Licenses can also be the culmination of litigation between an IP owner and a party that purports to use an IP without a valid license from the IP owner. For example, in 2011, Intel Corporation and Nvidia Corporation signed a patent licensing agreement whereby, Intel ended up paying Nvidia USD1.5bn as license fees.
Many actually do not realize the potential commercial advantages that an IP can provide to their business. At the time of identification and creation of the IP itself, if an entity considers various alternate ways to best utilize the same, this small initiative can go miles ahead in creating an enduring commercial advantage to the entity, in terms of higher market capitalization and better competitive advantage. Vital steps include– IP identification; IP creation or acquisition; devising an IP strategy (for commercially leveraging the IP); safeguarding – through appropriate IP filings and contracts; and enforcement – taking prompt defensive or offensive action to enforce the IP rights.
Any basic license can be of various types such as software license; patent/technology license; copyright license; trade mark license or a combination of any of these. Generally, IP license agreements are mostly modeled on the following forms: Exclusive or Non-exclusive license. In an exclusivelicense arrangement, the licensor retains all ownership rights, title and interest to the IP licensed to the licensee. The licensee receives a right to commercialize an IP to the exclusion of all others, including the licensor. Exclusive licenses can be category based exclusivity and may not always be blanket rights. For instance, the exclusivity may be in terms of rights pertaining to term period (term exclusivity), or territory (territorial or geographical exclusivity) or field of technology (operational exclusivity). The reason an IP owner may limit the extent of the exclusivity is to retain residual rights to commercialize on its own or through any other entity and thereby enhance the potential of the IP in question, both in terms of realizing the maximum possible revenue as well as building the maximum extent of brand and/or product exposure for the IP owner and its IP in the market.
While rights can be granted based on an oral communication between Parties, in India several forms of rights documents need to be in writing and be validly registered with the relevant authorities.
What form of rights an IP owner decides to grant actually depends upon various factors such as extent of control, ownership of rights, economic scenario, market requirement and exploitation that the IP owner wishes to retain for itself as against determining that another entity may havethe ability to render it more effectively
For a licensee, the determining factors stem from the grass root point that in the absence of a specific right (license or assignment) from the IP owner, the unauthorized exploitation tantamounts to a violation of legal and/or common law rights of the IP owner. It is no wonder that the world today is sitting and closely monitoring the Apple and Samsung war. Even the Korean electronics giant, LG electronics recently acquired a patent license from Microsoft so that LG can utilise Microsoft’s patented Android and Chrome OS without being at the receiving end of litigation by Microsoft. It is interesting to note that Microsoft has entered into similar agreements with several other companies, including Samsung, HTC, Acer, Quanta and Wistron, whereby it earns a percentage of fees for every Android phone or tablet manufactured by its licensees.
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