Option agreement

Option agreements are used when a potential commercial exploiter is interested in the invention and would like to perform a preliminary investigation of e.g. its suitability to its own business operations. Through such an agreement, the firm receives the first option on investigating the invention and concluding a licensing agreement or buying the invention, during the option period. For its part, during the same period, the owner of the invention undertakes not to negotiate the commercialisation of the invention with other parties.

In an option agreement the following are specified: the invention in question, the parties, the period of validity of the option, how the option right can be exercised and the compensation paid to the invention's owner should this occur. In many cases, the main terms of any future licensing agreement or bill of sale are set down.