Patent Licence Agreement (India)
PATENT LICENCE AGREEMENT
Patents Act 1970 | Indian Contract Act 1872 | Arbitration and Conciliation Act 1996
This Patent Licence Agreement ("Agreement") is entered into as of [Effective Date] between:
(1) [Patentee Name] (PAN: [Patentee PAN]), having its address at [Patentee Address] (hereinafter referred to as the "Patentee"); and
(2) [Licensee Name] (PAN: [Licensee PAN]), having its address at [Licensee Address] (hereinafter referred to as the "Licensee").
RECITALS
A. The Patentee is the registered owner of Indian Patent No. [Patent Number], titled "[Patent Title]", filed on [Patent Filing Date] (the "Patent").
B. The Licensee desires to obtain a licence to work the Patent in the Field of Use and within the Territory, and the Patentee is willing to grant such licence on the terms of this Agreement.
1. GRANT OF LICENCE
1.1 Subject to the terms of this Agreement, the Patentee grants to the Licensee a [Licence Scope] licence under the Patent to make, use, offer for sale, sell, and import products and processes covered by the Patent ("Licensed Products/Processes") within the field of [Field of Use] (the "Field of Use") and within the territory of [Territory] (the "Territory").
1.2 No rights are granted outside the Field of Use or the Territory. The Licensee shall not sublicence any of the rights granted herein without the prior written consent of the Patentee.
1.3 This Agreement shall be registered with the Indian Patent Office using Form 16 under Section 68 of the Patents Act 1970 to be effective as against third parties. The cost of registration shall be borne by the Licensee.
2. TERM
2.1 This Agreement shall commence on [Effective Date] and continue for [Licence Term], unless earlier terminated in accordance with this Agreement.
3. ROYALTIES AND PAYMENTS
3.1 In consideration of the licence granted, the Licensee shall pay the Patentee royalties as follows: [Royalty Structure].
3.2 All payments shall be in Indian Rupees (₹) by NEFT/RTGS. GST under the Central Goods and Services Tax Act 2017 shall be payable in addition to royalties. For intra-group licences, the royalty rate shall comply with the arm's length principle under the transfer pricing provisions of the Income Tax Act 1961.
3.3 The Patentee shall have the right to audit the Licensee's accounts once per year on thirty (30) days' written notice to verify royalty calculations.
4. OBLIGATION TO WORK THE PATENT
4.1 The Licensee shall work the Patent on a commercial scale in India in accordance with the following obligations: [Working Obligation].
4.2 The Licensee acknowledges the provisions of Chapter XVI (Sections 84–92A) of the Patents Act 1970 regarding compulsory licensing and agrees to take all reasonable steps to prevent grounds for compulsory licensing from arising.
4.3 Both Parties shall comply with Section 146 of the Patents Act 1970 and file annual statements of working of the Patent in Form 27 with the Patent Office.
5. IMPROVEMENTS
5.1 Each Party shall promptly disclose to the other any improvements to the patented invention developed during the term of this Agreement.
5.2 Improvements developed solely by the Licensee shall be owned by the Licensee, provided however that the Patentee shall have a non-exclusive licence to use such improvements at no additional cost. Improvements developed solely by the Patentee shall be owned by the Patentee.
6. TERMINATION
6.1 Either Party may terminate this Agreement on sixty (60) days' written notice for material breach, if the breach is not remedied within thirty (30) days of written notice.
6.2 Either Party may terminate immediately if the other Party becomes insolvent or is wound up. The Patentee may terminate immediately if the Licensee challenges the validity of the Patent.
6.3 Upon termination: all licensed rights revert to the Patentee; the Licensee shall immediately cease working the Patent; and all accrued royalties shall be paid within thirty (30) days.
7. DISPUTE RESOLUTION
7.1 Any dispute arising out of this Agreement shall be referred to arbitration seated at [Arbitration City], in accordance with the Arbitration and Conciliation Act 1996, before a sole arbitrator mutually appointed. The award shall be final and binding.
7.2 This Agreement is governed by the laws of India. Subject to the arbitration clause, the courts of [Governing State] shall have exclusive jurisdiction.
Patentee
________________
Signature
Licensee
________________
Signature
What Is a Patent Licence Agreement (India)?
