Sunday, July 29, 2012

Licensing Agreement

A License is a contractual right that gives someone permission to do a certain activity or to use certain property that is owned by someone else. In an Intellectual property license, one company grants permission to another to use its Intellectual property, to which it has exclusive rights.
A License allows an intellectual property rights holder (the licensor) to create a business from an invention or creative work by charging a user (the licensee) for product use. It also helps to control, manage and protect the intellectual property.
In Intellectual property, Licensing agreement is a written contract under which the owner of a copyright, know how, patent, service mark, trademark, or other intellectual property, allows a licensee to use, make, or sell copies of the original. Such agreements usually limit the scope or field of the licensee, and specify whether the license is exclusive or non-exclusive, and whether the licensee will pay royalties or some other consideration in exchange. While licensing agreements are mainly used in commercialization of a technology, they are also used by franchisers to promote sales of goods and services.
A variety of such licensing agreements are available, which may be broadly categorized as follows:
·         Technology licensing agreement: 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. Therefore, if any Small and medium size enterprises (SME) is interested in improving the quality of its 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 licensing agreement is the right solution.
·         Trademark licensing and franchising agreement: A trademark license is an arrangement by which the licensor consents to the use of its trademark by the licensee on agreed terms and conditions. A franchising agreement is granted by the franchisor to the franchisee to use its trademark and the franchised system. Therefore, if any SME is interested in marketing the product or service, and the brand (trademark) of that product, is owned by others or, entering and expanding the existing market for the product or service for which the SME owns the right conferred by a trademark then considering a trademark license or a franchise agreement is the right solution.
·         Copyright license agreements: The Copyright License Agreement is an agreement between the owner of the copyright in any existing work or the prospective owner of the copyright and the company or individual in any future work in writing to another person for a limited time. This license should not be mistaken with an assignment. Therefore, if any 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 the existing market for the literary and artistic efforts of the enterprise, then considering a copyright license agreement is the right solution.
However, in practice, all or some of these agreements often form part of one single contract, since, it involves not only the intellectual property rights but many other rights also.
Under the Trademark Act 1999, the assignability and transmissibility of trademark are covered from Section 37 to Section 45.Section 37 of the said Act deals with the power of the registered proprietor to assign the trademark; and the assignability and transmissibility of registered and unregistered trademark whether with or without the goodwill of the business concerned is covered under Section 38 and Section 39 of the Act respectively. The registration of the assignment comes under the purview of Section 45 of the said Act.
In International context, a formal licensing agreement is possible only if the intellectual property right that is wish to license is also protected in the other country or countries, and, if the intellectual property is not protected in such other country or countries then the property would not be license and also there would be no legal right to put any restriction on its use by anyone else.