IP Licensing

8 Key excerpts on "IP Licensing"

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  eBook - ePub

  Licensing Myths & Mastery

  • William S. Seidel(Author)
  • 2017(Publication Date)
  • Business Expert Press

    (Publisher)

  CHAPTER 1

  Understanding Licensing

  1.1 Introduction

  If you have ideas, concepts, works of art, literary works, music, inventions, designs, processes, methods, or brands, you have Intellectual Property (IP). You can sell it; license usage rights; or fund, market, and distribute it yourself. It is even possible to license ideas to a few companies.

  IP is an intangible property created in someone’s mind. It has value just like real property and fits in two categories: Hard Rights include protected property like patents, trademarks, and copyrights, and Soft Rights include unprotected property like trade secrets, know-how, and concepts.

  The concept of licensing is relatively simple. The word, from Latin, means permission, given by one party who controls something to another party who desires it. Your IP has value, someone or some company may want to exploit it, and a license is the right to use it.

  Licensing works because of international laws for government-issued rights of patents, trademarks, and copyrights, protecting intellectual property. Without the legal ownership of names, works of art, inventions, and the ability to restrict exploitation by others, commercialization and innovation as we know it would not exist. This affects everything we see and use from movies and books to cars and smartphones.

  A license is a contractual grant, the License Agreement , by the owner, the Licensor , of the intellectual property rights to the party desiring to use part or all of those rights, the Licensee . A license agreement grants the licensee permission to commercialize the project by manufacturing, marketing, and/or distributing it while paying for those rights. As a licensor, you become a vendor to the company, under protection by the company, and you may even contract and work with the company. A license agreement is more like a profit-sharing agreement or an employment agreement than a sales agreement.

  Licensing creates one of the greatest financial freedoms anyone can attain. If all goes right, licensing has the ability to create Passive Income

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  Intellectual Property Licensing and Transactions

  Theory and Practice

  • Jorge L. Contreras(Author)
  • 2022(Publication Date)
  • Cambridge University Press

    (Publisher)

  That is, without licensing an entity would have to acquire ownership of all blocking rights or create an entirely new product or service that does not infringe the IP of others. Both of these alternatives are often impossible, making licensing the best and only option for the productive use of one’s own IP. Licensing of this nature can occur through individual licensing negotiations, cross-licenses (in which each party grants parallel licenses to the other), or pursuant to IP pools in which the rights of multiple IP owners are licensed on an aggregated basis (discussed in Chapter 26). While these transac- tions are often quite different in nature, they share the common feature of eliminating barriers to the efficient utilization of IP within a market sector. 1.2.8 Platform Leadership In some instances the developer of a technology or creative platform may wish to license rights to others to encourage the broad use of its platform. This approach was adopted early by the makers of video game consoles (Sony, Nintendo, Microsoft), which sought to encourage game developers to write games optimized for their platforms. Today, the Apple App Store and Google Play exemplify a similar approach. 23 Similar motivations are at work in the area of open source software (Section 19.2), technical interoperability standards (Chapter 20) and many patent “pledges” (Section 19.4). In each case, the owner of a platform technology makes it available, often without charge, to encourage the independent development of products and services compatible with the plat- form. With a platform’s growth and adoption, the IP owner can sell ancillary products and services, effectively using the broadly licensed rights as “loss leaders” to promote other revenue- generating activities.

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  Navigating Strategic Decisions

  The Power of Sound Analysis and Forecasting

  • John E. Triantis(Author)
  • 2013(Publication Date)
  • Productivity Press

    (Publisher)

  195 © 2010 Taylor & Francis Group, LLC 12 Product and Technology Licensing Licensing of products, services, and technologies is the assignment by the licensor to the licensee the rights to produce and sell goods and services, apply a brand name or trademark, or use the licensor’s patented technology. Licensing is governed by agreements that are legal contracts between the licensor and the licensee that cover a wide range of business arrange-ments and define the rights and obligations of the parties. Licensing agreements are important strategic decisions, and in today’s highly competitive environment, they are a part of the growth strategy of many large companies. For example, in the US pharmaceutical industry, licensing is necessary to ensure revenue and profit growth, and today almost half of large pharmaceutical company revenue is derived from licensed drugs. In the technology sector, licensing is a busi-ness strategy that generates substantial revenues and, to enhance profitability, expertise has been developed to manage it from the idea to qualification to incubation to commercialization down to licensing. The majority of licensing agreements have standardized common elements that include the following: 1. The scope of the agreement, which deals with exclusivity, transfer of rights, territorial restrictions, and distribution rights 2. Time schedules and milestones specifying the length of the contract, product to market dates, and renewal options and conditions 3. Financial terms and conditions that include advance payments, revenue sharing or royalties, minimum payments, and how payments are calculated 4. The licensor’s ability to monitor and control the licensed article’s quality and market performance 5. The licensee’s obligations to maintain quality standards and commercial performance, protect intellectual property, and control patents and trademarks, advertising, and inventory requirements 6.