A Patent Licence Agreement in India governs the use of the rights granted, fixing the royalties payable and the conditions attached to the licence.
India's patent system is administered by the Office of the Controller General of Patents, Designs and Trade Marks (CGPDTM), with the Patent Office having offices in Mumbai, Delhi, Kolkata, and Chennai. Patents in India are granted for a term of 20 years from the filing date under Section 53 of the Patents Act 1970. India does not permit patent protection for certain categories of inventions, including discoveries of known substances (Section 3(d), which has been controversially applied in the pharmaceutical sector), mathematical methods, business methods, and medical treatments.
Patent licensing is a critical mechanism for technology commercialisation, R&D collaboration, and cross-border technology transfer. A patent licence agreement in India must be carefully structured to address the unique features of Indian patent law: the compulsory licensing provisions of Chapter XVI, the requirement to work the patent in India on a commercial scale, the annual statement of working obligation under Section 146, and the registration requirement under Section 68.
The legal framework governing the Patent Licence Agreement (India) in India draws on several key statutes and regulatory bodies. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Parties executing a Patent Licence Agreement (India) in India should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Patents Act, 1970 sets the foundational requirements.
When Do You Need a Patent Licence Agreement (India)?
You need a patent licence agreement whenever you wish to authorise another party to commercially exploit your patented invention in India, or when you are a business that needs access to patented technology owned by another party.
As a patentee, you need this agreement when: licensing a pharmaceutical compound to a generic manufacturer; authorising a manufacturer to produce goods using your patented process; entering technology collaboration agreements with research institutions or universities; licensing technology to a joint venture or subsidiary; and monetising patents from your portfolio through licensing programmes.
As a licensee, you need this agreement before commercially working any patented invention owned by another party. Making, using, selling, or importing a patented invention in India without authorisation constitutes infringement under Section 48 of the Patents Act 1970, entitling the patentee to injunctive relief, damages, and account of profits under Section 108 of the Act. The licence agreement defines precisely what you are authorised to do and protects you from infringement claims within that scope.
Parties in India should prepare a Patent Licence Agreement (India) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Patent Licence Agreement (India)
A thorough India Patent Licence Agreement should include the following key elements.
Parties: Full legal names, addresses, PAN, and CIN (for companies) of patentee and licensee.
Patent Details: Patent number, filing date, grant date, title of invention, and field of technology.
Grant of Licence: Precise description of the licensed rights — to make, use, offer for sale, sell, or import; any field-of-use restrictions; territory (India, or specified states, or worldwide).
Exclusivity: Exclusive, sole, or non-exclusive; and any back-licensing or grant-back provisions for improvements.
Term: Duration, tied to patent term (maximum 20 years from filing date); renewal provisions.
Obligation to Work: Minimum commercial working requirements and reporting obligations under Section 146 of the Patents Act 1970 (annual Form 27 filing).
Royalties: Rate, basis, payment schedule in INR (₹), milestones, minimum guarantees, audit rights, and transfer pricing compliance for intra-group licences.
Sub-licensing: Whether the licensee may grant sub-licences and on what terms.
Registration: Obligation to register the licence with the Patent Office using Form 16.
Improvements and Grant-Back: Rights in improvements made by the licensee.
Termination: Grounds, procedure, and consequences including cessation of working.
Governing Law and Arbitration: Laws of India; dispute resolution under the Arbitration and Conciliation Act 1996.
Additional compliance elements for a Patent Licence Agreement (India) used in India include: Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Forms-legal.com provides this template as a starting point for India-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Patent Licence Agreement (India) (India) [Legal document template]. Forms Legal. https://forms-legal.com/india/business/intellectual-property/patent-licence-agreement-india
"Patent Licence Agreement (India) (India)." Forms Legal, 2026, https://forms-legal.com/india/business/intellectual-property/patent-licence-agreement-india.
