Licensing

Some Nuggets...WIPO Data US IP value = $5-$5.5 trillion or more $180-200B in revenue annually $2.8B in 1970; $27B in 1990 US IP exports = 45%-60% of total exports 35-40% of US GDP (U.S. Market value) $1.2+ trillion invested into R&D In 2015, 589K patents (50% granted) 52% granted to non-residents; 870K® in US 30%+ of U.S. jobs relate to IP

Licensing Basics What is a license? A GRANT! A grant by IP owner for someone else to use IP. A CONTRACT!!! When we buy a DVD, software, MP3, book, etc. we are paying a licensing fee for IP and cost for any physical production All media industries are based on licensing Licensor: owner of IP who grants license Licensee: party that licenses the IP Assign: outright sale or transfer of IP

Types of Licensing Agreements Exclusive: all but ownership. Usually deprives licensor the right to use IP. License granted at exclusion of all others (preferable for a licensee) UO® and Nike® for “O” on all headwear/apparel Non-exclusive: permission to use property in limited manner (markets, products, etc.) (preferable for a licensor) Sole: a hybrid license. Exclusive, but allows licensor to ALSO use IP

Software Licenses We NEVER buy software, we license “Shrink-wrap license”: when you break the wrapping you are agreeing to the license “Click-wrap license”: by clicking “I agree” you accept terms of the license (iTunes!) “Webwrap”: when you download the software you agree to the accompanying terms of license Software companies use these license to prevent reverse engineering

The Agreement You Agreed?

Royalties Income generate by licensor, or revenues collected by artist (in film “residuals”) “Paid up”: lump sum payment “Running royalties”: periodic payment based upon sales Cross License: no royalties, but two parties “pool” their IP instead of licensing or suing i.e. Edison Trust or Blu-Ray Based on value of IP in new technology (for patent, about 5% US; less in other countries)

In Action In patent: you license the right to use the patented idea in another product/innovation In trademark: you license the right for the use of your mark on other “products.” Must be diligent to maintain mark. In copyright: you license any or all of the RP3Ds

Compulsory Licenses Aka “Statutory license” Comes from 1909 Copyright Act Both patent and copyright Don't need expressed consent from IP owner Must provide notice to IP owner and pay a set royalty % based on “sales”

Mechanical License Paid to songwriters, composers, publishers for the right to make a recording of their lyrics/composition Compulsory mechanical license: can make a sound recording of a musical work w/out permission Must already be recorded Cover version, arrangement, print copies of notation Cannot change melody or lyrics (moral rights?) Statutory royalty rate = 9.1-cents (-5 minutes) per copy 24-cents per copy for ring tones

Songwriters/Composers/Publishers Royalty rights: 1) print rights= reprint sheet music 2) mechanical rights= sound recording of work Harry Fox Agency 3) performance rights= concert, tv/radio, clubs ASCAP, BMI, SESAC 4) sync rights= sync with visual element 5) digital rights= webcasting, streaming SoundExchange DJ food stamp advice: write songs!

Master Use License For using a sound recording in another media Film, television, video game, tv ads, sampling Negotiated between a record company and potential licensor Negotiated with whoever owns the copyright of the “master” recording Up front fee and running royalties

Sync License Any visual paired with sound, hence “sync” or synchronization Paid to publisher/songwriters/composers NOT record labels (that's a master use) Can re-record a composition to pair w/ a visual element Usually lasts for a set amount of time Royalties are “paid up” not based on sales

Most Favored Nations Aka “MFN” A clause that means that if you license to other parties the terms must be the same or as fair to someone already licensing It can also mean a 50/50 split between parties involved in the license

Contract Bits Contractual Remix Clauses Materials/Contents Release Injunctive Relief