Legal Definitions - grantback

A grantback is a specific clause found within a license agreement, typically involving intellectual property like patents, trademarks, or proprietary technology.

This provision requires the party receiving the license (the licensee) to either transfer ownership of, or grant a license back to, the original owner (the licensor) for any improvements, modifications, or new inventions that the licensee develops related to the licensed intellectual property.

In simpler terms, if you give someone permission to use your invention or technology, and they make it even better, a grantback clause ensures that you, the original owner, also get rights to those enhancements.

Here are a few examples to illustrate how a grantback provision works:

• Software Development: Imagine a small tech startup, "InnovateCo," licenses its proprietary algorithm for data compression to a larger software company, "GlobalApps," for use in GlobalApps' new messaging application. The license agreement includes a grantback clause. While integrating the algorithm, GlobalApps' engineers discover a way to significantly enhance its speed and efficiency, creating a new, improved version. Due to the grantback provision, GlobalApps must either assign ownership of this improved algorithm to InnovateCo or grant InnovateCo a license to use this faster version. This ensures InnovateCo benefits from the advancements made by GlobalApps' development team.

• Manufacturing Process: A chemical company, "ChemSolutions," holds a patent for a unique, environmentally friendly process to produce a certain plastic. They license this patented process to a manufacturing firm, "PlastiCorp," to produce plastic components for various industries. The license agreement contains a grantback clause. During its production, PlastiCorp's engineers develop a modification to the process that reduces energy consumption by 15% and increases yield. Because of the grantback clause, PlastiCorp is obligated to either transfer the rights to this energy-saving improvement to ChemSolutions or grant ChemSolutions a license to use this more efficient method, allowing ChemSolutions to incorporate it into its own operations or license it to other parties.

• Biotechnology Research: A university research lab, "BioDiscovery," patents a novel gene-editing tool and licenses it to a pharmaceutical company, "PharmaGen," for developing new therapies. The licensing agreement includes a grantback provision. PharmaGen's scientists, while working with the tool, discover a new application that allows for more precise targeting of specific cells, significantly enhancing its therapeutic potential. Under the grantback clause, PharmaGen must provide BioDiscovery with rights to this new, more precise application, either by assigning the patent for the improvement to BioDiscovery or by granting BioDiscovery a license to use it. This allows the university lab to further research or license this enhanced capability to other entities.