FAQ
Licensing
Clients frequently ask us the following questions on the subject of licensing:
1.
What are standard royalty fees?
This question cannot be answered in general terms. Royalty fees can be determined in various ways. They are usually agreed upon as a percentage proportion (royalty rate) of a reference value (typically turnover).
If the licence relates to the protected object as a whole (for example an electrical switch), then the reference value can be, for example, the net turnover for this object. However, if only a part of the licensed object is protected on its own (for example just an electrical switch on a coffee machine), then a specific percentage of the net turnover for the licensed object as a whole can be selected as the reference value.
The level of royalty rates depends firstly on the reference value but secondly also to a considerable extent on the technical field. The spectrum goes from royalty rates of, for example, 0.8% for semiconductor diodes up to (sometimes well) over 10% for products in the pharmaceuticals and cosmetics industries.
There is also the further possibility of fixing a one-off payment (for instance when the agreement is entered into). This can make it unnecessary for invoices to be presented every year. However, since in many cases the development of the market cannot be predicted, the level of such a one-off payment is difficult to estimate.
There are hardly any limitations relating to individual payment arrangements. We are happy to advise you on this. Please get in touch with us.
2.
Do we have to wait until our patent has been granted before we can grant licences?
No; licences can be granted before a patent is granted or even before the publication of the underlying patent application. In these cases it is still not possible to predict whether a patent will be granted and what will ultimately be protected. Thus, lower royalty rates often have to be agreed for the period prior to grant. As an alternative, it could also be agreed that the royalty fees are paid subject to the condition that a patent is subsequently granted, and that if it is not they are repaid at least in part.
We are happy to advise you as to whether it is worthwhile to award or acquire a licence before a patent has been granted in your specific circumstances.
3.
We unfortunately had to acquire a licence from a competitor over one of its European patents. We have now found out by chance that an opposition has been filed against the patent. Could that have any effect on the licence?
Yes. The final revocation of a patent means that there is no longer any right of prohibition. Thus, the obligation to pay royalty fees disappears when the patent is revoked.
The final revocation of a patent even has retrospective effect. However, it is generally the case that the repayment of royalty payments that have already been made is excluded. Nevertheless, a provision which departs from this can of course also be made in a licensing agreement.
Irrespective of this, attention should be given to licences over knowhow, which are often awarded together with a licence over a patent. The knowhow can, for example, be communicated by way of training sessions or else by the handing over of documents. Depending on how the agreement is structured, it is possible that, although the patent may be revoked or expires because of non-payment of the annual fees, the recipient is nevertheless not entitled to use the knowledge acquired in the training sessions without the payment of further royalty fees.
We are happy to advise you about these and other pitfalls in licensing agreements.
4.
We have obtained a licence over a patent from a competitor. Now, we want the licensed product to be manufactured and marketed by one of our subsidiaries. Is this possible?
That depends on the way in which the individual agreement is structured and on the applicable law. In any event, you should not automatically assume that a licence applies in each case to all companies in the group.
We would be happy to review your agreement in this regard. Please get in touch with us.
5.
A competitor’s patent protects various types of construction of a machine. We would like to manufacture and market one of these forms of construction ourselves; the other forms of construction do not interest us. Is it possible just to obtain a licence for a part of the patent?
Yes, it is also possible for the subject-matter of the licence to be agreed substantially freely between the parties. However, from the point of view of the licensee it is important to define this subject-matter precisely. In particular, modifications to an extent to be defined should also be covered by the licence.
We would be happy to prepare an individual licensing agreement for you. Please get in touch with us.
Do you have any more questions?
Please get in touch with us:
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Telephone: |
+41 (0)71 913 95 55 |
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Fax: |
+41 (0)71 913 95 56 |
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