LICENSING

GROUP-10
ANJANA.A.NAIR
B.APARNA
DHANU MARIA BABU
JERIN JOSHY
JILU JOGY
JOYAL JOLLY
LICENSING
• Licensing is the simplest form of business alliance, wherein a company
rents out its product based knowledge in exchange for entry to the
market.
• The firm that permits another firm to use its intangible assets is the
licensor and the firm to whom the license is issued is the licensee.
•  A fee or royalty is charged by the licensor to the licensee for the use
of intellectual property right.
DEFINITION
• Licensing is defined as a business arrangement, wherein a company
authorizes another company by issuing a license to temporarily access
its intellectual property rights, i.e. manufacturing process, brand
name, copyright, trademark, patent, technology, trade secret, etc. for
adequate consideration and under specified conditions.
CHARACTERISTICS
A license may be granted by a party (licensor) to another party (licensee)
as an element of an agreement between those parties
• Term: many licenses are valid for a particular length of time. This protects
the licensor should the value of the license increase, or market
conditions change. It also preserves enforceability by ensuring that no
license extends beyond the term of the agreement.
• Territory: a license may stipulate what territory the rights pertain to.
• A licensor may grant permission to a licensee to distribute products
under a trademark.
• The assignment of a license often depends on specific contractual terms.
• A licensor may grant a permission to a licensee to copy and distribute
copyrighted works such as "art"
DIFFERENCE BETWEEN LICENSING
AND FRANCHISING
BASIS OF DIFFERENCE LICENSING
• MEANING Licensing is an arrangement in
which a company (licensor) sells
the right to use intellectual
property or produce a
company's product to the
licensee, for royalty.
• GOVERNED BY Contract law
• REGISTRATION Not necessary
• TERRITORIAL RIGHTS Not offered
FRANCHISING
Franchising is an arrangement
in which the franchisor permits
franchisee to use business
model or brand name for a fee,
to conduct business, as an
independent branch of the
parent company (franchisor).
Securities law
Mandatory
Offered to Franchisee
BASIS OF DIFFERENCE LICENSING
• DEGREE OF CONTROL The licensor has control on the
use of intellectual property by
the licensee, but has no control
on the licensee's business.
FRANCHISING
Franchisor exerts considerable
control over franchisee's
business and process.

• PROCESS Involves one time transfer of Needs ongoing assistance of

property or rights. franchiser.

• FEE STRUCTURE Negotiable Standard

• TRAINING AND SUPPORT Not provided Provided

ADVANTAGES
• It creates an opportunity for passive income.
• It creates new business opportunities
• It reduces risks for both parties
• It creates an easier entry into foreign markets.
• It creates self-employment opportunities
• It offers the freedom to develop a unique marketing approach.
DISADVANTAGES
• It increases opportunities for IP theft.
• It creates a dependency upon the licensor.
• It creates added competition in the marketplace.
• It is offered for a limited time
• It could damage the reputation of both parties
•  It is not a guarantee of revenues.
•  It takes time for royalty payments to arrive.
•  It may lead to royalty litigation.
EXAMPLES
• NESTLE AND STARBUCKS
In May 2018, Nestle and Starbucks entered into a $7.15 billion coffee licensing deal.
Nestle (the licensee) agreed to pay $7.15 billion in cash to Starbucks (the licensor) for
exclusive rights to sell Starbucks’ products (single-serve coffee, teas, bagged beans,
etc.) around the world through Nestle’s global distribution network. Additionally,
Starbucks will receive royalties from the packaged coffees and teas sold by Nestle.
The licensing agreement provided Starbucks with the ability to drive brand recognition
outside of its North American operations through Nestle’s distribution networks. For
Nestle, the company gained access to Starbucks’ products and strong brand image.
• ANGRYBIRDS AND STARWARS
Rovio Entertainment and Lucasfilm have teamed up for an Angry Birds/Star Wars
collaboration that will see a new game and merchandise range.
The “Angry Birds Star Wars,” set to launch worldwide Nov. 8, will combine “Angry
Birds” and “Angry Birds Space” with the characters, stories and settings
• FORD MOTOR COMPANY
“Ford Brand Licensing has a process in place to review license
applications and also works with a variety of internal teams to
determine key categories and growth opportunities in which we’d like
to seek new partners for,” says Casie Ocaña, global brand licensing
manager, Ford Motor Company. “When it comes to picking those
partners, Ford looks to ensure the company shares the same values as
well as passion for our products and consumers.”
• WALT DISNEY
With more than $272bn in global sales of retail merchandise last year, a
License Global magazine report lists the Walt Disney Company as the
world’s leading licensor with brands that include Lucasfilm, Marvel,
ABC, ESPN, DisneyPixar and Walt Disney Studios and a total of $56.6bn
in licensed merchandise sold in 2016.
• POKEMON COMPANY INTERNATIONAL