What is licensing

In the era of globalization, designing something truly innovative is a very difficult undertaking, since ideas often tend to overlap, representing concepts so similar as to make them seem almost a useless copy.

The differences between one invention and another often appear as small nuances of concept and can generate unpleasant discussions or even legal proceedings aimed at settling which rights are really linked to each project or business idea.

It is increasingly important to protect intellectual and industrial property. In fact, the issues related to these aspects generate considerable interest and closely involve both companies, artists and freelancers.

In a panorama of possible business overlaps and sometimes saturated markets, practices have been developed aimed at the purchase or sale of ideas, brands or trademarks to promote their diffusion, thus obtaining greater profits. Licensing is, in fact, one of these practices.

The term licensing refers to the activity of marketing a license. It is a sort of concession, regulated through a special trademark license agreement, through which the owner of the trademark allows the licensee to exploit a registered trademark, a know-how or a particular patent, under certain conditions.

The brand owner, known as the licensor, can exploit licensing from a marketing perspective as it improves the diffusion of a brand/service, increasing its authority in the eyes of its target audience.

The licensee has the opportunity to expand its turnover, enjoying the goodwill, also in terms of recognition, that a brand brings with it.

It is therefore a question of the purchase or sale of an intellectual property, through which the parties agree in such a way as to define and materialize a mutual interest. There must be an entity between the brand owner and the licensee that mediates and manages the relationship between the parties, regulating it through a real license agreement, more commonly referred to as a license agreement.

Brand Oasi is that entity that supports both the licensor and the licensee and defines the details of the agreements.

Going into specifics, there are two types of licensing, which involve interests different that need to be appropriately assessed in the pre-contractual phase.

Specifically, there is the "licensing in", i.e. the purchase of the license, and the "licensing out", the assignment of the license.

Licensing in and Cross Licensing

This translates as "incoming license" and implies the acquisition by a company, a brand, a patent or know-how according to specific agreements established between the licensor and licensee.

If a company has an innovation that cannot be implemented concretely since already patented by a third party, the so-called "cross licensing" comes into play, i.e a real sharing of patents between different companies. In this case the company with the fewest patents will have to pay the relative royalty to compensate for the difference.

Licensing out

Conversely, they are the "outgoing licenses" transferred to third parties for the purpose of obtaining an economic advantage, formula contract which most often involves the technologies used in companies.

This formula provides for a series of particular clauses present in the agreement of the contract licensing. They enable the entrepreneur to protect himself from any damages resulting from direct competition, promoted by the transfer of the related patents.

For this reason, the transfer of use of the license can be under the title:

• Exclusive: where the licensor undertakes not to go live competition with the licensee.
• Non-exclusive: that is, it does not include any type of constraints or operational limitations.

With the licensing agreement, through appropriate regulation, it is possible to "exploit" intellectual property from an economic point of view and beyond. Licensing allows for the dissemination of brands, products and services, making sure that company ideas and projects do not remain confined e limited to the only company that chooses to implement them.

It is therefore necessary to define the terms relating to the license agreement between the owner of a patent and the third party who wishes to use it.

The contract, normally with a duration of 3 years, provides that all the characteristics relating to the relationship between licensee and licensor such as:

• The subjects and the duration of the contract
• The amount you are obligated to pay in royalties
• The methods of withdrawal and any restrictive and purely territorial clauses
• All cancellation procedures to be implemented in case of default.

This last point is a sort of "protection" so that the same agreement brings advantages for both the parties involved, having on the one hand the opportunity to benefit from a brand or a patent without necessarily having to create it from scratch and on the other hand to be able to enjoy greater consequentials economic profits.

The concession of a brand requires royalties and a guaranteed minimum defined in the contract; Usually the royalty is between 10% and 12% of the turnover. As a further protection in favor of companies owners of the trademarks, a minimum guaranteed royalty of approximately 50% is estimated on sales forecasts, this minimum is paid in part or entirely in advance at the time of stipulation of the license agreement. To calculate the guaranteed minimum, the business plan is taken into consideration presented by the licensee, who must define how he intends to develop the business in relation to prices, margins, distribution channels, etc.

Becoming a brand licensee means proposing the values expressed by the licensor brand. To such In this regard, a deep search for information on the brand and its history is essential, as well as the support and intermediation of Brand Oasi.

The brokerage to support the granting of the brand.

Brand Oasi is an intermediary between licensee and licensor. Thanks to thirty years of experience in the sector of licensing, takes care of the entire process envisaged from the negotiation of contracts to the development of marketing plans "tailor-made". It also deals with royalty management by offering customized solutions aimed at optimizing productivity and pursuit of the expected business objectives.

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