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howpublished = {\url{https://forms-legal.com/india/business/intellectual-property/patent-licence-agreement-india}},
note = {Free legal document template. Based on Patents Act, 1970}
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Frequently Asked Questions
Patent licences in India are governed principally by the Patents Act 1970 (as amended in 1999, 2002, and 2005) and the Patents Rules 2003 (as amended). A patent grants the patentee the exclusive right to prevent others from making, using, offering for sale, selling, or importing the patented invention in India during the term of the patent (20 years from the filing date under Section 53 of the Act). The patentee may licence these rights to one or more persons under a written licence agreement. Section 68 of the Act provides that an assignment of a patent, or a licence granting the licensee the right to make, use, or sell the invention, must be in writing and registered with the Patent Office to be valid as against subsequent purchasers or mortgagees for value. The registration is made using Form 16 under Rule 90 of the Patents Rules 2003. Until the licence is registered, it is valid between the parties but cannot be enforced against third parties who subsequently acquire an interest in the patent. The Patents Act 1970 also provides for compulsory licences under Chapter XVI (Sections 84–92A), which allow the Controller of Patents to grant a licence to a third party if the patentee fails to work the invention in India on a commercial scale, fails to make the patented article available to the public at a reasonably affordable price, or if the working of the invention is in the public interest.
Indian patent licence agreements typically describe the licence as exclusive, sole, or non-exclusive, and the distinction has significant legal and commercial implications. An exclusive licence means that the patentee grants to the licensee the exclusive right to work the patented invention within the agreed scope (field of use, territory, term), to the exclusion of all other persons, including the patentee itself. An exclusive licensee under Section 2(f) of the Patents Act 1970 acquires a legal interest in the patent and may bring infringement proceedings in their own name under Section 109 of the Act, provided the patentee is joined as a party (or the court otherwise permits). A sole licence means that the patentee grants the licensee the sole right to work the invention, but the patentee retains the right to work it themselves. No other licensees may be appointed, but the patentee is not excluded. A sole licensee does not have the independent right to sue for infringement. A non-exclusive licence means that the patentee may grant the same rights to multiple licensees simultaneously, and the patentee also retains the right to work the invention. Non-exclusive licences are commonly used for technology commercialisation, where the patentee wishes to maximise revenue by licensing to many parties.
Royalty rates for patent licences in India are generally freely negotiable between the parties, subject to the constraints of the Patents Act 1970 and competition law. There is no statutory minimum royalty rate in the Act, but the Competition Act 2002 prohibits the imposition of unfair or discriminatory conditions in licence agreements by dominant enterprises. For Standard Essential Patents (SEPs) — patents that are essential to implement a technical standard (such as a telecommunications or wireless standard) — the patentee has generally committed to license on FRAND (Fair, Reasonable, and Non-Discriminatory) terms. Indian courts and the Competition Commission of India (CCI) have considered FRAND licensing disputes in the context of the Patents Act 1970 and the Competition Act 2002. The Delhi High Court and the Madras High Court have both issued important rulings on FRAND royalty determination in Indian patent disputes involving global technology companies. Beyond SEPs, royalty rates in technology licences are typically determined by: the commercial value of the patented invention; the savings or profits generated by the licensee; comparable licences in the industry; the scope of exclusivity; the field of use and territory; and the remaining term of the patent. In the pharmaceutical sector, royalty rates and milestones are also influenced by the Drug Price Control Order 2013 and Department for Promotion of Industry and Internal Trade (DPIIT) guidelines.
The Patents Act 1970 imposes a significant obligation on patentees and licensees: the patented invention must be worked in India on a commercial scale. Under Chapter XVI of the Act, if the patented invention is not being worked in India on a commercial scale to an adequate extent, or if the working is not meeting the reasonable requirements of the public, or if the patented article is not available to the public at a reasonably affordable price, any person interested may apply to the Controller of Patents for a compulsory licence under Section 84. The Controller may grant a compulsory licence setting out the terms on which the compulsory licensee may work the invention. The royalty rate payable under a compulsory licence is determined by the Controller taking into account the factors in Section 90 of the Act. In the landmark Natco Pharma v. Bayer Corporation case (2012), the Controller granted India's first compulsory licence for a pharmaceutical patent, setting a royalty rate of 6% of net sales — significantly lower than the patentee's royalty rates under voluntary licences.
A Patent Licence Agreement (India) does not legally require a lawyer in India, and individuals and businesses may draft and execute the document independently. The Patents Act, 1970 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified India lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of India has jurisdiction over disputes arising from this type of document, and Registrar of Companies (ROC) may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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