When a startup licenses a medical device technology to an established MedTech company, the single most important question is not the royalty rate — it is who becomes the legal manufacturer under MDR Article 2(30). Whoever markets the device under their name and trademark becomes the manufacturer and inherits every Article 10 obligation, the CE certificate, and the lifetime PMS burden. The licensing agreement must align with that regulatory reality or the deal is unworkable.

By Tibor Zechmeister and Felix Lenhard.

TL;DR

  • Under MDR Article 2(30), the manufacturer is the legal person who markets the device under its name or trademark — licensing usually makes the licensee the manufacturer.
  • MDR Article 16 specifically addresses the situation where a distributor or importer modifies a device or places it on the market under their own name, triggering manufacturer obligations.
  • Royalty structures must account for the licensee's regulatory cost base: QMS, CER maintenance, PMS, and Notified Body fees are ongoing costs the licensee carries for the device's lifetime.
  • Technology transfer is not just IP — it is a documented hand-over of design history, risk management, verification and validation records, and supplier qualifications.
  • Licensors retain IP ownership but lose manufacturer status and regulatory control — founders should understand this trade before signing.

Why this matters

Founders reach the licensing conversation for one of three reasons: they cannot raise enough capital to complete MDR certification, they do not want to build a commercial organisation, or an established MedTech has approached them with a partnership offer. Any of those reasons is legitimate. None of them changes the regulatory arithmetic.

Tibor has seen licensing conversations collapse at week 10 of negotiation because neither side understood that the draft agreement made the licensor still the legal manufacturer under Article 2(30) even though the licensee would handle all sales, distribution, and relabelling. The licensee's regulatory team read the agreement and said "we're not doing this unless we're the manufacturer." That one sentence cost another six weeks of renegotiation.

The point is not that licensing is bad. The point is that licensing in MedTech is a regulatory transaction first and a commercial transaction second. Treat it otherwise and you will discover the gap too late.

What MDR actually says

Article 2(30) — who is the manufacturer

The manufacturer is defined in Article 2(30) as "a natural or legal person who manufactures or fully refurbishes a device or has a device designed, manufactured or fully refurbished, and markets that device under its name or trademark." The three criteria are: (1) designs or has designed, (2) markets, (3) under its own name or trademark. All three pointers matter.

In a classic licensing deal, the licensor designed the device but the licensee markets it under the licensee's brand. The phrase "has a device designed" in Article 2(30) captures the licensee perfectly: they have the device designed (by the licensor, under contract) and they market it under their own name.

Article 16 — modifications and own-name distribution

MDR Article 16 explicitly addresses the case where a distributor, importer, or other natural or legal person makes a device available on the market under their own name or trademark, or changes the intended purpose, or modifies the device in a way that may affect compliance. In any of those cases, the obligations of manufacturers under Article 10 apply to that person.

Licensing deals often fall under Article 16 even when both parties think of it as "just a partnership." The licensee rebrands, the licensee sells under their name, and the licensee becomes the manufacturer by operation of law — whether or not the agreement uses that word.

Article 10 — what the new manufacturer inherits

Article 10 lists the complete set of manufacturer obligations: QMS under Article 10(9), technical documentation under Article 10(4), clinical evaluation under Article 10(3), conformity assessment, affixing CE marking, registration, UDI assignment, post-market surveillance, vigilance reporting, and appointing a PRRC under Article 15. Every one of those obligations transfers with manufacturer status — which means every one of those obligations is a licensee cost that reshapes the royalty conversation.

A worked example

A two-founder startup has built a Class IIa wound care patch. They have a functional prototype, biocompatibility data under EN ISO 10993-1:2025, and a draft technical file. They do not have QMS certification, do not have a CE mark, and do not have EUR 800,000 for the 14-month path to certification.

An established European wound care company — call them AcmeDerm — offers a licensing deal. AcmeDerm has an ISO 13485-certified QMS, an existing Notified Body relationship, and 22 Class IIa products already CE-marked. Their proposal: AcmeDerm brands, manufactures, and sells the patch under the AcmeDerm name. The startup receives an upfront payment of EUR 500,000 plus 7% net royalty on sales for ten years.

Who is the manufacturer? AcmeDerm. They market under their name, they take the device to conformity assessment, they hold the CE certificate. Article 2(30) and Article 16 both point to AcmeDerm.

What does the startup still own? The underlying IP — patents, know-how, the design specifications in the transferred technical file. The startup is the licensor, not the manufacturer.

What does AcmeDerm inherit? Everything in Article 10. QMS coverage extension to include the new patch family. Technical documentation completion under Annex II and III. Clinical evaluation under Article 61. PMS plan additions under Annex III. PRRC coverage. UDI assignment and Eudamed registration. Full Notified Body conformity assessment under Annex IX.

What is the technology transfer? The startup hands over the design history file, all verification and validation records, the risk management file under EN ISO 14971:2019+A11:2021, biocompatibility test reports, supplier qualifications and manufacturing specifications, and any existing clinical data. This hand-over is not a one-day event — it is a documented process with acceptance criteria that AcmeDerm's QMS must treat as design input.

