ch 14.3

LICENSING IN MALAYSIA LICENSING IN MALAYSIA

LICENSING IN MALAYSIA

Licensing Licensing

Licensing is the practice of leasing a legally protected

property (such as a trademarked or copyrighted name,

logo, likeness, character, phrase or design) to another

party in conjunction with a product, service or

promotion.

It is based on a contractual agreement between the

owner of the property (or its agent) known as the

licensor and licensee (normally a manufacturer or

retailer).

Sources: www.licensingpages.com

Licensing Licensing

It grants the licensee permission to use the property subject to specific terms and conditions which may include the purpose of use, a defined territory and a defined time period.

In exchange for this usage, the licensor receives financial remuneration – normally in the form of a guaranteed fee and/or royalty on a percentage of sales.


Licensing Licensing

The verb license or grant license means to give permission. The noun license (licence in British spelling) refers to that permission as well as to the document memorializing that permission. License may be granted by a party ("licensor") to another party ("licensee") as an element of an agreement between those parties.

A shorthand definition of a license is "an authorisation (by the licensor) to use the licensed material (by the licensee)."

Sources: http://en.wikipedia.org/wiki/License

http://en.wikipedia.org/wiki/American_and_British_English_spelling_differences

LicensorLicensor

The owner of the Licensed property or brand.

e.g Bugs Bunny is owned by Warner Bros, so Warner Bros is the Licensor of Bugs Bunny.

Licensee

The manufacturer or distributor of a product or service that has purchased use of a license to sell products to retailers. Major retailers can also be licensees as they often sign license agreements directly with licensors


Licensing Process ChartLicensing Process Chart


A License AgreementA License Agreement

Ensuring that the intention of the parties (Licensor and Licensee) arrangement is properly documented is vital to protecting the parties’ position in the event of a dispute in the future.

Remember the faintest ink is better than the most retentive memory.

Documentary evidence in less susceptible to being challenged in a court of law.


Types of Licensing Agreement Types of Licensing Agreement

1. Sole License

“The Licensor grants the Licensee a sole license of the Rights for the Territory for the duration of this Agreement. The Licensor shall not, subject as provided below appoint other licensees for the Territory, but may itself manufacture and sell the Products in the Territory.

or

“A Sole License means that you as trade mark owner and the licensee (but no one else) may use the trade marks”.

Sources: http//pharmalicensing.com/public/articles_Susan Singleton

Types of Licensing AgreementTypes of Licensing Agreement

2. Exclusive License

”.“The Licensor grants the Licensee an exclusive license of the Rights for the Territory for the duration of this Agreement. The Licensor shall not, subject as provided below, actively sell the Products on the Territory nor appoint other licensees for the Territory”.

or

“An Exclusive License means that only the licensee may use the trade marks”.

Sources: http//pharmalicensing.com/public/articles_Susan Singleton

Exclusive License

The Copyright, Design and Patent Act 1998 UK defines it as a license in writing signed by or on behalf of the owner of the right authorising the licensee to the exclusion of all other persons, including the person granting the license, to exercise a right which would otherwise be execisable exclusively by the owner of the right.

Types of Licensing AgreementTypes of Licensing Agreement

3. Non-Exclusive License

“The Licensor grants the Licensee a non-exclusive license of the Rights for the Territory for the duration of This Agreement. The Licensor shall be free to manufacturer and sell the Products in the Territory and appoint other licensees to do so”.

or

“A Non-Exclusive License means that you as a trade mark owner may also use the trade marks and may grant the right to use the trade marks to as many others as you wish”. Sources: http//pharmalicensing.com/public/articles_Susan Singleton

Common Terms and Conditions in Licensing Common Terms and Conditions in Licensing AgreementAgreement

Below are some of the important issues that should be considered when preparing a licensing agreement.

1. Consider relevant requirements of each party as follows:-

1.1 whether agreement comes into force on the date of agreement or specified start date;

1.2 duration of license and any renewal terms;1.3 whether renewal is automatic or optional; 1.4 whether agreement is terminable by

either or both parties and on what ground;

Sources: Tolley’s Commercial Contract Checklist _Lexis Nexis


1.5 whether duration of license is simply linked to performance or payment of license fees;

1.6 whether approval is required in respect of specification and any relevant provisions;

1.7 what documentation and in what forms it is to be provided i.e., disk, paper, web, email.

1.8 testing and acceptance arrangements (if applicable);



2. What types of license is required?

Will it be a Sole license, an Exclusive license or Non-exclusive license or Sole and Exclusive.

3. Review the relevant territory.

“Territorial limitations are extremely common, particularly in the area of trade-mark licenses where different distribution partners may be granted exclusivity for their regions. The territory may be as broad as “world-wide”, limited to a particular province or region, or even as restricted as a plant location .

Sources: 1) Tolley’s Commercial Contract Checklist _Lexis Nexis

2) Key Aspects of IP License Agreement, Donald M. Cameron & Rowena Borenstein © 2003


4. Licensing Fees and Payments5. Termination6. Consequences of Termination 7. Service of Notice Clause8. Confidentiality Clause9. Applicable Law Clause10. Mediation and Arbitration Clause


Licensing Fees & Payment Terms Licensing Fees & Payment Terms

License fees and payment terms consider or specify

1. License fee payable. 2. License fee payment date (s):-

2.1 monthly2.2 quarterly on quarter dates2.3 annually2.4 30 days after specified period 2.5 any deposit or initial payments or fees

due upon singing license2.6 any time based charged


Licensing Fees & Payment Terms Licensing Fees & Payment Terms

2.7 any additional costs/material charges2.8 whether any fixed cost are applicable

(including staff, material and travel expenses)

