Monetizing a Patent Through Licensing: From Valuation to Term Sheet

74 questions on monetizing a patent through licensing, answered and cited by the UpLaw editorial team.

• Can a licensee challenge the validity of the patent it licensed?
• Can a patent owner collect royalties after the patent expires?
• Did Kimble v. Marvel change the Brulotte rule?
• Does an owner really need an audit clause if the licensee is trustworthy?
• Has the government ever exercised Bayh-Dole march-in rights?
• How can a licensor respond to Lear and MedImmune in drafting?
• How can deal structure bridge honest disagreement between licensor and licensee?
• How does apportionment work for a software method inside a larger appliance?
• How does exhaustion shape where in the supply chain a licensor should license?
• How does information asymmetry cut in a licensing negotiation?
• How does standard-essentiality change a patent owner's freedom?
• How does territoriality limit the universe of licensing targets?
• How do existing licenses affect a merger or acquisition?
• How do most real deals layer the payment structures?
• How do running royalties work and what rates are typical?
• How do you tell whether anyone actually wants the technology?
• How is apportionment connected to patent misuse?
• How precisely should a grant clause enumerate rights?
• How should a licensor choose between exclusive and non-exclusive?
• How should a licensor read its own claims?
• How should an audit clause be structured?
• How should a term sheet handle term, termination, and post-expiration payments?
• How should improvements and grant-backs be handled?
• Is the 25 percent rule still usable?
• Must a licensee breach the license before suing to invalidate the patent?
• Should a royalty ever be a percentage of the whole product price?
• What are the Georgia-Pacific factors, organized as a negotiation checklist?
• What are the lawful workarounds to the post-expiration royalty bar?
• What does an exclusive license buy, and what does it cost the licensor?
• What does a patent actually give its owner, and why isn't that enough?
• What does apportionment require of a royalty?
• What does a term sheet earn its keep by doing?
• What does a well-built license produce, and what can a badly built one do?
• What does preparation for a licensing negotiation actually consist of?
• What does the Bayh-Dole Act require of university licensing?
• What does the cost approach to patent valuation tell you?
• What does the financial-terms section of a model term sheet look like?
• What happens if a license is silent on sublicensing?
• What happens if licensed products are not marked with the patent number?
• What happens in the conversion from term sheet to definitive agreement?
• What hybrid grants let a licensor multiply value from one patent?
• What is a sole license?
• What is patent exhaustion?
• What is patent misuse, and why is it worse than losing a contract term?
• What is royalty stacking, and how do parties address it?
• What is the hypothetical negotiation, and why should a licensor who never plans to sue care?
• What is the income approach, and how does it translate for licensing?
• What is the most expensive error in patent licensing?
• What is the smallest salable patent-practicing unit, and is it a safe harbor?
• What ongoing work does a licensor owe after signing?
• What representations will a licensor give, and which will it refuse?
• What should the deliverable of a patent valuation be?
• What should the license-grant provision of a term sheet nail down?
• What special issues do cross-licenses and patent pools raise?
• What two different indemnities travel under one heading in a patent license?
• When does a lump-sum payment make sense?
• When does anchoring help and when does it backfire?
• When should a licensor walk away from a deal?
• Where do milestone payments dominate, and why?
• Which parts of a "non-binding" term sheet are meant to bind?
• Which pools of counterparties are worth canvassing?
• Why are most-favored-licensee clauses harder than they look?
• Why does apportionment doctrine matter to a deal that may never see a courtroom?
• Why does bankruptcy deserve its own clause in a patent license?
• Why does remaining patent term belong in triage rather than in valuation?
• Why does the prospect of an invalidity fight affect what a patent is worth?
• Why do minimum annual royalties pull double duty?
• Why do seasoned licensors build with willing licensees before approaching infringers?
• Why is a bare "best efforts" clause a weak diligence tool?
• Why is a non-exclusive license functionally a covenant not to sue?
• Why is "net sales" a term that does real work?
• Why is the market approach to patent valuation so hard to use?
• Why is the royalty base more dangerous than the royalty rate?
• Why should the three valuation approaches be run together?