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Can a Licensor assign a patent license agreement without Licensee approval?

Can a Licensor assign a patent license agreement without Licensee approval?

Full question:

If a patent license agreement has no stipulation or reference at all as to the Licensor's ability to transfer or assign the agreement, can the Licensor assign the agreement to a third party without the Licensee's approval and notification? Specifically, as an individual I hold a patent license agreement and I recently formed an LLC in which I am the sole owner. I would like to transfer or assign the patent license agreement to my LLC.

Category: Intellectual Property
Date: 04/07/2025
State: Florida

Answer:

A nonexclusive patent license generally cannot be transferred or assigned without the Licensor's consent. Federal patent law prohibits the holder of a nonexclusive license from assigning it to another party without the Licensor's approval. In the case of CFLC, 89 F.3d 679, the Ninth Circuit ruled that federal patent law applies under Section 365(c) of the Bankruptcy Code, which prevents such assignments without consent. Therefore, if you hold a nonexclusive patent license, you cannot assign it to your LLC without the Licensor's permission.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is a patent license agreement?

A patent license agreement is a legal contract where the patent holder (licensor) grants permission to another party (licensee) to use, make, sell, or distribute a patented invention. This agreement outlines the rights and obligations of both parties, including any royalties, duration of the license, and any restrictions on use. It can be exclusive, meaning only the licensee can use the patent, or nonexclusive, allowing multiple licensees to use the patent simultaneously.

What is the difference between assignable and transferable license?

An assignable license allows the licensee to transfer their rights to another party, while a transferable license refers to the ability to convey rights under the license to another entity. Generally, without the licensor's consent, neither type can be transferred or assigned, especially in nonexclusive licenses. Always check the specific terms of the license agreement to understand the rights involved.

What is a patent license covenant not to sue?

A patent license covenant not to sue is a provision in a license agreement where the licensor agrees not to initiate legal action against the licensee for using the patented invention. This protects the licensee from infringement claims as long as they comply with the terms of the license. It is a way to ensure that the licensee can use the patent without fear of legal repercussions.

Can you assign a license agreement?

Whether you can assign a license agreement depends on the terms of the agreement itself. Many agreements require the licensor's consent before a license can be assigned to another party. In the case of nonexclusive licenses, federal patent law typically prohibits assignments without the licensor's approval. Always review the specific terms and consult legal advice if needed.

What is the difference between transfer and reassign?

To transfer means to convey rights or ownership from one party to another, while to reassign typically refers to giving those rights back to the original party or to a new party. In the context of licenses, both actions often require the original licensor's consent, especially for nonexclusive licenses, to ensure compliance with the terms of the agreement.

What is the difference between assignable and transferable?

Assignable refers to the ability to transfer rights or interests in a contract to another party, while transferable generally means the ability to convey rights or ownership. In licensing, both terms imply that the original party must often seek consent from the licensor before making such changes, particularly in nonexclusive licenses.