2.9 whether fee and sums are inclusive or exclusive of taxation; payments;

2.10 whether renewal fees are payable and if so when and at what rate


Contract Duration, Renewal and Termination Contract Duration, Renewal and Termination

1. Term and Expiration

The license agreement should specify the following:-

1.1 Date of commencement

1.2 The period of time during which the parties‘ obligations are in force

1.3 An expiration date, unless it is intended to be a perpetual agreement

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena Borenstein_Ogilvy Renault

Contract Duration, Renewal and TerminationContract Duration, Renewal and Termination

2. Renewal

2.1 The agreement may also provide for a right of renewal;

2.2 A renewal provision it is always open to the parties to negotiate;

2.3 If the renewal is not automatic, the licensee will be required to provide the licensor with notice of its intent to renew within a set period of time before expiry;

2.4 If the renewal is automatic, the notice will only be required if a party does not wish to have the agreement term be extended.


Contract Duration, Renewal and TerminationContract Duration, Renewal and Termination3. Right to Terminate There are two basic types of termination rights 3.1. Termination for convenience 3.1.1 A party with a right to terminate the agreement for

convenience may usually do so at any time, provided that adequate notice is given to the other party.

3.1.2 Licensee typically do not want the licensor to be able to terminate the Agreement for convenience, as they have a great deal of money invested in a business plan related to exploitation of Intellectual Property, including unrecoverable costs.



3.2 Termination for cause

3.2.1 Termination for cause can encompass any number of events.

3.2.2 The most common triggering events allowing a party to terminate for cause including the material of breach by other party of terms of the

Agreement, or the failure of the other party to conduct business ordinary course.



3.2.3 Licensee have the right to terminate the Agreement if the licensed intellectual property is determined to be invalid.

3.2.4. The Licensee may also wish to be able terminate the Agreement if it is sued by a third party for infringement, particularly if it does not have a resource of indemnity from the licensor.



4. Effects of Termination

4.1 A-well drafted license agreement should provide for the consequences of termination on the rights and obligations of each of the parties, to avoid

additional disputes at a time when the parties may already be on less than good terms.

4.2 The licensee's most pressing business concern will be the ability to wind down and exhaust any existing inventories.



4.3 The licensor's perspective, its most pressing concern is that the licensee discontinue all exploitation of Intellectual Property as soon as possible. It may opt to reverse the right to purchase any of the licensee‘s existing stock, at cost of the licensee is amenable, rather than extend the license grant

4.4 The licensor may also require that the licensee return any and all materials that contain or reflect licensed know-how. This provision may operate in tandem with the provision requiring the return or destruction of all confidential information.


The Benefits of Licensing for Licensor The Benefits of Licensing for Licensor

The key benefit for a licensor is the ability to exploit and enhance its brand or property

1. Increasing its brand presence at retail or distribution outlet. 2. Creating further brand awareness to support its

core products or services.3. Supporting and enhancing its core values by associations with the licensed products.4. Entering new markets (consumer or geographical) which were unfeasible with it’s own resources or capabilities.5. Generating new revenue streams, often with little

involvement or additional financial or other resources implication.


The Benefits of Licensing for Licensees The Benefits of Licensing for Licensees

The key benefit for a licensee (especially manufacturer or retailer) is the ability to significantly increase consumer interest in and sales of its products or services. Licensing can be applied as follows:-

1. Transferring the values and consumer favour towards the property to the licensed product or service.

2. Providing added value and differentiation from competitive offerings.

3. Providing additional marketing support or momentum from the core property’s activity provided by the licensor.


The Benefits of Licensing for Licensees The Benefits of Licensing for Licensees

4. Appealing to new target markets who have not historically been interested in a licensee’s product or service.

5. Giving credibility for moving into new market sectors through product extension.

6. Gaining additional retail space and favour.


Intellectual Property License Agreement Intellectual Property License Agreement

1. The Nature of the Intellectual Property will dictate the scope of the rights granted under the Agreement.

2. A Licensor can only part with those rights that it itself holds – therefore the license of patent is typically limited to any or all of the right to make, use and sell the patented invention.

3. A license granted under copyright could include any of many subsidiary and derivation right accorded to the copyright owner.


Intellectual Property License Agreement Intellectual Property License Agreement

Obligation of the Parties

1. Each of the Licensor and Licensee may have obligations to fulfill under the Agreement other than the grant of License Rights and the Payment of Royalties or other License Fees.

2. The nature of the obligation is dependent upon the nature of the Intellectual Property Licensed and the scope of the License Grant.


Obligation of the PartiesObligation of the Parties

3. The obligations may either be positive obligations to take certain actions or negative obligations in the form of restrictive covenants.

a) Disclosure and Assistance

If the Agreement contemplates a license grant including know-how, or if the licensor is otherwise expected to disclose information and offer assistance to the licensee in the exploitation of its license rights, the one of the licensor’s obligations will be to disclose in the required information within a certain amount the time.


Obligation of the PartiesObligation of the Parties

b) Exclusivity

If the license grant is exclusive, the Agreement may include a provision whereby the licensor agrees that it will not license the technology to any other person within the defined exclusive territory or for use in the defined exclusive field.

c) Enforcement of Intellectual Property Rights

The agreement should contain a clause indicating which party will be responsible for the maintenance of registered intellectual property rights, and which party is responsible for payment of all the fees associated which those registration.


Conflict of Resolution Conflict of Resolution

Litigation

1. If an alternative dispute resolution procedure is not provided for the Agreement, a party may still attempt to resolve disputes through arbitration, but will only be able to do so if the other party agrees.


ch 14.3

Education

sole license

license agreementensuring

license agreements

grant license

verb license

malaysia licensing licensing

licensee permission

party licensor