Licensing

1. What is licensing
2. Official definition of the term 2.1 Licensing as defined in legislations 2.1.1 Licensing under Copyrights Act, 1957 2.1.2 Licensing under Trademarks Act, 1999 2.1.3 Licensing under Patents Act, 1970
3. Licensing as defined in official government reports
4. Licensing as defined in case laws
5. Types of licensing
6. International experience
7. Benefits of licensing
8. Related terms
9. way ahead
10. References

What is licensing

Licensing is the process of granting of permission (from one party to another) to use material that is licensed and held by one of the parties. This material comprises of software or intellectual property such as patents, trademarks, rights, tradesecrets etc.

The act of giving people official permission to do, to have, or to sell something is called licensing.

The word licence has been derived from the Latin term ‘licentia’ meaning ‘ freedom or liberty’. To a layman, a license means ‘a permission to use another’s property.’

Official definition of the term

Licensing under Copyrights Act, 1957

Licensing can be seen under Chapter VI of the Copyrights Act, 1957. Section 30 of the act permits owners of copyright in existing work or a prospective owner of the copyright in any future work who may license the rights in the copyright in writing by him or by his duly authorised agent.

The business of issuing or granting licenses in respect of literary, dramatic, musical and artistic works incorporated in cinematograph films or sound recordings can be carried out only through a registered Copyright Society. An owner of copyrights can grant licenses, in his individual capacity, in respect of his own works consistent with his obligations as a member of a registered copyright society.

Licensing under Trademarks Act, 1999

Trademarks licensing in India is governed by Section 49 of the Trademarks Act, 1999. The Act does not explicitly mention license but refers to the licensee as a registered user. The license needs to be written and allows the licensee to be a registered or an unregistered user. Registered users under this Act can institute infringement proceedings whereas unregistered users may not. Trademark license means the permission granted by the owner of the trademark to a third person. such a license is granted in conisderation of a royalty.

Licensing under Patents Act, 1970

A license can be understood as a permission given by the owner of a thing to a person to use,to make, or to exercise rights related to any invention which patented. A license only grants or permits partial use of a product or invention.

Licensing under desings act, 2000

present under section 30 of the Indian designs act, 2000 which states that a person entitled by way of assignments, transmission or any other operation of law of copyright can make an application by the prescribed format to the controller of designs for transmission or granting of design rights. Section 30[4] states that 'the person registered as the proprietor of a design shall, subject to the provisions of this act and to any rights appearing from the register to be vested in any other person, have power absolutely to assign or grant licenses as to or otherwise deal with, the design and to give effectual receipts for any consideration for any such assignment, license or dealing'.

IP	Statute	Relavant Provision
Trade Mark	The Trademark act, 1999	section 49 of the act states that the registered user and the registered proprietor should apply jointly through an agreement in writing to the registrar for a permitted use of the trademark.
Copyright	The Copyright act, 1957	section 30(3) of the act states that the copyright owner can grant any interest in his copyright work by a licensing writing that is signed by him or his agent.
Patent	The Patents act, 1970	section 68 of this act states that a patent license will only be valid if it is reduced to writing. another section in this act requires a licensee to get registered with the controller of patents this is present under section 69 of this act.
Design	The Desings act, 2000	section 30 of this act states that a license will only be valid if it is in writing and it has to be registered with the controller withing 6 months from its execution.

Licensing defined in official governments reports:

In government documents, "licensing" typically refers to the formal authorization or permission granted by a government entity or authority to engage in a specific activity, business, or occupation that would otherwise be illegal or restricted.

Governmental License means any license, permit, franchise certification, registration, identification number, certificate of need, certificate of occupancy, Food and Drug Administration registration, franchise, Consent or order of any state or federal Government Entity. on these license fees may be imposed, but must be reasonable and not so expensive as to prevent persons from the right to pursue a trade or occupation. Licensing may be used to raise revenue or to fund the regulation of activities of the government. Any qualifications attached to the issuance of the license must meet constitutional due process requirements and not be discriminative.

The issuance of a license may also be conditioned on the action of any other government agencies, such as requiring a state license before the applicant will be allowed a local license, or requiring other agencies, such as police, fire, and health departments, to approve the application before the license issue.

