Contractual & Other Licences
The owner of a patent may grant a licence permitting the patent to be used by third parties on the conditions specified. The terms and conditions of the licence will specify what the licensor may or may not do. The licence or should be patent holder is entitled to grant the rights. The right should be amongst those held by the patent holder.
This article does not relate to contractual licences (by agreement) but to licences that may be required to be granted under certain circumstances. Broadly speaking, they relate to circumstances where the patent holder chooses to make licences available or where a third party is unable to get a licence on reasonable terms and can invoke certain rights to obtain a compulsory licence.
Licences as of Right
The owner of a patent may grant a licence permitting the patent to be used by third parties on the conditions as are specified. The patent owner may apply for an entry on the register that licences are to be available as of right.
The Controller must be satisfied that the application does not preclude such licences. The application must be served on other licensees or persons having a mortgage or interest. There are reduced renewal fees.
Where the above entry is made, any person may obtain a license on terms agreed upon or in default of agreement, to be settled by the controller. An appeal may be taken against the terms.
An existing contractual licensee may apply for licences as of right if a licence of right is entered on the Register. A person who is the subject of infringement proceedings may apply for a licence. This does not constitute an admission of the validity of the patent.
Reduced renewal fees apply during a licence of right period. The owner may cancel the license and pay the renewal fees, which would otherwise have been payable. The controller must be satisfied there are no existing licenses. Otherwise, their consent must be obtained.
The Controller must be satisfied that the application does not preclude such licences. The application must be served on other licensees or persons having mortgage or interest.
Where the above entry is made, any person may obtain a license on terms be agreed or in default of agreement, to be settled by the Controller. An appeal may be taken against the terms.
The applicant may offer to enter a licence on terms settled by the Controller if it is unsuccessful in resisting the infringement. The application to settle the licence may be made by the patent holder, licensee, or person seeking a licence.
The controller determines the terms of the licences and reasonable remuneration for the use of the invention. This will seek to recompense research, development and other costs, together with a profit/reward element. A comparison may be made with existing licences given by agreement between others. The Controller may look at the likely profits and make a fair apportionment.
A compulsory license may be granted if the patent holder is not meeting the demand for the invention either by manufacturing in Ireland or importation from a World Trade Organisation country. The person seeking the compulsory license must first approach the patent holder, seeking a licence on reasonable terms.
A licence may be sought once three years have passed since the first publication of the patent. The application may be for a licence under the patent or for an entry to the effect that licenses are to be available as of right.
It is required that the invention, though capable of being commercially worked, is not being worked or worked to the fullest extent that is reasonably practicable. A further ground is that there is a failure to meet demand on reasonable terms or by doing so only by importation other than from a WTO member.
The demand is public demand for the product or process. Demand on reasonable terms means that which exists under current conditions. The demand must be at a reasonable price.
The failure might result in an export market not being supplied, the working of another substantial invention being prevented or hindered or the establishment of commercial or industrial activities in Ireland being unfairly prejudiced. The unfair prejudice against the establishment or development of commercial activities in the State is further ground.
Terms of Licence
The Controller determines the terms of the compulsory license. The licence must be non-exclusive. It may only be assigned with the consent of the controller and as part of the assignment of the enterprise or goodwill which uses the invention.
The primary purpose of the licence is for domestic demand. However, the provisions must be exercised in a manner which is consistent with EU law.
The level of remuneration is determined by the Controller. The Controller must take account of certain matters including
- the nature of the invention,
- how long the patent has been granted,
- measures taken by the patentee or licensee to make full use of the invention;
- the ability of the licensee to exploit the patent to the public advantage;
- risks to be taken by the licensee in providing capital and exploiting the patent.
The Controller need not take account of matters arising after the compulsory license. A licensee under compulsory license may sue for infringement in the same way as a licence.
In order to seek a licence fee, the applicant must show a prima facie case. The application is served on the patent holder and other interested parties on the register. It is advertised in the Official Journal.
Within three months, it may be opposed by the patentee or others with an interest. An arbitrator may be appointed. This will be appropriate if particular investigations or technical practice arising.
The State (through the Government or a Minister) may acquire rights to an invention or application and can exploit the right where this is determined to be necessary. In emergency situations, the state may exercise power to use a patent for any purpose which appears necessary.
These include ensuring the preservation of the State, maintenance of life supplies, and public safety. The terms of the licence are to be determined in default of agreement.
The following contract clauses are void in patent licences and assignments.
- a prohibition of or limitation on the use of a product supplied by or if the patent is opposed by anyone other than the supplier or licensor is prohibited,
- a requirement to purchase from the patent holder or his nominee is prohibited.
The above conditions can be validly included if the licensee or purchaser has the option of accepting the contract on reasonable terms without such conditions relieving himself from his liability to comply with the conditions on giving the other party three months’ notice and on payment of compensation or royalty.