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Licensing of IPR
A
Vital Component of the Business
Strategy of Your SME
By: World Intellectual Property
Organisation (WIPO)
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You may be interested in starting a
new business, expanding an existing business (extending your territory or the
nature of business) or improving the quality of the goods or services of your
SME
and thereby its market position. In many situations,
licensing of intellectual property rights is an effective tool for achieving
these business goals.
A licensing agreement is a partnership
between an intellectual property rights owner (licensor) and another who is
authorized to use such rights (licensee) in exchange for an agreed payment (fee
or royalty).
A variety of such licensing agreements are available, which may be
broadly categorized as follows:
Technology License
Agreement
Trademark Licensing and Franchising
Agreement
Copyright License Agreement
In practice, all or some of these
agreements often form part of one single contract since in transfers of this
nature many rights are involved and not simply one type of intellectual property
right.
You may also come across licensing agreements in other circumstances,
such as, during a merger or acquisition, or in the course of negotiating a
joint venture.
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All of these mechanisms either
on their own or in combination
will provide your SME, as a
licensor or licensee, a wide
variety of possibilities in
conducting business in your own
country or elsewhere. As an
intellectual property owner and
a licensor, your SME can expand
its business to the frontiers of
your partners' business and
ensure a steady stream of
additional income. As a
licensee, your SME can
manufacture, sell, import,
export, distribute and market
various goods or services which
it may be prevented from doing
otherwise.
In
the international context, a
formal licensing agreement is
possible only if the
intellectual property right you
wish to license is also
protected in the other country
or countries of interest to you.
If your intellectual property is
not protected in such other
country or countries then you
would not only not be able to
license it, but also you would
have no legal right to put any
restriction on its use by anyone
else.
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The principle function of a trademark or service
mark is to distinguish the goods and services of one enterprise from that of
another, thereby often identifying the source and making an implied reference to
quality and reputation. This function is to some extent prejudiced if the
trademark owner licenses another enterprise to use the trademark through a
trademark license agreement. Therefore, the trademark owner is well advised, and
often by law or contract required, to maintain a close connection with the
licensee to ensure that the quality standards are maintained so that the
consumer is not deceived.
Through a franchise agreement the owner of certain
technical or other expertise who has usually gained a reputation in connection
with the use of a trade or service mark (the franchiser) may team up with
another enterprise (franchisee) who will bring in expertise of his own or
financial resources to provide goods or services directly to the consumer.
The franchiser will ensure, through the supply of
technical and management skills, that the franchisee maintains the quality and
other standards in relation to the use of the trade or service mark which often
require certain standardized features like, for example, a uniform trade dress.
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Technology Licensing
If
your SME is interested in:
→
improving the quality of your
product or manufacturing a new
product by using the rights
owned by others in the form of a
patent,
utility model, or know-how
protected by a trade secret,
then acquiring such rights
through a technology licensing
agreement may be the right
solution, or
→
entering a market or extending
your existing market for a
product for which your SME owns
the rights to a patent, utility
model or know-how protected by a
trade secret, then
authorizing another to use your
process or product through a
technology licensing agreement
may be the right solution.
By
a
technology licensing
agreement the licensor
authorizes the licensee to use
the technology under certain
agreed terms and conditions. It
is, therefore, a contract freely
entered into between two parties
and contains terms and
conditions so agreed.
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Joint Venture
A
joint venture may consist of
any variety of business
relationships that involve two
or more enterprises pooling
their resources with the
objective of implementing a
common business purpose.
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Often, in such
agreements, one party will contribute technology
or know-how of which he is the proprietor and
the other party may contribute financial and
expertise of his own to the project. The joint
venture will, therefore, often include a
license agreement concluded by the parties
concerned to regulate the use of the proprietary
information and compensation for its use. |
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Copyright License Agreements
If
your SME is interested in:
→
manufacturing, distributing or
marketing the results of the
literary and artistic efforts of
creators, or
→
entering a market or expanding
or extending your existing
market for the literary and
artistic efforts of your
enterprise
you may consider a
copyright license agreement.
Many owners find it difficult to
manage their rights on their own
and they have formed collective
management organizations that
represent them and manage their
rights for them. If you are
interested in acquiring these
rights you may have to address
yourself to the appropriate
collective management
organization that will be
authorized to license the
various rights of their members.
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