A hybrid license licenses both patent and trade secret rights. The hybrid license brings into play the laws and regulations dealing with both patent licensing and trade secret or know-how licensing. Some restrictions apply to hybrid licenses that would not apply to pure trade secret licenses. It is important to review these restrictions in the relevant jurisdiction, since the major portion of the licenses negotiated are hybrid-type licenses involving both patents and trade secret technology. A major error in many hybrid licenses is the intermingling or lumping together of the rights and obligations relating to patents and to trade secrets. It is a common drafting technique to state, for example, that the license is granted for both patents and trade secret technology for a stipulated royalty per unit. In most circumstances, confusion and uncertainty often arise when the licensed patent rights are invalidated or expire. In the United States, if such a hybrid license intertwines the patent and trade secret payment obligation, all obligations to pay cease upon the termination or expiration of the patent rights. This rule applies regardless of efforts in the license to extend payment, such as by providing provisions that require payment to extend for 25 years or the like. As a general rule, if payment for trade secret technology is expected after the patent rights terminate, the contract should specifically provide for that obligation. If payments are expected beyond the patents, it would be a simple matter to state that royalties or other forms of payments shall continue thereafter, until the trade secrets become in the public domain.

