Glossary
IP & Patent Glossary
Key terms and definitions for understanding patent licensing and intellectual property strategy.
A
Assignment
The transfer of all ownership rights in a patent from one party (the assignor) to another (the assignee). Unlike licensing, assignment transfers complete ownership permanently.
C
Cease and Desist Letter
A formal notice sent to a party believed to be infringing a patent, demanding they stop the infringing activity. Often the first step in a licensing campaign before formal legal action.
Claims
The section of a patent that legally defines the scope of the invention's protection. Claims determine exactly what is covered and are the basis for infringement analysis.
Claim Chart
A document that maps the specific claims of a patent against a product or process to demonstrate potential infringement. Used in licensing negotiations to show evidence of use.
Continuation Patent
A patent application filed based on a previously filed (parent) application, sharing the same specification but with new or different claims. Useful for expanding patent coverage.
Cross-License
An agreement between two patent holders granting each other rights to use their respective patents. Common between large technology companies with overlapping patent portfolios.
D
Due Diligence
The investigation and evaluation of a patent or portfolio before a licensing deal or acquisition. Includes assessing patent validity, enforceability, remaining life, and market value.
E
Encumbrance
Any existing claim, lien, or restriction on a patent that may limit the owner's ability to license or sell it. Examples include existing exclusive licenses or security interests.
Essential Patent
A patent that covers technology necessary to comply with an industry standard (e.g., Wi-Fi, 5G). Essential patents are typically subject to FRAND licensing obligations.
Exclusive License
A license granting one licensee the sole right to use the patented technology in a defined field or territory, excluding even the patent owner from practicing in that scope.
F
FRAND
Fair, Reasonable, and Non-Discriminatory — licensing terms required for patents essential to industry standards. Patent holders must offer licenses on equitable terms to all interested parties.
Freedom to Operate (FTO)
An analysis determining whether a product or process can be commercialized without infringing existing patents. Essential before launching a new product in a crowded technology space.
I
Infringement
The unauthorized making, using, selling, or importing of a patented invention. Infringement can be direct (literal copying) or indirect (contributing to or inducing others to infringe).
Inter Partes Review (IPR)
A procedure at the USPTO to challenge the validity of a patent based on prior art. Often used as a defense strategy by accused infringers to invalidate asserted patent claims.
IP Monetization
The process of generating revenue from intellectual property assets through licensing, sale, litigation, or strategic partnerships. ILG specializes in helping patent holders monetize their IP portfolios.
L
Licensing Agreement
A legal contract granting permission to use a patented technology under specified terms, including scope, duration, territory, and compensation (royalties or lump-sum payments).
Lump-Sum Payment
A one-time fixed payment for a patent license, as opposed to ongoing royalties. Often preferred for simplicity and to avoid long-term accounting and compliance obligations.
N
Non-Exclusive License
A license allowing the licensee to use the patented technology while the patent owner retains the right to grant licenses to other parties and practice the invention themselves.
Non-Practicing Entity (NPE)
An entity that owns patents but does not manufacture products or supply services based on them. NPEs monetize patents primarily through licensing and enforcement activities.
P
Patent Portfolio
A collection of patents and patent applications owned by an individual or organization. A well-managed portfolio can be significantly more valuable than the sum of its individual patents.
Patent Troll
A pejorative term for entities that acquire patents primarily to extract licensing fees through aggressive enforcement rather than to develop or commercialize the underlying technology.
Prior Art
Any evidence that an invention was already known before a patent application was filed. Prior art can include publications, products, or public demonstrations and may be used to challenge patent validity.
Prosecution History
The complete record of communications between a patent applicant and the patent office during examination. Important for interpreting claim scope and assessing enforceability.
R
Reasonable Royalty
The minimum measure of damages for patent infringement — the amount a willing licensor and willing licensee would have agreed to in a hypothetical negotiation at the time of first infringement.
Royalty
Ongoing payments made by a licensee to a patent holder, typically calculated as a percentage of revenue from products using the licensed technology, or as a per-unit fee.
T
Term Sheet
A preliminary document outlining the key terms of a proposed licensing deal before a formal agreement is drafted. Covers scope, financial terms, duration, and other material provisions.
Trade Secret
Confidential business information that provides a competitive advantage, such as formulas, processes, or customer lists. Unlike patents, trade secrets are not publicly disclosed and have no expiration.
U
Utility Patent
The most common type of patent, protecting new and useful processes, machines, articles of manufacture, or compositions of matter. Utility patents last 20 years from the filing date.
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