License types

In the evolving landscape of intellectual property, two new patent licensing models are being proposed to promote broader access to patented technologies while still allowing patent holders to maintain commercial opportunities. These models—Small Entity License Commons (SELC) and Flat-rate License Access Terms Commons (FLAT-C)—aim to create a more flexible and accessible framework for patent licensing, particularly for small businesses and individuals.

Small Entity License Commons (SELC)

Small Entity License Commons (SELC) is a proposed licensing model designed to grant free, non-negotiable access to patented technologies for small entities, such as individuals and businesses with fewer than 50 employees. The aim of SELC is to reduce the financial and legal barriers that often prevent smaller entities from utilizing patented innovations.

Under SELC, small entities can use the patent at no cost, while larger businesses are still required to negotiate a paid license for commercial purposes. This approach promotes innovation at the grassroots level without compromising the patent holder’s ability to monetize the invention in larger markets. Additionally, by offering the patent to small entities, the patent holder can claim active licensing, which may increase the perceived value of the intellectual property.

While SELC shares similarities with Creative Commons (CC) licenses in the copyright space, it is unique in that it does not limit the commercialization potential for medium or large companies. Instead, it serves as a hybrid model, offering free access to small players while maintaining traditional licensing opportunities for larger-scale use.

Flat-rate License Access Terms Commons (FLAT-C)

Flat-rate License Access Terms Commons (FLAT-C) is another proposed model that allows access to patents at a minimal, cost-covering fee. Unlike SELC, which offers free access to small entities, FLAT-C allows licensees to access the patent by paying a flat-rate fee, typically representing a portion of the patent holder's filing and maintenance costs. For example, a flat fee of $5,000 might be charged, representing one-tenth of the average $50,000 cost of filing a U.S. patent.

FLAT-C is designed for small and medium-sized businesses that are not ready for full commercial licensing fees but still want access to valuable patented technologies. This model helps the patent holder recover some of the costs associated with patenting while making the technology accessible to a broader audience.

In addition to the flat-rate structure, FLAT-C can be offered with limitations to increase its appeal and create urgency. For instance, FLAT-C may be available only to the first X licensees (e.g., the first 10 licensees) or for a limited window of time (e.g., a six-month offer). These restrictions ensure that the patent holder retains flexibility in setting future licensing terms while creating a sense of exclusivity and opportunity for early adopters.

The FLAT-C model bears some similarities to non-assertion pledges—such as those made by companies like IBM and Tesla, where they agree not to enforce certain patents—but it offers a more structured approach with an explicit cost-recovery mechanism. By charging a flat fee, patent holders ensure that they recover some of their investment while still fostering innovation and adoption through reduced licensing barriers.

The Impact of SELC and FLAT-C

Together, SELC and FLAT-C represent a shift towards more inclusive and accessible patent licensing models. By offering free or minimal-cost access to small entities, these models aim to democratize access to patented innovations, making it easier for small businesses and individual inventors to participate in the development of new technologies.

At the same time, these models preserve the patent holder’s ability to negotiate commercial licenses with larger entities, ensuring that the financial value of the patent is maintained. With options like limited-time availability or caps on the number of FLAT-C licenses, patent holders can create incentives for early adoption while keeping control over the broader commercialization of their inventions.

If adopted, SELC and FLAT-C have the potential to reshape the patent licensing landscape, fostering a more collaborative and innovative environment for both small and large players in the market.