PRESENTATION ON

LICENSINGPRESENT BY:

ARTI GUPTAKHUSBOO KANWARRBIEBT-2nd SEM

Licensing

It is an contractual agreement between two business entities whereby the licensor (selling firm) allows the licensee (the buying firm) to use its

– Technology- Patents- Trademarks-Designs- Processes

- Intellectual property

in exchange for a fee or a royalty.

According to Andrew Wakefield “ the transfer of rights to manufacture or market a particular product to another individual or organization through a legal arrangement or contract. It usually requires that a fee, commission, or royalty is paid to the licensor.”

According to pat upon “licensing is a practice of allowing a manufacturer to affix the idea ,character , design , or other representation owned by another to his product.”

The major objective of licensing system is to give effect to the industrial policy of the government.

To regulate the location of industrial units so as to secure a balanced regional development.

To protect and promote small scale sector.

To regulate foreign capital and technology.

To maintain a proper demand-supply balance.

To encourage exports and the substitution of imports.

To conserve foreign exchange.

To ensure the use of large scale economies and proper technology.

1. Coal and lignite.

2. Petroleum(refined) and its distillation products.

3. Distillation and brewing of alcoholic drinks.

4. Cigars and cigarettes of tobacco and manufactured tobacco substitutes.

5. Electronic aerospace and defence equipment of all types.

6. Industrial explosives including detonating fuse, safety fuse ,gun power ,nitrocellulose and machines.

7. Hazardous chemicals.

8. Drugs and pharmaceuticals.

Reasons for Licensing - licensors (sellers) Point of View

1. Lack capital, management resources, market knowledge to exploit directly by export or FDI, so license to a local firm

2. Use licensing as a way to test the market (but is this unfair to local licensee?)

3. We can get money for an invention or technology which is outside our core competence

4. Local market may be too small - problem of economies of scale

5. Avoid or minimize political factors/risks- restrictions on imports- restrictions on FDI- require majority foreign ownership- high risk of nationalization

6. Possible high rate of obsolescence / short product life cycle for new technology - maximize scope for exploitation

The Benefits of Licensing for Licensors

The key benefit for a licensor is the ability to exploit and enhance its brand or property. Licensing can do this by:

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/service or category (e.g. association with a healthy food or with a cutting edge mode of fashion)

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 resource implications

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 do this by:   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 

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

Major Elements of a License Agreement

1.Covers the financial arrangement between the two parties.

2.Establishes the time frame of the deal.

3. Address the issue of quality.

4. Which party maintains control of copyrights, patents, or trademarks.

5. Specify how disputes will be resolved – in which court.

The Licensing Process Flow Chart

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