What are common license terms for intellectual property?

There are two main types of licenses:

  • Exclusive: Only the licensee obtains the specified patent rights. For example, only one person can practice the patented product—the exclusive licensee. That right may be divided up among several parties in complimentary ways. For example, one party could have the exclusive right to sell east of the Mississippi, while another party can have the exclusive right to sell west of the Mississippi. There are plenty of other ways to divide up exclusivity, such as between different product lines or industries.
  • Non-exclusive: the patent owner can license the same thing to multiple parties.

Common license terms include:

  • Compensation to patentee, such as royalty rate (e.g., a percentage of revenues), timing of payment of royalty rate
  • Minimum annual royalty
  • Length of license
  • Obligations of the parties to enforce patent in the event of an infringement
  • Sub-licensing rights
  • Termination events
  • Reimbursement of past costs for preparation and prosecution of the patent (common in academic licenses)


Steven Saunders is an Intellectual Property Attorney at the Boston-based law firm, Nutter. Steven can be reached at ssaunders@nutter.com.

For more information about Steven, See Steven’s Martin Trust Center Biography at: https://entrepreneurship.mit.edu/profile/steven-saunders/

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