Licensing Some Nuggets US

Licensing

Some Nuggets. . . • US IP value = $5. 5 trillion or more • $180 billion in revenue annually – $2. 8 B in 1970; $27 B in 1990 • US IP exports = more than 60% of total exports • In 2011, $1. 2 trillion invested into R&D • In 2011, US issued 224, 505 patents (many to Asian companies/inventors) • In 2011, IBM secured 6, 180 patents – IBM invests $6 B in R&D; sees $1 B in licensing royalties

Licensing Basics • What is a license? A GRANT! – A grant by IP owner for someone else to use IP. A CONTRACT!!! • When we buy a DVD, software, MP 3, book, etc. we are paying a licensing fee for IP and cost for any physical production • All media industries are based on licensing • Licensor: owner of IP who grants license • Licensee: party that licenses the IP • Assign: outright sale or transfer of IP

Types of Licensing Agreements • Exclusive: all but ownership. Usually deprives licensor the right to use IP. – – • License granted at exclusion of all others (preferable for a licensee) Non-exclusive: permission to use property in limited manner (markets, products, etc. ) – • (preferable for a licensor) Sole: a hybrid license. Exclusive, but allows licensor to ALSO use IP

Software Licenses • We NEVER buy software, we license • “Shrink-wrap license”: when you break the wrapping you are agreeing to the license • “Click-wrap license”: by clicking “I agree” you accept terms of the license (i. Tunes!) • “Webwrap”: when you download the software you agree to the accompanying terms of license • Software companies use these license to prevent reverse engineering

Royalties • Income generate by licensor • “Paid up”: lump sum payment • “Running royalties”: periodic payment based upon sales • Cross License: no royalties, but two parties “pool” their IP instead of licensing or suing

In Action In patent: you license the right to use the patented idea In trademark: you license the right for the use of your mark. Must be diligent to maintain mark. In copyright: you license any or all of the RP 3 Ds

Compulsory Licenses • Aka “Statutory license” • Comes from 1909 Copyright Act • Both patent and copyright • Don't need expressed consent from IP owner • Must provide notice to IP owner and pay a set royalty based on “sales”

Mechanical License • Paid to songwriters, composers, publishers • Compulsory mechanical license: can make a sound recording of a musical work w/out permission – – Cover version, arrangement, print copies of notation – • Must already be recorded Cannot change melody or lyrics (moral rights? ) Statutory royalty rate = 9. 1 -cents (-5 minutes) per copy

Songwriters/Composers/Publishers • Royalty rights: – 1) print rights= reprint sheet music – 2) mechanical rights= sound recording of work • – Harry Fox Agency 3) performance rights= concert, tv/radio, clubs • ASCAP, BMI, SESAC – 4) sync rights= sync with visual element – 5) digital rights= webcasting, streaming • • Sound. Exchange DJ food stamp advice: write songs!

Master Use License • For using a sound recording in another media – Film, television, video game, tv ads • Negotiated between a record company and potential licensor • Negotiated with whoever owns the copyright of the “master” recording • Up front fee and running royalties

Sync License • Any visual paired with sound, hence “sync” or synchronization • Paid to publisher/songwriters/composers • Can re-record a composition to pair w/ a visual element • Usually lasts for a set amount of time • Royalties are “paid up” not based on sales

Most Favored Nations • Aka “MFN” • A clause that means that if you license to other parties the terms must be the same or as fair someone already licensing • It can also mean a 50/50 split between parties involved in the license