June 10, 2014 Copyright 2008 1 .

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http://xellectip.com

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Arvind ViswanathanXellect IP Solutions, India

www.xellectip.com

Dar es Salaam, August 22nd to 26th, 2011

Exploiting IP Assets: Overview of Licensing, Franchising & Merchandising

WORLD INTELLECTUAL PROPERTY ORGANIZATIONUNITED REPUBLIC OF TANZANIA

WIPO TRAINING OF TRAINERS PROGRAM ON EFFECTIVE INTELLECTUAL PROPERTY ASSET MANAGEMENT BY SMALL AND MEDIUM-SIZED

ENTERPRISES

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Seven Rays of IP Exclusivity™

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Selling

• Permanently transfer ownership of the

patent to another entity.

• Receive an agreed-upon payment once,

with no future royalties

• Value obtained immediately, without having

to wait any longer to realize that value

progressively

• Avoid any unforeseen risks that will reduce

the value of the IP in the future

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Licensing

• Obtain the benefit of royalties for the remainder of the life

of the IP

• Slow incremental value for longer time period

• Particularly useful if the company that owns the IP is not

in a position to conduct business:

– at all

– in sufficient quantity to meet a given market need

– in a given geographical area

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Licensing Opportunities

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• Exclusive license: a single licensee has

the right to use the IP, which cannot even

be used by the owner

• Sole license: a single licensee and the

owner have the right to use the IP

• Non-exclusive license: several licensees

and the owner have the right to use the IP

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Merchandising

• Any practice which contributes to the sale of products to a retail consumer

• Involves stimulating interest and enticing customers to make a purchase

• Includes ideas around:– Pricing– Discounting– Physical presentation– Displays– Timing of presentation of products

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Enabling Merchandising

• Common practice involves use of brand or image from one product or service is used to sell another

• Involves license of:– Trademarked brand names, logos, or character images from owners of such IP

Assets– To manufacturers of products

• E.g. toys or clothing

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Merchandising for children is most prominently seen in connection with films and games

The most common adult-oriented merchandising is that related to professional sports teams (and their players)

Idea being that items in or emblazoned with the image of the license will sell better than the same item with no such image

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Franchise

• Franchise is considered more or less similar to licensing deal, but more stringent requirements

• A Franchisee takes on all aspects of the business– Products, Processes, Trademarks etc.

• Typically, a Franchisee is obligated, under the terms & conditions, to adapt to changes made by the Franchisor– May include new products introduced– Any changes to processes

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Franchise v. License

Franchise• Typically, the complete

business• Complete Support Provided• Any changes in the parent

company will be reflected in the franchisee’s operation also

• Typically, only franchisor- franchisee involved

• Multiple partnerships not offered usually in a given location

• Longer Lasting

License• A Single form of IP i.e. Product

or Process• Limited Support• Licensee maintains own

identity• Often times, Government

needs to be informed of such an agreement

• Multiple Licenses quite commonplace

• Limited time

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Some Considerations for Franchising

• Strong Trademark & Brand• Good track record of profitability• Businesses built around a unique or unusual

concept• Rapid reach to a wide geographic area• Broad geographic appeal• Relatively easy & inexpensive to operate

businesses• Facile replication

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Identifying Potential Commericalizing Entities

• Conduct Competitive Intelligence• Find synergistic partners for:

– Research collaboration– Manufacturing– Marketing

• Points to consider:– Technology – Market – Customer needs

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Considerations for Negotiations

• Financials– Lump Sums– Royalties

• Financial Administration

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• Subject Matter• Extent of Rights• Exclusivity

– Or Lack Thereof– Most Favored Licensee

• Territory• Sub-license• Improvements by

– Licensee– Licensor

• Technical Assistance

• Warranties• Anti-competitive Practices• Dispute Resolution• Early Termination Clause

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Licensing

A Success Story


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The Inspiration

• Mandy Haberman, a UK citizen and a mother witnessed a friend’s child spilling juice over a carpet

• Instead of brooding over the clean-up involved, decided to solve the problem of leaking cups

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Solution

• Her idea was to use a slit valve to control the flow of liquid through the spout of cup

• In 1992, the first of many patents was filed (patent no. GB-B-2266045)

• Additional patents both for the UK and overseas were later filed and granted

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Licensing efforts…failure

• Companies involved in manufacture of infants’/children’s products targeted

• Prototypes of the innovative product were shown• No license was issued• Therefore, in 1996, Mandy Haberman collaborated with a marketing

company that specialized in marketing such innovative products • Anywayup® cup started to sell in unprecedented numbers

• 60,000 units a week!!

