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LICENSING

The granting of permission to use intellectual property rights, such as trademarks, patents, or technology, under defined conditions. Under this method, the manufacturer enters into an agreement with a licensee in the foreign country and this gives him the right to use the manufacturing process, a patent design or a trademark, technical information or some facility in return for some fee or royalty.

Parties of Licensing- review


Licensor- Company who owns the brand and issues the license Licensee- Company or person who purchase the brand License- The written agreement giving the licensee permission to use a brand

Licensor
The licensor approves the product and collects the licensing fees and royalties Ex: WB will give permission to Electronic Arts to use the Harry Potter character

Licensor (cont)
Companies typically pay between 5 and 10 percent of wholesales in the form of royalties
$900,000 in sales -10% royalties ($90,000) $810,000 before you pay the bills

Advantages of Licensing
Advantages for Licensor
1.Enhanced company image and publicity 2.Increased profit from royalties 3.Increased brand awareness or recognition 4.Increased opportunity for penetrating new markets 5.Limited manufacturing costs or risks

Disadvantages of Licensing
Disadvantage for licensor
1. Potential for poor quality of a licensees manufactured products 2. Partial relinquishment of control over the marketing mix of the brand

Advantages of Licensing (cont)


Advantages for Licensee
1. 2. 3. 4. Existing brand awareness or recognition Lower advertising and promotional costs Increased possibility of success and profitability Connection with an athlete, sports team, entertainer, or corporation

Disadvantages of Licensing (cont)


Disadvantages for licensee:
1. Athlete, entertainer, or corporation may lose popularity. 2. Sports teams may suffer losing seasons 3. Change in styles, trends, and consumer preferences 4. Royalties and licensing fees can be expensive

INDUSTRIES FOR WHICH INDUSTRIAL LICENSING IS COMPULSORY


1. For Large and Medium Industries: Items reserved for the Small Scale Sector 2. For All Industries: a) All items of electronic aerospace and defence equipment, whether specifically mentioned or not in this list. b) All items related to the production or use of atomic energy including the carrying out of any process, preparatory or ancillary to such production or use, under the Atomic Energy Act, 1962.

EXAMPLES OF LICENSING IN INDIA


INDIA'S NEXAVAR LICENSING CREATES A GLOBAL DEBATE Nexavar, the brand name of the anti-liver cancer drug, sorafenib, sold by Bayer in India in tiny quantities was an unknown commodity. An Indian patient with advanced liver cancer paid 280,000 for a dose of 120 tablets he has to take in a month or spend close to 35 lakh in a year for the drug which could extend life by six-to-10 months. BAYER APPEALS FORCED LICENSING IN INDIA Bayer is appealing an India Patent Office ruling that requires the company to license its cancer drug Nexavar to the Indian drugmaker Natco Pharma, a case that highlights growing U.S. concerns in what has become a notable illustration of U.S. concerns over insufficient intellectual property protections in the country.

Why license?
The Licensors reasons might include:
to make money to help sell products, services, equipment to obtain technology via grantback to secure a market to settle a patent dispute cross-licensing of other, existing technology rights to future technology to buy continued development of the licensors technology

The Licensors reasons might include:


to acquire marketing strength, capital and market assets or an interest in them. to reduce capital requirements for reaching a market. to adapt a product to a local market to reach fields of use outside the licensors normal purview to avoid waste of by-product technology to profit from residual value in an old technology to fulfill local laws to avoid antitrust/anti-competition or trade regulation problems

The Licensees reasons might include:


to obtain rights to technology to supplement the licensees R&D to obtain continuing access to technical help to benefit from the good reputation of the licensor by gaining ability to use its trademark to obtain quick entry without cost and technology risks to obtain access to the licensors facilities

Bootlegging
Bootlegging is unauthorized use of a name, logo, or trademark of a league, athlete, sports team, entertainer, film, TV show or character Bootlegging reduces the profits of the licensors and legitimate licensees

Bootlegging (cont)
Bootlegging can result in poor quality products for consumers, which will decrease brand loyalty

INDIA SUSPENDS KINGFISHER AIRLINES' LICENCE


1. Kingfisher Airline's (KING.NS) licence was suspended on October, 2012 after it failed to address the Indian regulator's concerns about its operations, forcing the debt-laden carrier to stop taking bookings. 2. Controlled by Vijay Mallya - the self-styled "King of Good Times" - and seven months behind on salary payments among other missed bills, Kingfisher's fleet has been grounded since the start of the month when a staff protest turned violent.

THANK YOU

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