What is a patent licensing agreement in Saudi Arabia?

What is a patent licensing agreement in Saudi Arabia?

A patent licensing agreement in Saudi Arabia is a contract under which the patent owner (licensor) is granted the right to use and exploit the patent for a third party (licensor) for a specified period of time in exchange for a sum of money or a set of other conditions specified in the agreement. In this article, we, the Abdul Aziz Bin Yasser Al-Anzi Law Firm and Legal Consultations, will explain everything related to patent licensing agreements in Saudi Arabia.

 Abdulaziz bin Yasser Al-Anzi Law Firm

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What types of licensing agreements are available for using patents in Saudi Arabia?

How can a contractual license for a patent be obtained?

Rights of the licensee using the patent.

Compulsory licensing of patents.

Special conditions for compulsory licensing of patents.

Cases of compulsory license cancellation.

What types of licensing agreements are available for using patents in Saudi Arabia?

The Patents, Layout Designs of Integrated Circuits, Plant Varieties and Industrial Designs System stipulates in its first article the existence of two types of licenses as follows:

Compulsory licensing: Permission for a third party to exploit a protected subject matter, without the consent of the owner of the protection document, in accordance with the provisions set forth in this system.

Contractual licensing: A contract by which the owner of a protection document authorizes another party to use some or all of their rights to exploit that document for a specific period in exchange for a specified fee.

Therefore, patents can be obtained through compulsory licenses to use the patent without the owner's permission, or through a contractual license which is an agreement with the owner to exploit the patent in exchange for a financial fee.

How can a contractual license for a patent be obtained?

A contractual license can be obtained from the patent owner, and in order for the license to be obtained by agreement of all parties, the conditions stipulated in Articles (21 and 22) of the system must be met, and those conditions are as follows:

A license agreement may be written for all or some of the exploitation of the patent.

The owner of the protection document must pay the prescribed financial fee and register in the records of the Saudi Authority for Intellectual Property in order for the license contract to be valid against third parties.

This license does not preclude the policyholder from exploiting the protected subject himself, or from granting another license for the same protected subject, unless the first license agreement stipulates otherwise.

The Saudi Authority for Intellectual Property may request the parties to a license agreement to amend it to eliminate any misuse of the rights under the protection document, any negative impact on competition, or the acquisition and dissemination of technology.

Rights of the licensee using the patent.

Article (23) of the system states that (the license entails the licensee’s right to carry out all the works and privileges granted to the owner of the protection document, related to the subject of protection throughout the Kingdom for the duration of the protection, unless the license contract stipulates otherwise, and the licensee may not assign the rights and privileges granted to him by the owner of the document, unless the license contract explicitly stipulates otherwise.)

Terms of the Contractual (Optional) License Agreement for Patents.

In order to write a licensing agreement between the licensor and the licensee, it is necessary to seek the assistance of a lawyer specializing in intellectual property and the resulting contracts and agreements. Therefore, it is preferable to contact the Abdulaziz bin Yasser Al-Anzi Law Firm for Advocacy and Legal Consultations in order to write and prepare a licensing agreement that guarantees the rights of the parties and is free of legal loopholes.

After the agreement is written, it is registered with the Saudi Authority for Intellectual Property.

Compulsory licensing of patents.

Article (24) of the system stipulates that the Authority may grant a compulsory license to a third party to exploit the invention covered by the patent without the consent of the patent owner, but the following conditions must be met:

The application must be submitted after four years have passed from the date of filing the patent application, or three years from the date of granting it, whichever is later, without the patent owner having exploited his invention, or having exploited it inadequately, unless he justifies this with a legitimate excuse.

The applicant for a compulsory license must prove that they have made efforts – within a reasonable period – to obtain a contractual license, under reasonable commercial terms and for reasonable financial consideration. This provision, and the preceding paragraph, are exempt if the applicant is a government entity or a person authorized by it, and the purpose is to achieve the public interest – particularly security, health, nutrition, or the development of other vital sectors of the national economy – or to address an emergency or other very urgent situation, or if the purpose is for general non-commercial purposes. In the latter case, upon becoming aware of a patent or design certificate, its owner must be notified immediately.

The compulsory license is granted primarily to ensure the availability of the invention in local markets. This provision does not apply if the purpose of the license is to prevent or limit practices that have been determined or ruled to be unfair competition.

The licensing decision must specify the scope and duration of the license, as required by its intended purpose. The license is subject to termination if the conditions for which it was granted cease to exist and are unlikely to recur, while taking into account the legitimate interests of the licensee.

The license should not be exclusive to the person to whom it was granted.

To decide on each request individually.

The patent owner shall be fairly compensated, and the committee shall determine the amount of compensation, which the licensee shall be obligated to pay.

The beneficiary of the compulsory license may not assign it to another party, unless the assignment includes the establishment benefiting from the license, or part of it, or its commercial reputation, and the city’s approval of the assignment is required, otherwise it is invalid. If the authority approves the aforementioned assignment, the assignee becomes responsible for the obligations of the first beneficiary that were incurred before the assignment was approved.

Special conditions for compulsory licensing of patents.

There are some patents for which the system stipulates in Article (24/b/d) special conditions for granting compulsory licenses, and they are as follows:

If the compulsory license relates to a patent for semiconductor technology, the purpose of the license is solely for general non-commercial purposes, or to limit practices that have been decided or ruled to be acts of unfair competition.

If a patent involves an important technological development of great economic value, and it cannot be exploited without exploiting another patent, the Authority may grant the owner of that patent a compulsory license to exploit the other patent. In this case, the compulsory license may not be waived except by waiving the other patent, and the owner of the other patent shall have the right to obtain a corresponding license from the compulsory licensee, under reasonable conditions.

Cases of compulsory license cancellation.

Article (28) of the regulations stipulates that a compulsory license may be revoked in the following cases:

If the beneficiary of this license does not utilize it sufficiently to meet the needs of the Kingdom within two years of the license being granted, which is renewable for an equal period, if he proves that there is a legitimate reason.

If the licensee fails to pay the amounts due within ninety days of their due date, including the compensation due to the owner of the protection document, as stipulated in the grant decision.

If the licensee violates any of the conditions for granting the license.

Question and Answer

How can I obtain a license to use a patent?

A contractual license can be obtained from the patent holder and a compulsory license from the Saudi Authority for Intellectual Property.

Is the mandatory licensing fee paid?

Yes, the compulsory license is subject to a fee paid to the patent owner, and if it is not paid as agreed, the authority cancels the license.

What are the conditions for obtaining a license to use the patent?

The conditions are explained in the article.

Can a compulsory license be cancelled after it has been obtained?

Yes, the Saudi Authority for Intellectual Property can cancel the compulsory license after the beneficiary has obtained it.

In order for the beneficiary to obtain contractual and compulsory patent licenses, assistance must be sought.Abdulaziz bin Yasser Al-Anzi Law FirmWe also offer legal consultations, with over ten years of experience in drafting and preparing contractual licensing agreements and submitting applications for mandatory licenses from the Authority. Our team possesses extensive expertise in understanding intellectual property regulations and laws, and in navigating the Authority's procedures. We leverage this experience and knowledge to provide high-quality, comprehensive services that prioritize the client's best interests and the sustainability of their business. Don't hesitate to contact us.Contact us.