Upfront Payment Clauses
(Patent License Agreement)

Summary

These upfront payment clauses can be used in patent license agreements for monetary payment to be made by licensee to licensor as consideration for the license grant. This upfront payment may be made in one payment, in two or more installments at specific intervals, or upon meeting certain milestones. This template includes practical guidance, drafting notes, and an alternate clause. While there is an almost endless variety of structures available for patent license payment provisions, the payment clause in a license agreement typically describes the: • Amount to be paid • Party responsible for making the payment • Timing of the payment • Method by which the payment is made Some patent licenses require the licensee to make a lump sum payment to the licensor at the initiation of the license or upon some other defined event. For a more detailed discussion on patent license payment and royalty clauses, see Patent Licenses: Key Provisions. For more information on other types of intellectual property licensing, see Intellectual Property Licensing Resource Kit.