Who needs this? Pharma, chemical and technology companies licensing patents or know‑how from universities, start‑ups or competitors. When? Before the term sheet is signed — diligence findings should shape the deal terms.
The checklist
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01
Verify ownership and chain of title. Check USPTO assignment records and inventor assignment agreements for every patent.
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02
Look for prior licenses and encumbrances. Existing licenses, security interests, government rights (Bayh‑Dole) or options can limit what you receive.
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03
Confirm status and term. Maintenance fees paid, expiration dates, terminal disclaimers and any extensions.
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04
Assess claim scope against your product. Make sure the licensed claims actually cover what you plan to sell.
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05
Evaluate validity risk. Know the prior art and file history before paying for rights that may not hold up.
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06
Check freedom to operate. A license to one patent doesn't clear third‑party patents.
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07
Define the grant precisely. Field of use, territory, exclusivity, sublicensing and improvements.
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08
Structure royalties carefully. Define "net sales," royalty step‑downs on expiration, combination products and know‑how royalties.
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09
Allocate enforcement and defense. Who sues, who controls, who pays, and who keeps recoveries — and whether you will need the licensor to join.
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10
Address prosecution control. Who prosecutes continuations and responds to office actions, and your right to comment.
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11
Review warranties, indemnities and liability caps.
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12
Negotiate termination and its consequences. Milestone triggers, cure periods, and what happens to sublicenses and inventory.
Common mistakes
- Relying on the licensor's patent list without checking assignment records.
- Undefined "net sales" or combination‑product terms that spark royalty disputes.
- Ambiguous termination triggers (see the Federal Circuit's September 2026 TexasLDPC v. Broadcom decision).
Frequently Asked Questions
Q: What is the most important item in patent license due diligence?
A: Confirming the licensor actually owns (or controls) the patents — clean chain of title and no conflicting licenses — because no contract term can grant rights the licensor doesn't have.
Q: Who controls enforcement of a licensed patent?
A: It depends on the agreement. Exclusive licensees with "all substantial rights" may sue alone; otherwise the patent owner usually must join. Spell this out in the license.
Negotiating a license or tech‑transfer deal?
Contact Green, Griffith & Associates for IP due diligence and agreement drafting.