Royalty arithmetic. AcmeDerm's internal analysis shows EUR 320,000 in one-time regulatory completion costs and EUR 85,000/year in ongoing QMS, PMS, and CER maintenance attributable to the patch. They also carry the Notified Body audit exposure for the lifetime of the device. The 7% royalty was calibrated to those costs. If the startup had pushed for 15%, AcmeDerm walks — not because they are cheap, but because the regulatory cost base does not allow it.

IP carve-out. The startup retains all background IP and keeps the right to license the same technology outside the wound care indication — say, for post-surgical dressings or veterinary applications. The licensing agreement defines the field of use with enough precision that AcmeDerm's Article 2(30) manufacturer status is limited to the defined indication only.

The Subtract to Ship playbook

1. Decide manufacturer status before anything else. Before royalty rates, before exclusivity, before milestones. Who is the manufacturer under Article 2(30)? Write it down in one sentence and let both sides' regulatory teams confirm.

2. Scope the field of use precisely. Indication, intended purpose, device classification, target population, distribution territory. The narrower the field of use, the cleaner the manufacturer definition and the more you can license the same underlying technology to other partners in other fields.

3. Build the technology transfer package before negotiation, not during. DHF, risk management file, verification and validation records, biocompatibility, supplier specs, any clinical data, and the current draft technical documentation. A licensee will pay a premium for a transfer package they can drop into their QMS with minimal rework. Subtract everything from the package that is not strictly needed; add everything that is actually necessary for Article 10 obligations on the other side.

4. Protect background IP explicitly. The license grants specific rights to use the technology for the specific field. Background IP — the underlying patents, know-how, and any improvements the licensor develops independently — stays with the licensor. Draft this carefully; without it, the licensor loses the ability to license the same technology to a second partner later.

5. Align royalty structures with regulatory lifecycle cost. The licensee's cost base is not COGS plus margin. It includes QMS, PMS, CER maintenance, PMCF if applicable, Notified Body surveillance, and vigilance. A royalty structure that ignores this will either starve the licensee of margin or break the deal in year three.

6. Build in regulatory change triggers. What happens if the device is up-classified? What happens if a new harmonised standard is issued? What happens if MDCG guidance changes the classification basis? The licensing agreement should specify who bears the cost of regulatory change and how royalties adjust.

7. Define exit and reversion clearly. If the licensee discontinues the device, what happens to the CE certificate, the Eudamed registration, the PMS obligation? Under Article 10(10) the manufacturer cannot simply walk away — PMS obligations continue as long as devices remain in service. The reversion clause should acknowledge that manufacturer obligations cannot be "given back" easily.

Reality Check

  1. Can you state in one sentence who is the manufacturer under MDR Article 2(30) in your draft licensing agreement?
  2. Is your field of use defined narrowly enough that you can license the same technology to a second partner in a different indication?
  3. Have you prepared a technology transfer package that the licensee's QMS can ingest as design input under ISO 13485?
  4. Does your royalty structure reflect the licensee's full regulatory lifecycle cost — not just COGS?
  5. Are background IP and improvements carved out so you retain commercial optionality?
  6. What is your reversion path if the licensee discontinues the device and the CE certificate lapses?
  7. Does your agreement include regulatory change triggers for up-classification or new harmonised standards?
  8. Have both sides' regulatory teams — not just lawyers — reviewed the draft agreement?

Frequently Asked Questions

Can the licensor stay the manufacturer while the licensee distributes? Yes, but only if the licensee truly acts as a distributor under Article 14 — not rebranding, not modifying, not putting the device on the market under their own name. In most real licensing deals, the licensee crosses into Article 16 territory and becomes the manufacturer.

Do we need ISO 13485 certification to license our technology? Not as the licensor, if the licensee is the manufacturer. But you need documentation quality that the licensee can accept. Licensees with mature QMS will expect design history, risk management, and verification/validation records in ISO 13485-compatible form.

How are royalties typically structured in MedTech? Upfront payment plus a running royalty on net sales is common. Royalty rates vary widely — low single digits for commoditised categories, high single digits or low teens for differentiated technologies with strong IP. Regulatory cost base on the licensee side is a real constraint on the upper end.

Can we license to multiple partners in different territories? Yes, if the agreements are scoped by territory and field of use. Each licensee becomes the manufacturer for their territory and field, each runs their own conformity assessment, and each holds their own CE certificate.

What happens to our PRRC obligation under Article 15? If the licensee becomes the manufacturer, they appoint the PRRC. The licensor does not carry Article 15 obligations for the licensed device unless the licensor is also a manufacturer of other devices.

Is a licensing deal reported in Eudamed? Eudamed registers the manufacturer, the authorised representative, and the device itself. The licensing agreement as a commercial document is not itself registered, but the resulting manufacturer identity is.

Sources

  1. Regulation (EU) 2017/745 on medical devices, consolidated text. Articles 2(30), 10, 14, 15, 16, 61; Annex II, Annex III, Annex IX, Annex XIV.
  2. EN ISO 13485:2016+A11:2021 — Medical devices — Quality management systems — Requirements for regulatory purposes.
  3. EN ISO 14971:2019+A11:2021 — Medical devices — Application of risk management to medical devices.