Types of licensing

The major types of intellectual property licensing are:

In The Indian copyright law the copyright licensing is classified into two types as follows:

Voluntary license: is defined under section 30 of Indian copyright act, which allows the copyright owner to grant another perosn the right to make exclusive or non-excluisve use of a copyrighted work. this is called a voluntary license because it is voluntarily granted by the owner of the copyright.

under this the ownership remains with the copyright owner and only specific rights like distribution, adaptation, reproduction, production or display are transferred to the licensee.

voluntary lisence can be further classified into the following:

Exclusive License: This type of license involves the exertion of intellectual property rights of the licensor by the licensee to the exclusion of all, including the licensor. Thus, only the licensee is authorised to use the intellectual property.

Non-Exclusive License: This license allows for the licensee to exercise the rights as well as the keeping open the scope for the licensor to exercise the rights and licensing these rights to any other third party.

Sole License: In this license, while the licensee is permitted to use the intellectual property, the licensor is also authorised to use the property, however, such rights cannot be transferred to any third party. Only the licensor and licensee may exercise these rights.

Implied license: this kind of license is not explicitly granted through a written agreement but is instead implied by the way of conduct or the circumstances of the parties in the license.

Compulsory license: according to section 31 of the Indian copyright act, a compulsory license is a statutory license that permits the government to grant a license for the use of copyrighted works without taking the consent of the holders of this right.

The copyright board in india is authorised to grant compulsory licenses for copyrighted indian works in some situations.

Few things that are eligible for compulsory licenses are artistic works that are authored by indian citizens and cinematographic films, sound recordings that are made or manufactured in India.

The concept of compulsory licensing in copyright law is present under many international agreements like trade-related aspects of intellectual property rights [TRIPS] agreement and this differes from counrty to country.

Types of tademark licenses:

A trademark licensing is a process by which the owner of a registered trademark or licensor grants the right to use his trademark fully or partially to a third party who is the licensee under a mutually agreed lisencing agreement.

Types of License	Licensor's right to use	Licensee's right to use	Licensor's right to grant the license to other parties
Exclusive	not apllicable	applicable	not appliacable
non-exclusive	applicable	applicable	applicable
sole license	applicable	applicable	not applicable
sub- license	applicable	applicable	applicable

under the sub- license both the licensee and the licensor have the right to use and grant licenses.

Types of patent licenses:

Exclusive licensing is the one in which all the patents rights is transferred to the licensee.

Non Exclusive here this kind of licensing is giving license to more than one company.

Sub licensing is issued by the licensee to different companies to make the products.

Compulsory license is when government gives permission to any person or company to make, sell or use a patented design for the benefit of the public irrespective of the patent owner's will. these licenses are mostly granted to pharmaceutical companies under section 84 of patents act, 1970.

Cross licensing is a process when there is a chance of an exchange of licenses between many creators and organisations. This is used when the innovation requires the support of other products to make its position in the market.

Voluntary licensing is very similar to compulsory license which a license granted for an act of goodwill to the society. here the patent owners at their discretion grant license to other parties mostly granted to pharmaceutical products.

Carrot licensing this is a marketing method where the patent owner gives the licensee a sight of what could be achieved by obtaining a license for their patent. here the licensee doesnt come under any obligation to take a license.

Stick license is a contrast to carrot licensing. this license can be used when the licensee is already in use of the patented technology and thereby violating your patent.

International perspective

World Intellectual Property Organisation broadly categorises intellectual property licences under:

Technology License Agreement: In this kind of license, the licensee is permitted to exercise rights related to patents, utility models or know-hows protected by a trade secret owned by the licensor. The licensee is, therefore authorised to use the technology under certain conditions.

Trademark License Agreement: Trademarks are a way of distinguishing the goods and services of one enterprise from another. The franchiser has usually gained reputation for his trademark and via a license agreement, authorises the franchisee to make use of the trademark under certain conditions like maintaining the quality of goods and services since the goodwill of the trademark is at stake. The franchisee may provide financial resources or his own expertise.

Copyright License Agreement: Copyrights are granted over creative works such as music, cinematograph films, artistic works etc. In order for them to be reproduced and published by others, there must be a copyright license agreement between them authorising the licensee to exercise rights over the copyright owned by the licensor.

Different countries have various legal requirements for the registration and management of the IP and its licensing.

In China there are very strict rules to be followed where the licensor should submit the brand licensing agreement to the china trademark office because the trademark law in china requires a licensor to supervise the quality of the goods and products to use the license agreement.

In USA there is no such legal requirement but the license should be registered at the state level.

In UK there is no specific licensing law but there are separate legislations that cover the registration and management of patents, copyrights, design rights and trademarks.

