Operating Licence Agreement

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Introduction

The permission to use an invention such as an industrial process used to produce a result or a product takes the form of a license to use. This type of license differs from the manufacturing license (see document H04.300 of the Business Precedents), of which the main purpose is the creation of a product instead of the use of a process, in several points, notwithstanding the fact that the ultimate purpose of both types of licenses is usually the same.

The following document provides the legal, financial and technical framework of the operation by which a patentee allows others to use its patented process, and takes into accounts the specific issues relating to this type of license.

Description

The License to Use Agreement is the legal instrument by which a person called the PATENTEE, who succeeded in developping a new process to produce a result or a product, authorizes another person, called the USER, to use it for purposes of specific applications within a specific territory and in return of a payment (royalty).

Use

The license to use an industrial process is usually part of a contractual framework including, on one hand, the construction of an industrial facility and, on the other hand, the grant of a right to use the process to be used in the industrial facility.

The contractual framework can vary considerably depending on the number of operations required (i.e. setting up a joint venture, execution of a construction agreement for the installation, contracting for procurement, etc…) to establish the physical infrastructure required for these operations. The license to use is the final step of this contractual framework as it gives the entire setup its true economic value.

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