Definition
Licensing is an agreement in which a patent owner grants another party the right to use the patented invention, typically in return for royalties or fees.
Why It Matters Legally
Licensing turns a patent into revenue without selling it and can resolve disputes without litigation. The terms, such as exclusivity and royalty rate, determine how much value the owner captures.
Example Use Case
A university licenses its patented technology to a manufacturer in exchange for ongoing royalties on every product sold.
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Related Terms
Royalty, License Agreement, Assignee, Patent Pool, Cross-License