Patent Licenses

There is an entire breed of specialized licenses that are used for patents. Patent owners license their patent rights to other companies, authorizing the licensees to make, use, sell or offer for sale, or import products embodying the claims of the patent. Rarely are such patent licenses unlimited. Instead, we typically see limitations for specific fields of use (e.g., a semiconductor patent licensed only for making disk drive heads), for specific products (e.g., a browser patent licensed only for a particular operating system), or for specific markets and geographic regions (e.g., a telephone system patent licensed only for products sold in the European Community).

To be compatible with an open source license, a patent license necessary to make, use, or sell the software under license must not prevent the creation of derivative works or prohibit use anywhere in the world. (See Open Source Principles #1 and 3.)

Patent licenses often require payment of royalties to the patent owner. Such licenses may be incompatible with open source licenses if they require licensees or sublicensees to pay for the right to make and distribute copies or derivative works. (See Open Source Principles #2 and 3.) Some paid-up patent licenses, which require a single up-front payment for all patent rights, can be consistent with open source software. But it is difficult to find an angel to invest significant money in a paid-up patent license where those costs cannot be passed on to downstream licensees.

Large companies with extensive patent portfolios often negotiate cross-licenses with other companies. Each party to the license agrees to allow the other to make, use, sell or offer for sale, or import products embodying claims in the licensed portfolios. Such patent licenses are compatible with open source licenses as long as the software licensor has rights, under the cross-license, to allow downstream open source “compatible patent licensing.

It is difficult in a book like this to say much of value about stand-alone patent licenses. Software is not licensed that way because software is inevitably both copyrightable and patentable. A software license always has a copyright component. Where stand-alone patent licenses do become important to open source is in the context of open standards that are intended to be implemented in software. These specialized patent licenses for open standards are discussed in Chapter 13.

For now, I'm going to focus on the patent license grants contained within open source licenses themselves . Such licenses convey sufficient patent rights to make, use, sell or offer for sale, or import the specific software in ways consistent with the Open Source Principles. These patent licenses are implied in some open source licenses, expressed in others. Patent license terms differ subtly among open source licenses. I will point this out when I introduce each license.