Research On Liability Provision Of Patent Infringement In The International Patent Licensing Contract

Liability provision of patent infringement in the International patent licensing contract means the provision includes the agreement about liability of parties on when licensee violated the contract to use the patent, or the third party used or exploited the patent without the permission of patentee, or the patent was accused by any third party because of illegal or infringement. It is general clause and legal clause in International patent licensing contract, which mainly involves patent infringement boundary and liability agreement.Laws and regulation of many countries or International treaties pay more attention on the restriction of general patent infringement but less focus on the liability of patent infringement during patent transactions. It only stipulated if one party can institute court separately once patent infringement occurs, but lacked the detail rules on who was responsible for the obligations of removal the obstacles or who is liable for damages since the infringement behavior occurred or how to distribute the litigation cost.Current patent licensing contracts reflect the liability of patent infringement, especially on liability of non-infringement warranty and liability of protecting patent right; however, such provision is not complete and explicit, even can not be applied to practical areas, because it lacks specific provision concerning agreement on the liquidated damages caused by breach of non-infringement warranty.Liability of patent infringement in the International patent licensing contract involves three situations:being sued for patent infringement by the third party, the third party infringed the patent right and licensee infringed the patent right.First, International patent licensing contract should take the provision about the behavior that licensee exploited the patent beyond the contract into account. It mainly covered if sub-license is allowed and liability for breach of contract which assumed by licensee if it uses the patent without permission of licensor. Such liability is different according to the different account form of license fee.Second, considering the situation of being sued for patent infringement by the third party, licensor must be required to make a non-infringement warranty which contains if the patent is the dependent patent, and how many joint owners it has. Licensor also must be required to promise that it is impossible for licensor has knew that someone used or exploited the patent within the territorial scope and rights of patent license without permission before the contract was signed and within the validity period of Contract. Meanwhile, Contract should explicit who is liable for protecting the patent right and how to share the expense of defense, compromise or settlement when the third party sued for patent infringement。If final court adjudicates tort fact holds water, licensee not only can ask licensor to assume the compensation that had been lost, but also can ask licensor to adopt measures to pay for acquirable interest.Third, due to different regulation about litigation rights of different countries, the contract should covered two parts for different situations:who is liable for protecting the patent if someone infringe up on patent right and how to share the legal cost which maybe different according to the exclusive license or non-exclusive license. How to share the damages awarded by court also should be stipulate based on the indemnity principle, and that compensatory damages should take the payment of license fee into account.