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Licensing efforts…success

• Shortly after, a US company signed an exclusive USA licensing agreement

• Anywayup® Cup was to be manufactured and sold under the TumbleMates brand

• Over 10 million cups are now sold each year worldwide

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Victim of Success

• Just 18 months after product launch, a copycat product was discovered

• Mandy Haberman herself made the discovery• Infringer happened to be one of the UK companies she

had initially approached for licensing• She filed a lawsuit and won the legal battle• Court ordered an injunction preventing further

infringement of the patent• The appeal by the infringer was abandoned shortly

thereafter as an out of court settlement was reached

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Licensing

An Individual Inventor’s Story


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Individual inventor…case study 1

• Dr. Milind V. Rane is a professor at a premier institute in India and freelance consultant

• During the course of his consultations, he conceived and developed the design for the Matrix Heat Recovery Unit (MHRU)

• It can be used for recovering heat from hot gases and/or vapors from engines, generators, boilers or furnaces

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Partnership

• M/s Unidyne Energy Environment Systems Pvt Ltd., a small-scale industry based in Mumbai, evinced interest in the invention.

• An exclusive license was granted to Unidyne to manufacture and sell the MHRUs

• Terms of agreement stated that the units to be sold as engine exhaust fired steam generators and water and thermic heaters

• As per the agreement, a down payment was made at the time of signing and subsequent payments were made after achieving various milestones during the demonstration phases

• The agreement stipulated a royalty rate of 4.5% of net sales for the inventor

• Further, the costs of patent filing and maintenance were borne by the company

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Win-Win Situation

• For the Company, the agreement represented an important move as it enabled it to enhance its product portfolio and widen its technology and customer base

• For the Inventor, the license provided a vehicle for the commercialization of the invention

• Revenues generated from the down payment and the royalties fuelled the development of his other inventions

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Merchandising

Building & Managing A Global Brand


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Walt Disney's "Toy Story" is no mere child's play

• Movie industry insiders and critics predicted it will be the hottest film of the holiday season

• $125 million promotion budget with a dual purpose:– (1) getting people to see the film and (2) buy scores of products based on its characters

• Created everything from puppets, action figures, sneakers and contests pegged to the movie's 25 toy characters

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http://articles.nydailynews.com/1995-11-23/news/17983233_1_toy-characters-buzz-lightyear-movie

An expert summarized the merchandising with a simple question:

“How can a kid, sitting through a one-and-a-half-hour movie with an army of recognizable toy

characters, not want to own one?"

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The Merchandisers

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By linking products with "Toy Story," companies hoped to catch the wave

•Executives at Minute Maid juices believed the movie could help reverse their stagnant sales•Frito-Lay brands put "Toy Story" characters on nearly 80 million bags of Doritos, Fritos, Rold Gold and Ruffles•Burger King offered Kids Club Hamburger Meals featuring six of the movie's characters

oAlso, a "Toy Story" hand puppet based on Woody, Buzz and other characters sold with purchase of a Value meal for a time period

•Payless ShoeSource offered a sneaker featuring Buzz Lightyear's image on it

oAlong with the sneaker, the company created "A Special Friendship" booklet, adapted from "Toy Story," the back of which contained $35 worth of coupons to be used at Payless‘ stores

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Net Effect

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Over 250,000 figures were sold for each character prior to the film's releaseDemand continued to expand, eventually reaching over 25 million units sold by 2007

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Manchester United

• Club's trademarks and associated intellectual property valued at £329 million• Ranked second only to the New York Yankees in its list of most valuable sports team brands• Brand built on the basis of early-80s style of play

– Built a strong emotional appeal with fans as a “reflection of liberalization of Western Society”

• Brand strength bolstered by intense off-the-field media attention to individual players– E.g. David Beckham (who quickly developed his own global brand)

• This attention generated greater interest in on-the-field activities, and hence generates sponsorship opportunities – the value of which is driven by television exposure

• Manchester United has received the largest share of the revenue generated from the BSkyB broadcasting deal since Premiership inception

• Nike manages merchandising operation as part of a £303 million 13-year partnership established in 2002

– Those with an affinity for the club can purchase a range of branded goods and services

• Additionally, Manchester United-branded media services – such as the club's dedicated television channel, MUTV – have allowed the club to expand its fan base to those beyond the reach of its stadium

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™ Copyright 2007Xellect IP Solutions

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“A Piece of My Intellect

For a Pot of Gold”


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WIPO RESOURCES FOR SMEs

June 10, 2014 Copyright 2008 1 .

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