How is licensing defined in case laws:

NATCO-BAYER CASE

in this case a german pharmaceutical company called Bayer corporation invented a drug called Nexavar which is used to treat kidney cancer. this drug was given patent protection in India in the year 2008. then, an indian pharmaceutical company approached Bayer corporation with an aim to get a voluntary license to manufacture a drug in 2010. but their request was denied so they applied to the controller for a grant of compulsory license. the license was given in the year 2012. Bayer coporation was aggrieved by it and it approached the intellectual property appellate board [IPAB]. what the board decided was similar to that of the controller. the board held that since the patentee is enjoying the rights conferred on it the patentee should ensure that the drug is available for the public. in this case the conditions mentioned in section 84 was also fulfilled.

Nacto pharma is paying the royalties to Bayer corporation at a rate of 6% for all the sales on a quaterly basis which is in accordance with the guidelines issued by the UNDP. in january 2013, the health ministry of India recommended 3 anti-cancer drugs for compulsory licenses.

LEE PHARMA V/S ASTRAZENECA

In this case a compulsory license was sought by an Indian pharmaceutical manufacturer for a drug called sexagliptin that is used for the treatment of type- 2 diabetics. it is one of the rarest drugs found in India. the drug was first given to Bristol Myers Squibb and then to an anglo swedish company called Astrazeneca. but this application for the grant of compulsory license was rejected.

ENTERTAINMENT NETWORK (INDIA) LIMITED V/S SUPER CASSETTE INDUSTRIES LIMITED

In this supreme court case the court looked into the matter where a compulsory license granted to one broadcaster can prevent another broadcaster to get a compulsory license. the supreme court held that the copyrighs board has the authority to grant subsequent licenses.

NOVEX COMMUNICATIONS PVT LTD V/S DXC TECHNOLOGY & ORS

The madras high court held that the entities involved in the business of issuing copyright licenses should be registered as copyright societies under section 33 of the copyrights act. In this case Novex communications was not registered as a copyright society therefore it could not issue licenses.

BAJAJ ELECTRICALS LTD V/S GOURAV BAJAJ & ANR

in the high court of bombay it held that unauthorized use of trademark of the name BAJAJ was a trademark infringement commited by the defandants who were using the name in their businesses called apna Bajaj store and Bajaj excellent.

Benefits of licensing

Reducing costs which means a business may buy-in innovation to reduce its develpment and research costs.

Accessing expertise indicates that by taking a license a business may tap into expertise that it does not have.

Saves time- a business may get its products or the services to markets more quickly by getting a license to use existing IP, instead of consuming more time on re-inventing.

Generation of revenue- licensing can broaden the reach of IP into many different markets.

Sharing the costs and risks mena sthat when a company licenses the right to manufacture and sell their products, the licensor receives revenues from that licensing but it does not take the risk of manufacturing, promoting or selling those products. the licensee has the right to use the IP without the expenses and risk of the cost of developing the product and the research.

Collaboration indicates that when the businesses want to work together to develop new products and services licensing of any IP will help as the first step of taking a license helps to asses the needs and objectives of the business.

When a license is obtained a buisness may have and advantage over its competitors.

An owner of the IP license can make the owner of another business to sell in territories that the owner cannot cover

Way ahead

Challenges Associated with Intellectual Licensing Agreements are:

• Possibility of ownership disputes:

There can be disputes about the title, ownership, or rights associated with the licensed intellectual property. It can arise becuase of a chain of issues in claims or title claims or there is any form of breach in a contractual obligation by one party.

• Infringement Claims:

There can be legal cases against the licensee and licensor in case claims of infringement have been made or there is an unauthorized use of the intellectual property. There could be injunctions or damage claims made.

• Validity and Expiry:

There could be any changes in the law or a new regulation passed that could affect the validity and the enforceability of the license agreement of the intellectual property rights. It could also be affected by any judicial decision passed about this matter.

• Unregistered Rights:

There can be various unregistered rights about intellectual property. These can only be protected through a licensing agreement, provided in the clauses of the licensing agreement.

• Subjects of Discussion:

There can be various subjects that are to be discussed in the licensing of intellectual property like creating, perfecting, or enforcing security interests, specifically liens and encumbrances, on licensed Intellectual Property (IP) assets. It is basically about the financial factors.

• India’s provisions for compulsory licensing, where the government can allow the production of patented products (e.g.medicines) without the patent holder’s consent, has sparked concerns among international pharmaceutical companies. While these provisions are important for public health, they create tension with global investors concerned about the sanctity of their patent rights.

Related terms

Synonyms of the term licensing are permit, grant, authorize.