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  Innovation and Technology Transfer for the Growing Firm

  Text and Cases

  • Julian Lowe, Nick Crawford(Authors)
  • 2013(Publication Date)
  • Pergamon

    (Publisher)

  Licensing-in, however, is not just about resources and tactics. Licensing can have substantial repercussions for the overall strategy and direction of the enterprise. It can be a central part of the firm's innovation policy and as such., is crucial to the firm's survival and growth in the long and short term. A firm's innovation strategy will rarely rely solely on technology licensing or ignore it totally. There is an important relationship between in-house R&D and externally traded technology. This may vary substantially between firms of different size, products and basic technologies. This book is directed towards an assessment of the problems 1 2 INNOVATION AND TECHNOLOGY TRANSFER and opportunities involved in these considerations. Licensing is really just another form of buying and selling technology. However, there are ambiguities in both concept and definition and undoubtedly licensing is applied to more situations than may be justified under a narrow definition of the term. A licence agreement comprises the case whereby one firm grants to another the right to use its intellectual property. Strictly speaking a 'licence' refers to the right to use a patent alone. In common parlance however, licensing is used to describe any transfer of technology or other intellectual property whether or not a patent is involved in the transaction, while in many agreements patents do constitute a part of the agreement, they may not always be the central part and this is particularly true where a large amount of 'know-how' or expertise required to carry out a process is involved. Licence agreements vary widely in both scope and scale however, and can comprise no more than the use of a particular patent or agreement in a process in some cases.

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  Deal Makers

  How intelligent use of contracts can help you sell more and deliver better

  • Tiffany Kemp(Author)
  • 2013(Publication Date)
  • Anoma Press

    (Publisher)

  To date, I’ve had a 100% success rate with these ‘cease and desist’ letters, with the infringers immediately taking down the infringing content in most cases, and within a few days for the others. One bemused recruiter explained that he had outsourced the development of his new website to an offshore web development company, and was not aware that he even had any terms and conditions on the site. The developers had obviously found our terms and adopted them lock, stock and barrel – including my client’s company registration details!

  If you own an IPR, you control the right of others to use it

  When you own an intellectual property right, you can use it as you choose. When it comes to commercialising it, that might mean that you choose to exclude anyone else in the world (or a particular country) from using it, so that you benefit exclusively from its wonderfulness.

  Alternatively, you might realise that others have more resources to exploit and generate business from your IP than you do. Or you might want to work with others to help you exploit it yourself. What are the mechanisms for granting rights to others without giving your IPR away?

  The most obvious mechanism, used by software vendors the world over, is to grant a client a limited licence to use your IP. So in the case of software, this means granting your client a licence to use the copyrighted computer source code (probably) as compiled into some form of executable.

  (By the way – in English, we use ‘licence’ with a ‘c’ for the noun – “we grant you a licence to use...”and ‘license’ with an ‘s’ for the verb – “we license you to use...” In America, they use an ‘s’ for both flavours.)

  If you have a patented invention, you might want to license a manufacturer to use your patent for the purpose of manufacturing goods for supply to you. Or you could grant a reseller licence, enabling them to manufacture the goods and sell them directly to end users, paying you some form of royalty for each unit made and/or sold.

  These days, most commercial manufacturing seems to be done in China or other eastern countries. There are still significant concerns, however, about how safe your IPR is in the hands of a Chinese manufacturer – with some justification, given the prevalence of ‘knock off’ brand-name goods in Chinese markets.

