Portfolio licence

A portfolio licence is the contract by which the holder grants the licensee the right to exploit all of its patents, present and sometimes future, relating to a technology or a standard, for an aggregate royalty. It stands in contrast to patent-by-patent licensing. In standardised technologies, the portfolio licence is the usual form of agreement, because a compliant product implements hundreds of standard essential patents held by the same holder in many countries.

The features of the portfolio licence

First, the territorial scope is most often worldwide, because products are manufactured and sold on every continent and a country-by-country negotiation would be impracticable. Next, the royalty is aggregate: it does not depend on the validity or essentiality of each patent taken individually, but on the strength of the portfolio as a whole, assessed by sampling and by comparison with other portfolios. Finally, the licence usually covers future patents acquired during its term and provides adjustment clauses in case of patent transfers or expiry of a significant part of the portfolio.

The portfolio licence in FRAND litigation

Litigation creates a tension between the portfolio licence, which is worldwide, and the patent, which is national. The holder sues for infringement of one or a few patents in a chosen country, but asks for a licence over its whole worldwide portfolio. The manufacturer contests the validity and essentiality of the patents asserted and wishes to pay only for the valid patents. The British courts have agreed to set the terms of a worldwide licence, other courts refuse or are cautious. The Unified Patent Court had to address these questions from its first years. Before the French courts, the question is linked to the analysis of the FRAND undertaking as a contract governed by French law.

Key points

In practice, negotiating a portfolio licence requires a sample analysis of the patents, a study of the comparable licences and attention to the adjustment, dispute resolution andarbitrationclauses. The firm acts in these negotiations and in the disputes that accompany them, as presented on the page FRAND and standard essential patents counsel.