LICENSING

ERIKA PERDOMOSTEFANY ENCISONATALY CABRERA

Is based on a contractual relationship between the licensor an the licensee.

Licensing can be a very effective way for the internationalization of the activities of small and medium enterprises.

LICENSINGWhat is?

Characteristics A license may be granted by a party

(licensor) to another party (licensee) as an element of an agreement between those parties

1. Term: many licenses are valid for a particular length of time. This protects the licensor should the value of the license increase, or market conditions change. It also preserves enforceability by ensuring that no license extends beyond the term of the agreement.

2. Territory: a license may stipulate what territory the rights pertain to.

3. A licensor may grant permission to a licensee to distribute products under a trademark.

4. The assignment of a license often depends on specific contractual terms.

5. A licensor may grant a permission to a licensee to copy and distribute copyrighted works such as "art"

TYPES OF LICENSINGLICENSING AGREEMENTS: The

arrengaments between the licensor and the licensee are typically laid out in a legal document known as a Licensing Agreement.

Types of Licensing Agreement:Concerning an existing technology/product.The making of provisions for technology

sharing as it evolves during the lifetime of the agreement.

LICENSING OF PATENTS: Involves granting another entity the right to use an original process or type of equipment.

EXAMPLESA greeting card company can obtain a license

to use image Hannah Montana or The Simpsons, characters on greetin cards.

A licensing right classic characters like Winnie the Pooh, which offer lasting value and provide consistent business.

Board games from popular companies such as Hasbro are often licensed from their creators.

Advantages• Appealing to small companies that lack resources due to low risk and capital commitment, while maintaining improved delivery and service levels in local markets.

• Fast market access and more importantly the ability to circumvent barriers to foreign entry that have been imposed through quotas, high tariffs, or limited licensing to local firms.

• Adequate marketing information and control through access to low-cost information about local market performance and competitive reactions, as soon as the licensed product enters the local market.

• Ability to take advantage of the possession of a patented product that is subject to rapid technological changes while it is otherwise unprofitable to simultaneously exploit along multiple markets.

Disadvantages

• Potential creation of future competitors, through disclosure of accumulated knowledge and experience when the license contract ceases.

• Passive interaction with local market, leading to limited market learning.

• Limited flexibility to apply sophisticated technology and marketing advances at a later stage.

• Limited profit potential in case the product is more successful than initially thought.

• Policing the implementation of the licensing agreement is either inefficient or very expensive.