A patent license is an agreement between a patent owner (licensor) and a person or entity that wants to use or benefit from the patent (the licensee) in which the licensor grants the licensee the right to use the license in the manner and for the period of time (the term) described in the license agreement.

The licensor grants the licensee a license to use the patent in exchange for royalty payments (royalties) from the licensee—often based on a percentage of sales of the goods or services in which the licensee uses the patent.

There are different types of licenses, including exclusive licenses, nonexclusive licenses, and partially exclusive licenses. A license may also grant the licensee the right to sublicense the patent rights to other persons or entities—often when the original license is an exclusive license.

In Alabama, as in all states, patent licensing is governed primarily by federal law, as patents are a matter of federal jurisdiction under the United States Patent Act (Title 35 of the United States Code). A patent license in Alabama allows the licensee to use the patent as specified in the license agreement, which is a contract subject to state contract laws. The agreement typically details the scope of the license, the term, and the financial arrangement, such as royalties, which are payments made by the licensee to the licensor, often calculated as a percentage of sales. Licenses can be exclusive, granting only one licensee the right to use the patent, nonexclusive, allowing multiple licensees, or partially exclusive, limiting use to certain fields or geographies. Exclusive licenses may include the right to sublicense, permitting the licensee to grant patent rights to third parties. It's important for licensors and licensees to ensure that their agreements comply with both federal patent laws and Alabama's contract laws to enforce the terms of the patent license effectively.