Licensing of industrial property rights
(Licensing) is one of the legal measures to transfer technology. In accordance
with Law on Intellectual property in 2005 (amended, supplemented in 2009),
licensing of an industrial property rights means permission by the
owner of such industrial property object for another organization or individual
to use the industrial property object within the scope of the owner's
right. Licensing of industrial property rights must be established in the form of
a written contract. There
are three types of industrial property object licence contracts: Exclusive
contract; Non-exclusive contract; Industrial property object sub-licence
contract, detailing:
-Exclusive contract means a contract
under which, within the licensing scope and term, the licensee shall have the
exclusive right to use the licensed industrial property object while the
licensor may not enter into any industrial property object licence contract
with any third party and may use such industrial property object only with
permission from the licensee.
-Non-exclusive contract means a
contract under which, within the licensing scope and term, the licensor shall
still have the right to use the industrial property object and to enter into a
non-exclusive industrial property object licence contract with others.
-Industrial property object
sub-licence contract means a contract under which the licensor is a licensee of
the right to use such industrial property object pursuant to another contract.
What is the advantages and
the disadvantages of licensing contract?
-Firstly, for licensor, licens
ing can
be used to access new markets that are not easily accessible. By allowing the
licensee the right to market and distribute the products, the licensor can more
easily enter the market; Licensing contract may stipulate measures for the
licensor has the right of improvements, technical know-how and related products
that will be developed by the licensee during the valid term of the contract.
However, the licensor may not always claim these rights, and some countries
have strict restrictions on including these types of terms in the licensing
contract; Licensing is necessary if the product only sells best when combined
or sold for use with another product; Last but not least, the licensing
contract allows the licensor to hold ownership of the intellectual property and
at the same time receive licensing fees, in addition to the profits gained from
self-exploitation of such assets from products or services sold or provided by
that party.
Besides the advantages, the licensing
contract also has some disadvantages for the licensor. The licensee may become
a competitor of the licensor. The licensee may make the licensor make less
remuneration than the business losses resulting from the competition of the new
competitor; The licensee may unexpectedly request contributions, for example,
for technical assistance, human resource training, additional technical data,
etc. It is important that the licensing contract must clearly stipulate the
rights and obligations of the parties, whereby any disagreements that occur in
the future can be resolved quickly and effectively; The licensor's revenues
depend on the skills, capabilities and resources of the licensee. This
dependence is even greater in the case of exclusive licensing. The provisions
of minimum wage and other provisions may be provided to avoid this, but this is
still a concern.
-Secondly, for the licensee, the
advantage of a licensing contract is allowing access to technology that has
been developed or is available to apply for helping businesses access to the
market more quicky; Small companies may not have the resources to do and carry
out the research to supply new and higher quality products. The licensing
contract allows enterprises access to technical advances that are difficult to
achieve by other measures; Licensing may also be necessary to maintain and
develop an established market position but be threatened by new designs or
production methods. Access to new technology through a licensing contract is
the best way to overcome this challenge; There may be many opportunities to get
a license when combining with existing company technologies can create new
products, services and opportunities in the new market.
-Regarding the disadvantage to the
licensee, the licensee may have to make financial commitments to technology
that is "not yet ready" for commercial exploitation, or need to
modify the technology to meet its business needs; An intellectual property
licensing contract may result in additional costs for the product. Many
technologies integrated into products can create products with high technology
content but are very expensive when publishing to market; Licensing may create
technological dependence on suppliers, who may not extend the licensing
contract and negotiate a licensing contract with other competitors to limit the
market or to limit exploitation activities which was allowed in accordance with licensing
contract.
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