This document sets forth a sample license agreement whereby the licensor grants an
exclusive license to make, use, sell, and lease specified licensed articles. As drafted,
the licensor warrants they it has title to the licensed patent rights pertaining to a filed
U.S. Patent Application. This form contains standard licensing provisions and can be
modified to reflect the needs of any company seeking to grant a license or of a company
seeking to obtain a license for certain intellectual property or products.
This agreement, which is to become effective _________, _________[date], is made between: _________, a
_________ corporation having a principal office at _________("Licensee"), and _________, residing in
_________(collectively called "Licensors"); and
Witnesseth that, in consideration of the mutual promises made in this agreement, the parties agree as follows:
Article 1 - Definitions
Certain terms used in this agreement shall be defined as follows:
Par 1(a). "Licensed patent rights" shall mean U.S. Patent Application Serial No. _________ for _________, filed
_________, _________[date], in the names of Licensors; any divisions or continuations in whole or in part thereof;
any U.S. or foreign patents or applications that are later added to this license; any patents issuing on any of such
applications; any reissues or extensions or reexaminations of any such patents; and any foreign patent or patent
application corresponding to any of the U.S. patents or patent applications included in the "licensed patent rights."
Par 1(b). "Licensed article" shall mean any article, whether consisting of one or more separate units, made, used or
marketed in any country, that is covered by any unexpired patent, or is covered by one or more claims of a pending
patent application, in that country, which patent or application is part of the "licensed patent rights."
Par 1(c). "Royalty base" shall mean the "net proceeds" of "licensed articles" marketed.
Par 1(d). "Net proceeds" shall mean the total amount of monies received by Licensee for "licensed articles" and not
subsequently refunded or credited, less the sum of the following deductions when applicable: cost of installation; all
taxes and duties paid by Licensee with reference to "licensed articles;" insurance, transportation and special
packaging paid by Licensee; and commissions and fees paid by Licensee to third parties, including but not limited to
manufacturers' representatives; but in any case the total of such deductions shall not exceed fifteen percent of the
total amount of monies received and not subsequently refunded or credited.
Par 1(e). "Subsidiary" shall mean any U.S. or foreign company, at least half the beneficial or controlling interest in
which belongs to another company at the time in question.
Par 1(f). "Competition" shall mean any device whatsoever marketed by a third party, which device is designed for
_________, whether or not such device infringes the "licensed patent rights."
Par 1(g). "_________ purchase order" shall mean a purchase order from a company that is franchised to operate a
Par 1(h). "Undiscounted licensed article" shall mean a "licensed article," the selling price of which is not lower than
the published base price for such articles.
Article 2 - License and Warranty
Par 2(a). Licensors hereby grant, and agree to grant, to Licensee and its "subsidiaries" a worldwide exclusive license
under the "licensed patent rights" to make, use, sell and lease "licensed articles." Subsequent references to Licensee
in this agreement shall apply also to its licensed "subsidiaries."
Par 2(b). Licensors warrant that they have title to the "licensed patent rights" and the right to enter into every term of
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Article 3 - Improvements and Methods
Licensors agree to tender in writing for incorporation into the "licensed patent rights" a like license under any U.S.
or foreign patents or patent applications now or hereafter owned or enjoyed by any or all of the Licensors that claim
any improvement in any invention disclosed in any patent or patent application included in the "licensed patent
rights," or any method or process for manufacturing any such invention. Licensee at its option may accept such
written tender by a written instrument mailed within six months after receipt of tender. Such additional licenses shall
be upon the same terms as this license and shall terminate upon any termination or cancellation of this agreement.
Article 4 - Foreign Filing
Par 4(a). Licensee at its option may file at its own expense in any country a patent application corresponding to any
U.S. patent application included in the "licensed patent rights," except that Licensors shall have the first option to
file such applications in _________; and they are not excluded from filing any patent application in any country
where Licensee elects not to file such application.
Par 4(b). Licensors on request shall promptly execute papers to enable Licensee to file foreign applications as
provided in this article.
Par 4(c). Once Licensee files at its own expense under Par 4(a), it shall thereafter have and retain control over the
resulting application, and any application that is a division or a continuation in whole or in part of that application,
any patent issuing on any such application, and any patent that is a reissue or extension of any such patent until the
expiration of the patent in question or the cancellation or termination of this license agreement, whichever occurs
Par 4(d). Licensee shall give Licensors thirty days written notice prior to abandonment of the maintenance or
prosecution of any foreign patent or application included in the "licensed patent rights," together with sufficient
information to enable Licensors to assume control over it within the notice period, and Licensors shall then be
entitled at their option to assume such control.
Article 5 - Lump Sum and Royalties
Par 5(a). Lump sum. Licensee shall pay to Licensors a lump sum of $_____, which shall not be creditable against
royalties earned on the marketing of "licensed articles." Payment of the lump sum shall be made in three equal
installments of $_____ each, the first to be paid upon the signing of this license agreement, the second to be paid
sixty days after the signing, and the third to be paid one hundred and twenty days after the signing; except that upon
receipt of the first "_________ purchase order" for "licensed articles" the entire balance of the lump sum still unpaid
at that time shall fall due immediately.
Par 5(b). Earned royalties. In addition to the lump sum payment mentioned in Par 5(a) of this agreement, Licensee
shall pay to Licensors, at the times specified in Par 5(g), an earned royalty equal to a percentage, specified in Par
5(e) or Par 5(f), of the "royalty base" of "licensed articles" marketed by Licensee for which payment has been
received. Such royalty shall be