Home > Topics > Technology and Product Licensing > Field-of-Use Licensing > Editor's Summary, Implications and Best Practices

When licensing complex technologies, the licensor usually can partition patent rights based on time (duration of license grant), location (where rights may be practiced), and field-of-use. This chapter explains and clarifies the last of these three considerations. By partitioning a bundle of patent rights and distributing them to one or more licensees, field-of-use licensing maximizes value, optimizes delivery, and facilitates the most effective use new technologies, whether in agriculture, biotechnology, pharmaceuticals, vaccines, or diagnostics.

This chapter describes how, with field-of-use licensing, the licensor gains greater control, while at the same time maximizing the use and value of the technology. There is, however, a tradeoff: field-of-use licensing requires more work. The technology licensor should identify, motivate, negotiate with, and manage more than one licensee—and quite possibly many. Nonetheless, this hard work can increase royalty streams to the licensor, since multiple licensees, each with different and specialized access to the technology, can efficiently accelerate different types of products to market.

When using field-of-use licensing, a licensor should be flexible. For example, even if a licensor envisions only one possible field-of-use for an invention, it makes sense to specifically limit a licensee to just that field. This is because technology changes so rapidly that a new use for the invention has a very good chance of developing later during the life of the patent. By limiting licensees to a particular field, a licensor retains the ability to work with the best possible licensee(s) for a new use when it arises.

In field-of-use licensing, technologies should be defined so that the rights to be partitioned in the licenses can be ascertained. After all, a field-of-use license grants rights to practice only a subset of the uses of the licensed technology, not all of them. For example, if a university’s Biochemistry Department were to isolate, sequence, and express the protein product of a new gene, this is more than one technology. It could easily lead to at least nine separate commercial uses:

1. Selling the protein product to the research reagent market
2. Making and selling antibodies directed against the protein to the research reagent market
3. Making and selling antibody-based diagnostic products
4. Making and selling DNA-based diagnostic products
5. Performing DNA-based diagnostic tests as a service
6. Making and selling the protein as a therapeutic product (this may be further focused by disease if the gene is involved in multiple disease states)
7. Using the gene and protein in-house to screen pharmaceutical drug candidates
8. Using the gene in gene therapy
9. Using the gene to develop an antisense therapeutic

The licensor should technically understand and define the product, and then reduce this to several, or possibly many, available field-of-use licensing opportunities. Once the possible fields of use are clearly defined, the next step is to market the technology to companies serving one or more of the markets those fields represent. By optimally partitioning patent rights to multiple companies, development will be accelerated and value maximized.

The chapter offers several pragmatic approaches to field-of-use licensing, along with valuable, practical examples that illustrate the types of licensing clauses that can be implemented:

1. The field-of-use can be limited in the grant clause of the agreement by adding a phrase that delineates the field. Note that the language can define both what is included in the field and what is excluded.
2. The field-of-use can be limited in the license agreement by establishing “Field” or “Field-of-use” as a term articulated in the “Definitions” section of the agreement.
3. The field-of-use can be limited in the license agreement by the granting of rights to specific patent claims or to specific applications within a family of patent applications. For example:
   • By issued claims - when an issued patent exists and is referenced in the “Definitions” section under patent rights, this approach is straightforward—the licensor determines the issued claims that are required for the field-of-use and refers to them by number in the “Definitions” or the “Grant.”
   • By patent application – when a distinct invention associated with the field-of-use is uniquely contained within one or more patent applications from a family of applications which otherwise cover broader uses of the technology outside of the intended field-of-use, the field-of-use can be limited by inclusion of only certain patent applications in the grant.
   • By restricting future rights – the grant can be for a specific patent application only and not for future rights that may be added during subsequent prosecution; for example, a continuation-in-part, adding new subject matter to the application, would fall outside of the license grant.

The chapter recommends that the licensor retain control over patent prosecution, while seeking to fairly distribute costs over field-of-use licensees. When considering the reimbursement, the field-of-use licensor should manage patent expenses creatively. For example, the licensor can cover patent expenses up front, later reimbursing them from the royalty stream, or, if costs are to be reimbursed by the licensees, language can be used to include future licensees in that reimbursement.

Field-of-use licensing also raises patent infringement/interference questions. As with patent costs, the simplest approach is for the licensor to carry interference and infringement costs alone, recovering them through royalties or settlements. This approach retains more control for the licensor, and correspondingly less for the licensees. Another approach to address possible infringement and interference actions would be to work out a mechanism to share the costs and management of these activities with one or more licensees.

Possible problems with field-of-use licensing include overlapping rights between licenses. This can arise from different interpretations of the rights granted under licenses or from unexpected future technical developments. It is therefore wise to lay the groundwork for resolving disputes related to these types of potential issues.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Field-of-use licensing will enables universities and national research institutions to maximize the public use and the return on R&D investments. This is because field-of-use licensing rationally manages technology licensing.
• Along with investing in the nation’s R&D infrastructure, it is also critical to invest in both human and institutional capacity building in licensing, technology transfer, and IP management. A complete set of skills is critical for developing new technologies and realizing their maximum potential.
• Hence, when considering investments in the nation’s R&D infrastructure, remember that licensing is an essential component that also should be supported.

For Senior Management (university president, R&D manager, etc)

• Field-of-use licensing will be critically important for maximizing the full potential of R&D conducted in an institution. Therefore, support the technology transfer office with continued financial backing and opportunities for ongoing education, training, and capacity building.
• This is an investment in the future of your institution. Field-of-use licensing is a very sophisticated approach to licensing, requiring significant expertise and resources, but the potential benefits are substantial. As R&D moves more and more towards commercial applications, greater attention to intellectual property, technology transfer, licensing, and sound business strategies will be required.

For Scientists

• Field-of-use licensing will maximize the value of the R&D efforts of you and your staff. It will also accelerate commercial applications of the fruits of your research. Depending on how agreements are drafted, this might feed back to your program, possibly generating additional support.
• Your role in field-of-use licensing will be to assist the technology transfer office in dissecting technologies of interest into their several, or perhaps many, licensable components. You should assist the licensing officers with understanding how, where, and with whom the best commercial applications can be realized. Your input will be absolutely essential.

For Technology Transfer Officers

• Field-of-use licensing will be critical to the success of your office. Complex technologies arising out of your institution will require equally complex licensing strategies in order to realize their maximum potential value. Therefore, you will need to coordinate activities, educate staff and scientists, and identify and cultivate licensing opportunities.
• A large part of your job will be investing in communication that will foster and build licensing networks. Practically speaking, you will need to interface with your R&D scientists, commercial operations, and the business sector. This will help you identify not only all of a new technology’s potential licensable applications but also who will be best positioned to commercialize them as licensees.
• As for education, your office should continually build capacity, because field-of-use licensing is a very sophisticated interface between technology management, commercialization, patent law, and creative licensing.
• Maintain solid relationships with your R&D personnel. They are absolutely indispensable for providing critical information about how technology can be segmented into commercially viable units, each of which can then be a partitioned patent right in a field-of-use license.
• Field of use licensing should be a central consideration fro every license your institution negotiates and grants. Even if only one use for a licensable technology is readily apparent, still specifically draft and execute licenses limiting rights granted to that field of use. Otherwise, potentially unforeseen (and valuable) future applications, that may arise later, will be lost in an earlier blanket license.