MMIT Licensing and Franchising

Licensing and Franchising Contractual Agreements  Licensing is an arrangement in which the owner of intellectual property (IP) grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation.  Franchising is an arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties or other forms of compensation.

Types of Intellectual Property  A patent provides an inventor with the right to prevent others from using, selling or importing an invention for a fixed period – typically, up to 20 years. It is granted to any firm or individual that invents or discovers any new and useful process, machine, manufactured product, or any new and useful improvement.  A trademark is a distinctive design, symbol, logo, word, or series of words placed on a product label. It identifies a product or service as coming from a common source. E.g., British Petroleum’s ‘BP’ acronym, McDonald's golden arches, and Nike’s swoosh symbol.  A copyright protects original works of authorship, giving the creator the exclusive right to reproduce the work, display and perform it publicly, and to authorize others to do these activities. Copyrights cover works from music, art, literature, films, and computer software.

Types of Intellectual Property (cont.)  An industrial design refers to the appearance or features of a product. The design is intended to improve the aesthetics and usability of a product in order to increase its production efficiency, performance, or marketability. The thin Apple iPod with the company logo is a well-known industrial design.  A trade secret is confidential know-how or information that has commercial value. Trade secrets include information such as production methods, business plans, and customer lists. For example, the formula to produce Coca-Cola is a trade secret.  A collective mark is a logo belonging to an association or group whose members have given firms the right to use the mark to identify the origin of a product or service. E.g., ILGWU is a collective mark for the members of International Ladies Garment Workers Union.

International Licensing Process Basic Issues 1.Set the boundaries of the agreement 2.Establish compensation rates (2-5% gross sales) 3.Agree on the rights, privileges, and constraints 4.Specify the duration of the agreement (5-7 years)

What is licensed?  Trademarks  Copyrights  Know-how  Patents

Franchising