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  Essentials of Licensing Intellectual Property

  • Alexander I. Poltorak, Paul J. Lerner(Authors)
  • 2004(Publication Date)
  • Wiley

    (Publisher)

  An exclusive license grants the use of the IP to one licensee to the exclusion of all others, even the licensor. A sole license allows only the licensee and the licensor the rights to use of the IP. A licensor may grant any number of nonexclusive licenses, but, since such a license does not secure a monopoly for the licensee, it generally commands a lower price than does an exclusive license. However, nonexclusive licenses have two advantages over exclusive licenses: (1) multiple nonexclusive licenses 51 L i c e n s i n g S t r a t e g i e s : T h e C a r r o t a n d t h e S t i c k provide multiple sources of revenue as opposed to the single source of revenue provided by an exclusive license; and (2) multiple nonexclusive licenses dilute the influence each licensee may exert over the licensor. A joint venture is created for a specific limited purpose and owned by two or more parties. The contribution of each of the joint venturers consists of IP or services such as manufacturing or distribution. A joint venture forms a separate entity, which may own intellectual property. A strategic alliance is an agreement between its various members to cooperate in some specified manner, and is not a separate entity.Allies agree to offer each other goods or services on preferential or exclusive terms. 52 E S S E N T I A L S o f L i c e n s i n g I n t e l l e c t u a l P r o p e r t y

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  Protecting and Exploiting New Technology and Designs

  • K. Hodkinson(Author)
  • 2002(Publication Date)
  • Routledge

    (Publisher)

  • Licensing may be done involuntarily or at least reluctantly. It may be that you would prefer to produce or keep the technology for yourself, but that it is the only way of persuading another company to license something to you—a cross licence situation. Cross licensing is often a halfway house between straight licensing activity and a collaborative joint venture and in fact that is how many joint ventures start off. Usually the parties are relatively equal in standing and contribute pretty equally. The cross licensing device enables them to spread risk and to concentrate on their own part of the project without exhausting staff resources, making best use of each other’s expertise in complementary technological fields. The cross licensing provides a cheap way of developing a broader-based expertise and between them the two firms strengthen their hand against other rivals.

  Of course the success of such licensing is heavily dependent on the trust and mutual honesty of the two parties. It is very easy to get one’s fingers burnt. Alternatively you may be forced into giving (or for that matter taking) a licence as a means of settling a potentially damaging infringement action. This may be essential where the challenge appears quite strong or you simply do not have the money to fight it with. The licence cuts your losses and those of the licensee. An enemy becomes an ally, in whose interests the validity of the patent may well now be.

  • Finally, you may be forced to license out by the law itself or by the threat of the law, whether directly under the compulsory licence provisions which exist in some of the intellectual property regimes or because of the complaints of rivals of abuse of dominant position in the market by the right holder. Or you have to cut the cost of maintaining the right in existence by declaring the right to be available for licences of right, i.e. anyone who applies will be given one on reasonable terms. This reduces the cost of renewal fees for patents and designs.

  Thus, in sum, licensing produces income without capital investment and with a reduction of risk. It expands artificially the markets in which one can trade and therefore hopefully increases the turnover over capital asset ratio of the company. But again licensing out is not all pluses. There are a number of countervailing factors to consider before deciding on this particular line of activity.

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  Tapping the Riches of Science

  Universities and the Promise of Economic Growth

  • Roger L. Geiger, Creso M. Sá(Authors)
  • 2009(Publication Date)
  • Harvard University Press

    (Publisher)

  38 Still, provi-sional patents offer a fairly small window in which to marry an invention to a license. Hence, the closer the ties with industry, the better the odds of suc-cess. However, since such links depend heavily on environmental context, weakness in this area is difficult to overcome. Success in licensing university IP is associated with three contextual fac-tors: an economic infrastructure of technology-based firms receptive to in-novation; access to entrepreneurs and venture capitalists, not so much for capital as for their unmatched savvy for gauging market opportunities; and an experienced, entrepreneurial faculty familiar with the first two factors. Once again, the early-stage nature of university inventions indicates why this is the case. Large corporations are very selective in taking an interest in embryonic technologies, since it is seldom evident how early-stage discoveries might eventually contribute to their product line and customer base. 39 Universities have always found more willing licensees among small companies and, in-creasingly in recent years, start-ups. Thus, regions rich in these young, science-based companies more readily assimilate university inventions. In 2006, a fairly typical year, 51 percent of academic licenses were executed by small companies (fewer than 500 employees), 17 percent by start-ups, and 32 percent by large corporations. While TTOs are often able to have multiple firms examine an invention, most commonly only a single firm will bid for it. These firms frequently demand exclusive rights for protection during the lengthy period of development. For start-ups, over 90 percent of licenses are exclusive; for small companies this figure declines to 40–45 percent; and for large corporations, 30–35 percent. A majority of academic licenses are nonex-clusive, but since a nonexclusive license might have multiple licensees, prob-ably the majority of academic patents are licensed exclusively.

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