IP LICENSING

BY CHANDRA SHEKHAR
NIFT DELHI
Licensing

a). Meaning of Licence

- Licence means the permission to act or - as a verb - permit or

authorize.

- For example, to licence a patent is to give permission to perform

the acts that are protected by the exclusive right of the owner of the
patent.

- Trade marks, industrial designs, copyright, confidential information

and know-how, etc can all be licensed.

- Licensing commences with a contract or agreement that may take

many shapes and may be voluntary or compulsory.

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Types of Licensing Agreements

i). Non-Exclusive Licences

Non-exclusive licences give the licensor both the right to use the
licensed right and to let others do the same, that is to say that more
than one licensee might exist at the same time for the same object.

ii). Exclusive Licences

An exclusive licence implies that the licensor has agreed not to give
a licence to any other licensees for the same licensing object and
area and the licensor will not make use of the licensed right.

iii). Sole Licences

The sole licence is the same as the exclusive licence with the
difference that the licensor has conditioned himself to use the
licensed right.

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Why Licensing?

i). Extra income for a company

One further way to make profit from an invention.

ii). Risk Minimization

Share the burden of responsibility with others. Difficulties and risks
caused by being a foreign company in a foreign country disappear.
Risks of nationalisation, double taxation, special taxation of foreign-
owned companies in a foreign country disappear.

iii). Capital saving

No need to spend money to purchase production units or set up
manufacturing plants.

iv). Flexibility
Through easy adjustment to prevailing situations, the licensor and
licensee can best decide on how to use each other’s resources and
capacity

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v). Commercial boundaries are eliminated
Restrictions on currency flows, quantitative import restrictions and
customs fees that make the exchange of goods difficult among
countries can be avoided.

vi). Lower costs

A product made on licence can be put on the market cheaper than
the same product exported. These savings are a result of costs of
labour, materials, transports and less tax pressure.

vii). Means of acquiring new technology or technique

Through cross-licensing or “pooling”, your company may improve
your products by adding more patented features

viii). Means of avoiding costly and uncertain patent litigation

The burden will be on the licensee to take infringement action or to
defend an infringement proceeding.

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Important Factors to Consider When Preparing a Licensing Agreement

i). Scope of Licence

ii). Territory
iii). Minimum Performance
iv). Best Endeavours
v). Transfer of Technology
vi). Access to Improvement
vii). Dealing With Infringements
viii). Protection of Trade Marks and Designs
ix). Protection of Confidential Information
x). Protection of New IP Generated during the tenure of the Licence
xi). Payment terms
xii). Sub-Licensing
xiii). Account keeping

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Important Factors to Consider When Preparing a Licensing Agreement
(Cont’d)

The preparation of a licensing agreement can be undertaken by a patent

agent who form an important link-man between the parties to a licence
situation.

In arriving at a properly structured agreement, a number of stages are

involved - negotiation, preparation of draft agreement, agree to a
situation, and a win-win contract.