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IP-Academy

Patent Licensing

Author: Danielle Carvey

Once a patent is granted, it is the high time to finally make and sell your invention. However, patents are not always filed by corporations with unlimited resources that can invest in making, selling and what is also important - marketing. For independent inventors, licensing their patent is a good option for commercialisation.

By way of licensing, patent owners allow others to make, use or sell the patented product and receive royalties, i.e. fixed or otherwise set payments. The term, territory and conditions of such relationship are defined in the agreement between the licensor and the licensee. It is important to find a licensee that will be able to mass-produce your invention and take care of promotion because the amount of royalties often depends on the income received by the licensee.

Licensing in itself can be a very profitable business, especially if the patented invention is in high demand. The best example is the technology of wireless charging. Invented and patented by NuCurrent, once a start-up from the US, wireless charging technology is now used by Apple and Motorola that pay millions of dollars in royalties to NuCurrent. Another famous patent licensor is IBM Corp. that receives a great part of its revenue in the form of royalties paid by Amazon, Google, LinkedIn and Twitter.

All in all, don’t be afraid to use your patent to the fullest! Feel free to contact us for assistance.

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A major element of reform and cooperation in the field of intellectual property came in the form of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which was implemented by the World Trade Organization (WTO) in January of 1995.

The TRIPS Agreement is applicable to all jurisdictions which are a party to the WTO, and among a variety of IP related provisions, the Agreement obligates all WTO member states to provide the possibility of patent protection in relation to pharmaceutical and agricultural chemical inventions.

At the time the TRIPS Agreement was enforced, however, the national legislation of some developing countries of the WTO did not allow for the filing of patent applications in relation to agrochemical or pharmaceutical inventions. As a result, the WTO afforded these countries a transitional period of up to 10 years to implement compatible national legislation that would provide for such patent protection, concluding on January 1, 2005. It was from this allowance that the concept of a “mailbox patent” was born.

The WTO obliged the countries which were allowed to delay implementing domestic law in line with the TRIPS Agreement to still accept patent applications from January 1, 1995, despite the fact that a decision on whether to grant patent protection did not need to be made until the end of the 10 year period. This afforded patent applicants the opportunity to still meet the patentability requirement of novelty by securing a filing date in such countries.

This obligation was extended for the Least Developed Countries (LDC's) following requests from several jurisdictions, and the time period for implementation of provisions to allow for the granting of such patents has subsequently been extended until July 1, 2034.

The term "mailbox" patent was coined in light of this obligation, as any patent applications pertaining to agrochemical or pharmaceutical inventions were stored in a metaphorical mailbox once filed until relevant national legislation was implemented and the applications could be assessed.

A second obligation was also required of the member states which opted to utilize the transitionary period, in that if a pharmaceutical or agrochemical product was allowed to be marketed during said period, the country had to provide the applicant with exclusive marketing rights for the product for either five years, or until a decision on the grant of the patent was made, whichever was shorter.

Brazil is one example of a country in which mailbox patents were introduced, with TRIPS Agreement compatible national law eventually being implemented on May 14, 1997. Other countries including Argentina, Cuba, Egypt, India, Kuwait, Morocco, Pakistan, Paraguay, Tunisia, Turkey, United Arab Emirates and Uruguay also notified the WTO that they intended to make use of the transition period for mailbox patents.

Industrial design protection is widely utilised across the globe, with a registered design right preventing others from appropriating or imitating the appearance of a product. However, the obtainment of a design right, alongside a certificate of registration, is often not the final step of design protection.

Once granted, it is important to ensure that a design right is maintained in each jurisdiction in which the owner utilises the design. In order to uphold and maintain such rights, many countries require the filing of a request for design renewal and the payment of annuity/renewal fees.

The renewal process varies between countries and even between regional IP systems. As an example, some of the largest IP offices worldwide include the US, South Korea and China, and they all have different procedures in relation to the renewal of design rights and annuities.

In South Korea, for example, the validity term for an industrial design right consists of 20 years counted from the date of filing. The legislation in the country outlines that once the right has been granted, the registration fee for an industrial design should be paid within 3 months from receipt of the Notice of Allowance.

The registration fee in South Korea is inclusive of the payment for the first 3 years of the design right lifecycle, meaning that further annuity payments should be made in respect of the 4th years onwards. The payment of each annuity fee thereafter is due prior to the anniversary of the registration date for each respective year.

