Patents are the corner of intellectual property that most contract lawyers touch the least. We are comfortable with copyright, trademark, and trade secret language, so we carry those habits into digital product and SaaS deals where a patent is quietly doing the heavy lifting. That mismatch is how a solid looking contract springs a leak that only shows up once a claim lands.
How to Contract host Laura Frederick brought together two people who have lived these issues from opposite ends. Fred Wilf is the founder and managing partner of Wilftek, a technology and intellectual property law firm near Philadelphia, with four decades of technology transactions and arbitration behind him. Brian Chang is Lead Counsel at Airwallex and spent the first part of his career as a patent litigator at Weil, Gotshal and Manges before handling tech procurement and inbound licensing in-house at Amazon. One of them has spent a career drafting to keep clients out of the courtroom and the other has spent a career inside it, so their advice fit together well.
Over the hour they worked through how patents differ from the IP we know best, how to scope a patent license to the actual use, what a SaaS grant really conveys, the ownership traps in custom development, how to carry rights down a distribution chain, how to build indemnities and liability caps that hold up, and what AI is starting to change about who counts as an inventor.
Here are our top ten takeaways from the speakers' comments during the webinar:
Treat patents as their own kind of intellectual property. We learned IP through copyright, and that habit is exactly what trips us up on patents. Patents have their own statute and their own magic words, and a term that means one thing for copyright can mean something different here. When a patented invention is in the deal, read the claims and bring in a patent attorney before you draft.
Customize the license scope to the patent and the use. You cannot pull a model patent license off the shelf and fill in the blanks. The scope has to track what the patent actually protects and how your client will use the technology over time. Think through SaaS access versus on-premises use, field of use shifts, improvements, and geography, because patents are national and a US patent protects nothing abroad.
Check whether a SaaS agreement even grants a patent license. Many SaaS deals grant a right to access and use the service rather than a license under the vendor's IP. For a back office tool that is usually fine when an infringement representation and indemnity back it up. The moment you want to flow rights down to your own users, read the grant closely, because an implied license may not be sublicensable.
Use an express patent assignment, not work made for hire language. Patents have no work made for hire concept, so copyright style language leaves the rights unassigned. If you want to own what a developer creates for you, get an express assignment or a catch-all that captures anything that cannot be work made for hire. A copyright lawyer's thumbs up on the clause does not mean the patent rights actually moved.
Stay away from joint ownership. A co-owner can make, use, sell, and license the whole invention without your consent, including a free license to your biggest competitor. Joint ownership also stalls patent prosecution because every owner has to cooperate on filings. Unless you have the lawyers and budget to manage it, there is almost always a better option.
Scope sublicense and pass-through rights from the end of the chain backward. Start with what the end customer needs to do, then climb the chain adding rights at each tier, from the right to use, to offer to sell, to import, up to the right to make at your manufacturers. Be explicit about how many layers of sublicense are allowed. A covenant not to sue your suppliers and end users makes a useful backstop.
Watch who controls the defense and the settlement. Whoever defends a third party claim usually controls the settlement, and a settlement that invalidates the patent wipes out value for everyone holding a license or ownership interest. Build the notice process and the defense rights with that in mind. Decide up front what happens when the indemnitor will not or cannot defend.
Write patent indemnities around modifications and combinations. Patents often read on combinations rather than single parts, so a blanket combination carve-out can leave you exposed on a product built from many components. Index the carve-out on indirect infringement factors instead. Ask whether the vendor should have known how you would use the product, whether it has a substantial non-infringing use, and whether it sits at the heart of the claim.
Size your liability cap to the real cost of patent litigation. A simple single patent case rarely costs under five million dollars, and a one year fee cap will not get you past the pleadings. Push for a super cap and anchor it to that reality. Then weigh the counterparty's ability to pay, because a large cap from a startup means little once the money runs out.
Account for AI when you think about who created the invention. Current signals suggest a patent holds when the inventive concept is human created, even if AI polishes the claims, but the concept has to come from a person. That puts a question mark over AI generated improvements in any license. Raise it in the negotiation rather than assuming the old framework still applies.
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