Under Indian IPR law, a patent is an exclusive right granted to an inventor, allowing them to prevent others from using their invention for about 20 years, as per the Patents Act, 1970. It’s like owning the recipe exclusively. On the other hand, a license is more like renting that recipe out; the patent owner lets someone else use it for a set time, often for royalty payments, without giving up ownership. Patents are protected under specific laws, with the 2005 amendment ensuring compliance with global standards. Sections 68 and 69 of the same Act say that licenses must be in writing and registered in order to be legal. The main difference is who owns the rights: patents give full rights to the inventor, while licenses give temporarily shared usage rights. This is very important for companies that are trying to decide whether to sell their invention outright or rent it out.
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Difference between Patent and License Under IPR Law
A patent is defined as an exclusive right granted to an inventor for a novel, non-obvious, and useful invention, allowing the owner to exclude others from making, using, selling or importing the invention without permission.
In India, this right is governed primarily by the Patents Act, 1970, amended in 2005 to align with the TRIPS agreement, ensuring compliance with international standards. The patent provides a legal shield for the invention, typically lasting 20 years from the filing date, protecting functional and technical aspects such as products or processes.
In contrast, a license is a contractual agreement where the patent owner, known as the licensor, grants permission to another party, the licensee, to make, use or sell the patented invention without transferring ownership.
This permission is temporary, often involving royalty payments and is not a permanent transfer of rights. Licensing is a mechanism to extract benefits from the patented invention while retaining ownership and it is particularly relevant in industries where collaboration or commercialization is desired.
Legal Framework and Requirements
The legal framework for patents in India is well-established under the Patents Act, 1970, which was first introduced in 1911 via the Indian Patent and Designs Act, 1911, and later superseded in 1972. The 2005 amendment, known as the Patents (Amendments) Act, 2005, extended product patent protection to all fields, including foods, drugs, chemicals, and micro-organisms, and repealed Exclusive Marketing Rights (EMRs) while introducing compulsory licensing provisions. These amendments ensure that patents meet global standards, particularly under the TRIPS agreement.
For licenses, the legal requirements are stringent in order to ensure validity and enforceability. Section 68 of the Patents Act, 1970 mandates that a patent license must be in writing and Section 69 of the Act requires registration with the Controller of Patents. This registration is crucial for legal recognition and to prevent disputes, as seen in case law such as PVR Pictures Limited vs. Studio, where the Delhi High Court clarified that a term sheet agreement does not constitute a license agreement which emphasizes the need for a binding document.
Licensing also falls under related IPR laws, such as the Trademarks Act and Designs Act, which may have additional registration requirements, though the Copyright Act does not mandate registration for licenses. Quality control is another aspect, particularly under trademark law, ensuring the licensor maintains standards to protect the reputation and goodwill of the IP, as highlighted in discussions on Indian Trademark law.
Read to learn more about the Registrar of Trademarks.
Key Features and Differences
The following points highlight that while patents are about exclusive rights and protection, licenses are about sharing usage under specific conditions, with legal formalities ensuring enforceability.
Definition
Patent: Exclusive right for a novel, non-obvious, useful invention.
License: Contractual permission to use a patented invention, without ownership transfer, often for royalties.
Duration
Patent: Patent life is typically 20 years from filing date (Patents Act, 1970).
License: Temporary, for a mutually agreed period, often shorter than patent term.
Ownership
Patent: Inventor retains full title and rights.
License: Licensor retains title; licensee has usage rights per agreement.
Transfer of Rights
Patent: Can be permanently assigned, transferring ownership (e.g., lump-sum payment).
License: Temporary permission, not ownership transfer, often involves royalties.
Legal Requirement for Writing
Patent: Not applicable, as it is a granted right.
License: Must be in writing (Section 68, Patents Act, 1970) and registered (Section 69).
Registration
Patent: Patent itself is registered, no additional registration for use.
License: Mandatory registration under Patents Act, Trademarks Act, Designs Act; Copyright Act exempt.
Read about What is a Trade Secret?
Practical Implications and Case Law
The distinction between patents and licenses is critical in practice, especially when deciding whether to assign (sell) the patent or license its use. Patent assignment involves a permanent transfer, often for a lump-sum payment, whereas licensing involves ongoing royalty payments, reflecting a revenue-sharing model.
Deshmukh and Co. (Publishers) Pvt. Ltd. vs. Avinash Vishnu Khandekar & Ors. (2005, Bombay High Court)
Facts:
Plaintiff claimed exclusive copyright over 14 books by V.S. Khandekar via a 1973 agreement.
Defendants (author’s heirs and a publisher) argued the agreement was a conditional license to publish, not a copyright transfer.
Plaintiff alleged breach, sought injunction and damages; defendants cited unpaid royalties.
Prior rulings excluded 12 books and one additional book from plaintiff’s claims.
Judgement:
The court ruled the 1973 agreement was a license, not a copyright transfer.
Plaintiff’s failure to meet license terms (e.g., royalties) invalidated exclusive rights.
A license permits limited use of intellectual property (copyright here); a patent grants exclusive rights to an invention, irrelevant here.
Plaintiff’s claims for injunction and damages were dismissed; copyright remained with heirs.
Royalty rates for licensing can vary from 0.1 to 25 percent, depending on the industry and invention. This flexibility allows patentees to tailor agreements to market needs but it also requires careful drafting to avoid being mistaken for an assignment.
In compulsory licensing, the government or a third party can use the patented invention without the patent holder's consent under certain conditions such as public interest or non-working of the patent. This is a form of licensing but is distinct from voluntary licensing agreements, adding complexity to the landscape.
Summary
A patent grants inventors exclusive rights to a novel, non-obvious invention for 20 years which helps in preventing unauthorized use. A license allows a third party to use the patented invention without transferring ownership, requiring a written and registered agreement (Sections 68, 69). Unlike permanent assignment, licensing is temporary, often involving royalties. The 2005 amendment aligned patents with TRIPS, covering pharmaceuticals. Licensing fosters collaboration and monetization while patents ensure innovation protection. Compulsory licensing addresses public needs. Both are vital for balancing innovation and commercialization in India’s IPR framework as seen in cases like PVR Pictures Ltd. v. Studio 18 (2009).
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Difference between Patent And License: FAQs
Q1. What is the difference between a patent and a license?
A patent grants exclusive rights to an invention; a license allows another party to use it without transferring ownership.
Q2. What are patents and licenses?
Patents are legal rights protecting inventions for 20 years. Licenses are agreements permitting use of the patented invention for a fee or royalty.
Q3. What is the difference between patent license and assignment?
A license temporarily permits use of a patent; an assignment permanently transfers ownership, often for a lump-sum payment.
Q4. What is patenting and licensing?
Patenting is obtaining exclusive rights for an invention. Licensing is granting permission to use the patented invention under agreed terms.
Q5. What is called a patent?
A patent is a legal right granted to an inventor, protecting a novel, non-obvious, and useful invention for 20 years.
