Share on Facebook
Share on Twitter
Share on LinkedIn
By Richard Gearhart
Founding Partner

One of the most common ways an inventor can take advantage of their patent is through licensing. A license gives another rights to make, use or sell an invention. However, the patent holder retains ownership of the patent. A license is a bit like a renting a piece of real property. The owner still owns it, but lets another use it, usually for a profit. When it’s a real property license, the payment is called “rent”. If it’s a patent that’s being licensed, the property is called a “royalty”.

Licenses allow the inventor to share in the profits of the manufacturer or producer of the invention. Often, the license will be based on the number of units sold by the producer. This arrangement is advantageous for the producer, since the producer only pays the licensor based on the producer’s sales.

The license can take many different forms and can be tailored to the needs of the parties to the transaction. For example, the license can be exclusive or non-exclusive to the party receiving the license. If the license is exclusive, then only the party receiving the license can make, user or sell the invention, and nobody else. If the license is non-exclusive, then the owner of the patent can license it many different parties.

About the Author
Richard Gearhart, Esq. is the founder of Gearhart Law and the host of a weekly radio show for entrepreneurs called “Passage to Profit”. He has built a firm with an international presence that helps entrepreneurs from around the world with their patent, trademark and copyright needs. Richard commands a breadth of experience that comes from nearly 30 years of practice in the writing and prosecution of hundreds of patents, and in all aspects of Intellectual Property law. In 2022, Richard was recognized by ROI New Jersey as a 2022 ROI Influencer in the Law List category for being one of the best of the best in New Jersey for intellectual property law. Gearhart Law emerged from Richard’s passion for entrepreneurship and startups and his belief that entrepreneurship grows the economy and creates jobs. When we started Gearhart Law, our goal was to help and support the new business ventures of 500 entrepreneurs and inventors. After 12 years, the firm has far surpassed this goal; today, we look forward to helping even more inventors and entrepreneurs get off to a great start and reach their own goals.