IP As Property / IP Rights Licensing / International Licensing

This brings us to an important point to note. In licensing of intellectual property one is talking about an agreement for an ongoing relationship which hopefully will last for many years and wherein, however good one's crystal ball may be at the time when one drafts the agreement, one cannot foresee every eventuality and make proper provision for it in the contract. It is, however, highly desirable at the time when setting out to draft the agreement to try to envisage as comprehensive a set of "what ifs" as one can so that one may try to reach agreement on such issues ahead of time and so minimize future problems.

A further complication in the international field lies in the constraints imposed by different legal systems. For example the European Community and Japan and several other countries, have specific guidelines as to whether certain types of clause which a licensor might wish to see in a license agreement will be treated as valid under their laws having regard their possible adverse impact on local competition laws. In other countries there may be inhibitions on the enforcement of intellectual property rights or the maximum amount of damages that one might be able to secure from the infringer. Such inhibitions in effect place limitations on a licensing strategy since they affect the value of the property being licensed.

For all of these reasons, the most important thing to bear in mind in international licensing of intellectual property is the same as that which applies to domestic licensing, namely that one must be careful about how one chooses one's partner. This, however, is even more important in the international field then it is domestically in view of the cultural and legal differences sketched above.

It is therefore important to have a clear idea as to what one is setting out to achieve by an international licensing agreement. Reasons can vary from simply trying to cash in on some useful technology that one owns in a country where in which one has no interest in ever doing business direct to an early step in a long term strategy to become a major player in a particular market. In the first case one's choice will probably be heavily influenced by who can maximize short term profits for the product or service being licensed. In the latter, more concern will be paid to factors such as local reputation, how easy the prospective licensee is to work with and the possibility of later entering into other forms of cooperation. In other cases a major motivation may even be to try to establish a sound business relationship with a potential source of new technology for one's own company to exploit in other parts of the world. In all cases, however, it is important to find out as much as one can about a prospective partner since the relationship is likely to be one in which the parties will work together over a number of years and one should not necessarily jump into a license agreement just because one is impressed by a meeting with a prospective licensee's representative at a trade show.

The other major preliminary to be carried out before entering into a license agreement is to ensure that one knows exactly what it is that is being licensed. In most countries, patent, trademark and design rights all require periodic payments of renewal or maintenance fees to remain in force. It can be embarrassing, to say the least, to try to license a right that has lapsed for nonpayment of such a fee. It is therefore desirable to carry out a proper inventory of one's rights, and to check whether any of them are under challenge before entering into a licensing negotiation. The licensee is likely to do its own due diligence and one does not wish to be surprised and in any case any licensee who is properly advised will insist on the agreement containing a warranty to the effect that the licensed rights are in force and not subject to any current challenge.