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Patent-holding semiconductor enterprises may directly apply the patents to their own production and operation, but they also often need to grant licenses to third parties for the exploitation of relevant patents, assign the acquired patent rights, or monetize the patents through other channels. In many cases, enterprises also need to seek patent exploitation licenses from specific patentees or purchase specific patents. There are also a number of legal issues that enterprises shall pay attention to in the aforesaid process.

First, the difference between patent assignment and patent exploitation licensing lies in that patent assignment refers to the transfer of all rights of a patent except the right of authorship to a third party, where the assigning enterprise waives all relevant rights as the owner of the intellectual property right. By contrast, patent exploitation licensing means the licensor authorizes the licensee to exercise the relevant licensed rights within a specified scope and under specified conditions, while the licensor remains the patent right holder and thus retains all unlicensed rights. In light of the different natures of patent assignment and licensing, the methods for enterprises to obtain patent-related fees also vary: an assigning enterprise generally receives a lump-sum patent assignment fee through patent assignment, while patent exploitation licensing can bring long-term benefits to the enterprise within the licensing term, and the relevant licensing fees may take forms including royalties and fixed annual fees.

With regard to patent exploitation licenses, enterprises shall note that such licenses fall into various types. Licenses include exclusive licenses, sole licenses, general (non-exclusive) licenses, sub-licenses, cross-licenses and other forms, subject to the specific stipulations set forth in the license agreement concluded between the licensor and the relevant licensee. After a patent license agreement takes effect, the patentee shall file the agreement for recordation with the China National Intellectual Property Administration within 3 months (Paragraph 2 of Article 14 of the *Implementing Regulations of the Patent Law of the People's Republic of China*). Among all types of patent exploitation licenses, an exclusive license grants the licensee the exclusive right to exploit the relevant patent within the agreed time limit and territory, and no other party including the patentee may exploit the said patent. A sole license means that only the concerned licensee is granted the license within the agreed time limit and territory, and no other third party will be granted the same license, while the patentee retains the right to exploit the patent. A general (non-exclusive) license grants the licensee the right to exploit the patent within the agreed time limit and territory, without restricting the patentee from granting the same license to a third party or exploiting the patent on its own. The patentee may also allow the licensee who has obtained the exploitation license to license a third party to exploit the relevant patent in the licensee's own name, which is the granting of a sub-license to the third party. In addition, the patentee may, through consultation with another party, mutually use each other's patents on a conditional or unconditional basis, which is known as cross-licensing. This arrangement is often of high practical value in joint R&D projects. In general, in light of the principle of freedom of contract applicable to license agreements, patent licenses can be of various types with diverse attached conditions, and the patentee shall conduct careful deliberation as needed before granting the relevant license.

Patent exploitation licensing is generally agreed upon by the patentee and the licensee through a licensing agreement, with exceptions applicable under specific circumstances. One such exception is where a patentee voluntarily files a declaration with the China National Intellectual Property Administration (CNIPA), expressing its willingness to license any entity or individual that pays licensing royalties in compliance with its payment standards and requirements to exploit the relevant patent. CNIPA shall publish such open licensing for public notice. A third party intending to exploit the patent under open licensing shall obtain the patent exploitation license immediately after notifying the patentee in writing and paying the licensing royalty in accordance with the public notice. This form of public offer is conducive to reducing transaction costs and facilitating the popularization of patents. However, once the open licensing takes effect, no exclusive license or sole license may be granted for the said patent. In addition, since applications for utility model patents and design patents are not subject to substantive examination, when submitting an open licensing declaration for these two categories of patents, the patentee shall also submit a patent evaluation report to avoid subsequent disputes arising from patent invalidity.

Furthermore, pursuant to the provisions of Articles 53 and 54 of the *Patent Law of the People's Republic of China*, under specific circumstances, the China National Intellectual Property Administration may also grant compulsory licenses for the exploitation of specific patents to eligible third parties, which include:

(1) Where the patentee, without justifiable reasons, fails to exploit or fully exploit its patent when three full years have elapsed since the date of grant of the patent and four full years have elapsed since the date of filing of the patent application;

(2) Where the exercise of the patent right by the patentee is determined in accordance with the law to be a monopolistic conduct, and it is necessary to eliminate or reduce the adverse impact of such conduct on competition;

or (3) Where the State is in a state of emergency or extraordinary situation, or for the purpose of public interest. Patentees shall accordingly note that they shall not abuse their exclusive patent rights to harm the interests of the State and the public, so as to avoid adverse impacts on themselves eventually.

In addition to granting a patent exploitation license, a patentee may also consider directly assigning its patent right. For the assignment of a patent right, the parties shall conclude a written agreement, register the assignment with the China National Intellectual Property Administration (CNIPA), and the CNIPA shall make an announcement thereon. The relevant assignment shall take effect as of the date of registration (Paragraph 3, Article 10 of the *Patent Law of the People's Republic of China*). For a patent application that has been filed but not yet approved, the subsequent right to apply for a patent may also be assigned. The right to apply for a patent herein covers the rights enjoyed by the patent applicant and the person who may act as the patentee thereafter. The assignment of the right to apply for a patent shall also be based on a written agreement, and subject to registration and announcement by the CNIPA. An enterprise may make capital contributions to a third party through the assignment of patent rights, under which circumstance a professional appraisal institution shall conduct value assessment of the relevant patent right, and a written contract shall be concluded for the matter.

Assignment of patents to foreign legal persons or individuals constitutes technology export, which shall be conducted in accordance with the *Foreign Trade Law of the People's Republic of China* and the *Regulations of the People's Republic of China on the Administration of Technology Import and Export*. Among relevant provisions, certain technologies are prohibited from export; certain technologies are subject to export restrictions, for which prior approval shall be obtained from the Ministry of Commerce before substantive negotiations are initiated. After the relevant intellectual property right assignment agreement is signed, relevant documents shall be submitted to the Ministry of Commerce to apply for a technology export license (Articles 31 to 35 of the *Regulations of the People's Republic of China on the Administration of Technology Import and Export*). For technologies eligible for free export, registration formalities shall be completed with the Ministry of Commerce (Articles 36 to 38 of the *Regulations of the People's Republic of China on the Administration of Technology Import and Export*). The Catalogue of Technologies Prohibited or Restricted from Export is available on the official website of the Ministry of Commerce.

Enterprises may also consider obtaining financing through patent right pledge. For the aforesaid pledge, a professional appraisal institution shall first conduct valuation of the patents involved. Thereafter, the enterprise shall sign a written pledge contract with the pledgee, and submit the contract to the China National Intellectual Property Administration for registration. The pledge right shall be established upon completion of the registration, and the relevant funds may be disbursed only thereafter.