Whilst it is recommended that the payment of an annuity fee is made within the prescribed time, a grace period of 6 months exists in South Korea, allowing for the late payment of said fee when accompanied by payment of a surcharge.

In China, industrial designs with a filing date on or after June 1, 2021 are in force for 15 years from the date of filing, whilst those with a filing date occurring on or before May 31, 2021 are in force for 10 years from the date of filing.

Once granted, the official grant fee should be paid within two months from the date of receipt of the notification to grant a certificate, however, unlike South Korea, this fee is not inclusive of the first annuity. Instead, the first renewal payment, as well as a stamp tax for the design certificate in China, are to be paid separately upon registration of a design.

Further annual fees are to be paid in advance, during the month preceding the anniversary of the filing date. Late payment is possible within a six-month grace period by paying a corresponding surcharge.

In the US, design patents with an application filing date occurring on or after May 13, 2015 are valid for 15 years from the date of issuance, whilst those filed prior to May 13, 2015 have a term of 14 years from the date of issuance.

Unlike the aforementioned countries, as well as many other jurisdictions, design patents in the US are not subject to maintenance fees or annuities.

For those who wish to file for and obtain design rights in multiple jurisdictions, international and regional systems exist which allow applicants to obtain protection in several countries in an often more efficient and cost effective way than filing in individual states separately. As with each jurisdiction, these design right systems possess their own procedures for renewal fees and payment.

An industrial design right applied for via the Hague System, for example, has the same effect in each designated state as it would if it were filed directly in that jurisdiction. They are valid for an initial period of five years from the date of the international registration, which is defined as the date of filing of the international application.

International industrial design rights may be renewed for two initial further 5-year periods, prolonging the validity term for up to 15 years. Thereafter, a right can be renewed up to the limit of years prescribed in the national or regional law of each designated state in which the design is granted. The WIPO will remind the right holder to renew a design six months prior to the due date of the renewal.

A Community Design is a design right registered via the regional system of the European Union Intellectual Property Office (EUIPO). Once a community design has been granted, it is valid for a period of 5 years counted from the date of filing.

It is possible for rights owners to renew the design a further four times for periods of 5 years respectively, meaning a EUIPO registered community design can be valid for a full term of 25 years in total.

The renewal fees are due during the last 6 months of any given 5 year protection period, and late renewal is possible within a six-month grace period by paying a corresponding surcharge.

Industrial designs filed and granted through the African Regional Intellectual Property Organization (ARIPO) have a validity term of 10 years from the filing date. The annuity fees are due on each anniversary of the filing date and are payable in respect of each designated state. They can also be paid within 6 months after the due date on the condition that the corresponding surcharge is paid.

As industrial design renewal procedures are subject to variation from country to country, applicants should take note of any annuity payment deadlines and fees in each jurisdiction they wish to maintain design rights. If you require advice on the renewal of design rights, or simply further information, please contact us.

What’s priority right?

Priority right, which is activated by the first filing, shows that you’ve been the first to apply for an invention, industrial design or trademark. To make use of it, you need to claim your priority right when filing abroad.

What’s the time limit for claiming priority?

Applicants have “twelve months for patents and utility models, and six months for industrial designs and trademarks” (Paris Convention, Art.4) from the filing date of the initial application to take further actions.

Why shall I claim priority?

The Patent Office will decide on the novelty of your invention (check out our post on novelty) based on the priority date. If you filed without priority, all the information that became known in the world (including your first application, if published) would be a part of the state of the art, and your invention would no longer be considered new or novel.

All in all, priority claim preserves the rights of the applicants who want to obtain protection for their intellectual property in more than one country.

Today, we again discuss the three “pillars” of patent law and explore industrial application or applicability, which is one of the patentability requirements. The invention is considered to be industrially applicable if subject matter experts can reproduce and make use of it based on their general knowledge.

The definition is more or less the same in many European countries: the possibility to be “made or used in any kind of industry, including agriculture” (Art. 57, the EPC).

Until recently, interpretation of the industrial application was limited to what is stated above, but in 2005 the Boards of Appeal of the EPO ruled that the requirement of industrial application is only fulfilled if there is commercial benefit from the practical application of the invention.

Fun fact: this requirement excludes a range of absurd inventions from being considered as patentable. For example, if an invention contradicts the laws of physics, it cannot be industrially applicable and is, therefore, not patentable.