Legal Definitions - nonmetered license

A nonmetered license is a type of patent license agreement where the licensee pays a flat percentage of sales in exchange for the right to use the patent, regardless of how much the patent is actually used. For example, if a company agrees to pay a 5% royalty on sales of a product that uses a patented technology, they would pay that 5% regardless of whether they sell 100 units or 10,000 units.

However, the Supreme Court has rejected nonmetered licenses as patent misuse, stating that the buyer has the right to insist on paying only for actual use. This means that nonmetered licenses are not commonly used in patent agreements.

Example: Company A agrees to pay a 3% royalty on sales of their new product that uses a patented technology. Even if they only sell a few units, they still have to pay the 3% royalty on those sales.

This example illustrates how a nonmetered license works by showing that the licensee pays a flat percentage of sales regardless of how much the patent is actually used.