ITPEC IP April 2021 Question 85
Which of the following is the most appropriate explanation of a patent strategy of cross-licensing?
Explanation
Mutual consent between patent holders to use each other's patents — that is cross-licensing.
In a cross-licence two or more companies each grant the others a licence to their patents, often with little or no royalty changing hands. Each side may then use technology the other has patented, and infringement disputes are avoided where products depend on both portfolios. It is common in semiconductors and electronics, where hardly any product can be built without patents held by other companies.
Answer (d)
Why not others:
- •(a) — acquiring another company's patents by absorbing it in a merger transfers ownership through M&A; no licence is granted
- •(b) — joint research with other organisations to complement one's technology and file patents is a research alliance; it creates new patents rather than exchanging rights to existing ones
- •(c) — granting one's own patents to other companies in return for royalties is ordinary one-way licensing; cross-licensing is reciprocal
Key rule: A licence lets another party use a patent without transferring ownership; a cross-licence is that permission exchanged in both directions.
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