Traditional license agreements grant a license to manufacture and sell products with an obligation to report the number of products sold. It is breach of contract when a licensee does not report, or does not report all products. Under the terms of the traditional agreement, products sold are licensed even when the licensee did not report them and does not pay royalties.
When all products sold by a licensee are licensed, the patent owner cannot act against the downstream distribution of products that were not reported.
One-Red’s unique Per-Batch Licensing System does away with the blanket license to manufacture and sell products and replaces the blanket license with the obligation for the licensee to apply for a license for each and every shipment of products. One-Red then grants the patent license for that specific shipment and provides a document (called "LSCD”) that identifies the shipment and confirms that the products in that shipment are licensed.
The Per-Batch Licensing System and the LSCD make it easy for all parties throughout the supply chain to be sure that products are licensed. Retail buyers will now insist on receiving an LSCD with every shipment because that LSCD is the easiest way to make sure that they are not selling unlicensed products.
One-Red’s Per-Batch Licensing System maximizes royalty income for our licensors and minimizes the legal cost associated with collecting royalties.