thereby.
In the event the legality of any provision of this Agreement is brought
into question because of a decision by a court of competent jurisdiction,
LICENSOR, by written notice to LICENSEE, may revise the provision in question or
delete it entirely so as to comply with the decision of said court.
17. NOTICES UNDER THE AGREEMENT
purposes of all written communications and notices between the parties, their
addresses shall be:
LICENSEE: Attn: __________________________________
agree this Agreement imposes personal obligations on LICENSEE.
LICENSEE shall not assign any rights under this Agreement without the
written consent of LICENSOR. LICENSOR
may assign all rights hereunder.
sets forth all of the covenants, promises, agreements, conditions and
understandings between the parties and there are no covenants, promises,
agreements or conditions, either oral or written, between them other than herein
set forth. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon either party unless reduced in writing and signed by them.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers on the respective
dates hereinafter set forth.