Introduction
This page explains the consequences of a UK patent (whether  owned by you or someone else) being endorsed “licences of right”.  This also applies to UK patents which have been obtained via a European patent application.

General
For some patents, the proprietor may choose to have the official register marked (or “endorsed”) “licences of right”. This means that, if anyone wants a licence under the patent, the proprietor must give them one. This will be an ordinary, commercial licence, on terms agreed between the proprietor and the licensee.  However, if they cannot agree terms, the matter can be referred to the UK Intellectual Property Office, who will then decide on fair licence terms.

If you have your patent endorsed “licences of right”
If you have your patent endorsed “licences of right”, the renewal fees are only half what they would be otherwise.This is the main advantage to you. Such an endorsement may also help to attract licensees by indicating your willingness to grant a licence.

procedure:

If you have a patent which you wish to have endorsed “licences of right”, it is necessary to apply to the UK Intellectual Property Office. The UK Intellectual Property Office then checks that there is no obvious reason why this should not be done (primarily that you have not already given someone an exclusive licence). If there are no problems, the Register is duly marked. Once this has been effected, future UK Intellectual Property Office renewal fees on the patent are reduced by half. In most cases, our service charge is also reduced.

If you apply to have the register of a patent marked “licences of right”, it takes at least ten days for this to be done. Therefore it is sensible to apply at least a month before a renewal fee is due, to ensure that the fee will be payable at the lower rate. The cost (approximately £90 plus VAT per patent) of the procedure of getting the endorsement made is such that there will certainly not be any saving in the first year. But if the entry remains in force for many years there can be appreciable savings.

If someone else’s patent is endorsed “licences of right”
You may approach the proprietor of a patent marked “licences of  right” for a licence. The terms (e.g. royalty rate, duration, etc.) of the licence are subject to the usual commercial negotiation, but may be decided by the UK Intellectual Property Office if agreement cannot be reached.

Other information
1)  If a patent is endorsed “licences of right” and the proprietor wishes to cancel the endorsement, this can only be done if any existing licensees agree. If the endorsement is cancelled, all of the savings that have been made on the half-rate renewal fees must be repaid.

2) One of the consequences of having a “licences of right” endorsement on the Register is that a defendant to proceedings for infringement (otherwise than by importation of an article from a country outside the EU) of the patent may, by undertaking to take such a licence, avoid the grant of an injunction against infringement and limit his liability for damages to a maximum of twice the licence royalty.

3) Existing licensees may ask the UK Intellectual Property Office at any time to exchange their licences for licences on terms settled by the UK Intellectual Property Office.

This information is simplified and must not be taken as a definitive statement of the law or practice