ELEMENT OF A

LICENSING
PROGRAM

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 Learning Objectives
This chapter is designed to help you to:
Identify the characteristics of a licensing
agreement.
Differentiate between trade mark and
patent.

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 Contents
1. Introduction
2. Characteristics of a licensing
agreement
3. Trade mark and patent
4. Conclusion

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 Introduction

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 First For a license to exist,
copyrights and there must be a contract
patents were between two or more
issued in the parties giving an
late 1700s explanation as to what
property rights the
licensor is agreeing to
give up to the licensee.

Licensing
Agreemen
t
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Characteristics of A
Licensing Agreement

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 • The terms of any license should always be
recorded in writing and, until the license
agreement has been signed, all correspondence
and negotiations about the terms of the license
should be expressed to be ‘subject to contract’.

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Characteristics of A Licensing Agreement
1. It is a legal document that ……

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Who may use the IP?

- The licensee may be a company, a group of

companies, another type of corporate body, an
individual or a collection of individuals.
- Some licenses can cover entire enterprises and
bind not only the company but also the users of its
products.

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 Duration of the license contract

- The time-scale of a licensing contract, such as its

commencement, duration and termination must be
stipulated in the contract.
- Duration of the license:
• fixed period
• any initial minimum period
• right to renew/automatic renewal
• right to terminate by notice
• length of notice period

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What IP are you licensing?

- This could be a patent or material which is

protected by copyright or a trade mark.
- You may be licensing more than one sort of IP.
- You may have licensed IP from someone else and,
in turn, want to license that IP to another business.

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 Limitations
How IP may be used?
- Be specific about what the licensee may do with the
IP. There are three main types of license:
a. Exclusive
b. Sole
c. Non-exclusive

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 Exploitation

Charges and payment

- Consider how the license is going to earn a return.
- Consider what and how you will have to pay.
- Think about what criteria you will use to value the
IP specified in a license.

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 Settlement of Disputes
Governing law and dispute
- If entering into a license with a party in a different legal
jurisdiction, determine which country’s laws should apply.
- Have a mechanism for resolving disputes. Dispute resolution
involves two aspects.
a. The law that should govern the agreement.
b. The appropriate method and forum to resolve
the dispute. The parties can decide whether
disputes should be resolved by the parties, or by
a judge.
- When licensing abroad, consider the cultural as well as legal
characteristics of your partners.
Example

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 Trade Mark and
Patent

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 A symbol (Nike’s swoosh), word
(Adidas), a number (number 10),
a colour (orange), etc that is
legally registered or established
by use as representing a company
or product.
Licensor must
exercise some degree
of control over the
nature and quality of
the licensed trade
Trade mark
mark goods or
services.
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 Benefits of
trade mark

Provide an incentive to companies to

invest in maintaining or improving
the quality of their products in order
to ensure that products bearing the
trade mark have a positive reputation.
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 Protecting the brands
Benefits by trade mark
registration.

International
expansion through
international sales.
Licensing for
profit.

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 Characteristics of A Trade Mark
Licensing Agreement

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Exploitation:
Responsibilities of the licensee:
• Quality of products and usage of mark.
• To supply promotional literature and/or samples for
licensor’s approval.
• To supply accounts to the licensor.
Responsibilities of the licensor:
• To provide the requisite know-how and assistance.
• Maintenance of registration of the mark(s).
Ownership of the trade mark:
• Acceptance of the licensor’s ownership of the trade
mark and goodwill by the licensee.
• Agreement not to challenge.
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Settlement:
Infringements:
• Control of proceedings.
• Cooperation in proceedings.
• Costs of proceedings.
• Rights in respect of damages or settlements.

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 A form of protection that provides a
person or legal entity with exclusive
rights for making, using or selling a
concept or invention and excludes
others from doing the same for the
duration of the patent .

Patent

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Only an inventor may apply for a
patent on his or her idea. If two or
more people participate in the
creation of an invention, the law
requires that all participants apply
for a patent as joint inventors.

A person making only

a financial contribution
to an invention can't be
Patent named as a joint
inventor.
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 There are two types of
entrepreneurs related
patents.

Patent

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 Provides protection on the appearance
design of the invention. It is generally
cheaper and simpler to file. However,
its overall protection is not as effective
as a utility patent because the
invention's design can be changed
many times, thus helping others who
want to use your design avoid patent
infringement. Its term is 14 years.

Design
patent
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 Is more complicated than a design
patent as it requires explanation on
the usage of the invention. It is
usually more expensive to obtain
and requires more input from an
attorney. The utility patent's term is
20 years.

Utility
patent

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• Nike was granted more than 540 patents by the U.S.
Patent and Trademark Office in 2013, up about 60%
from 340 in 2012.
• Many of Nike’s latest patents integrate digital
technology into sports equipment so users can
measure and improve results.
• The company introduced the FuelBand bracelet,
ideal for recording calories burn in an exercise.
• Nike make a golf shirt that replicate what a
coach does. The clothing has tighter material in
areas key to a repetitive movement, like a golf
swing.

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 •Ideal for monitoring calorie burning.
•Helps weight loss.

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 Conclusions

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Licensing agreement is a legal contract between two
parties, known as the licensor and the licensee. The
licensor grants the licensee the right to produce and
sell products, apply a brand name or trade mark, or
use patented technology owned by the licensor. In
exchange, the licensee submits to a series of
conditions regarding the use of the licensor’s
property and agrees to make royalties.

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