How can a patent owner license an invention to another company?

A patent owner can license an invention to another company by exercising their legal right to authorize others to make, use, or sell the patented technology. Because a patent is recognized as a species of personal property, the patentee holds the exclusive right to control the invention's exploitation.1

When an inventor lacks the necessary capital or manufacturing facilities, they may choose to license these rights to a third party. Through a license agreement, the patent owner grants the other company permission to utilize the invention in exchange for compensation, which is frequently structured as a royalty—a payment typically based on the actual extent of the invention's commercial use.21

In some jurisdictions, if a patentee refuses to commercialize or license their invention, they may be legally compelled to "work" the technology by licensing it to others. Additionally, in cases where companies use patents to form anti-competitive monopolies, government-led antitrust actions may force the patent holder to issue licenses.1