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June 10, 2014 Copyright 2008 1

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1 June 10, 2014 Copyright

2 Arvind Viswanathan Xellect IP Solutions, India Dar es Salaam, August 22 nd to 26 th, 2011 Exploiting IP Assets: Overview of Licensing, Franchising & Merchandising WORLD INTELLECTUAL PROPERTY ORGANIZATION UNITED REPUBLIC OF TANZANIA WIPO TRAINING OF TRAINERS PROGRAM ON EFFECTIVE INTELLECTUAL PROPERTY ASSET MANAGEMENT BY SMALL AND MEDIUM-SIZED ENTERPRISES

3 Seven Rays of IP Exclusivity June 10, 2014 Copyright 2007 Xellect IP Solutions 3

4 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 June 10, 2014 Copyright

5 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 June 10, 2014 Copyright

6 Licensing Opportunities June 10, 2014 Copyright 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

7 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 June 10, 2014 Copyright 2007 Xellect IP Solutions 7

8 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 June 10, 2014 Copyright 2007 Xellect IP Solutions 8 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

9 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 June 10, 2014 Copyright

10 Franchise v. License Franchise Typically, the complete business Complete Support Provided Any changes in the parent company will be reflected in the franchisees 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 June 10, 2014 Copyright

11 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 June 10, 2014 Copyright

12 Identifying Potential Commericalizing Entities Conduct Competitive Intelligence Find synergistic partners for: –Research collaboration –Manufacturing –Marketing Points to consider: –Technology –Market –Customer needs June 10, 2014 Copyright

13 Considerations for Negotiations Financials –Lump Sums –Royalties Financial Administration June 10, 2014 Copyright 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

14 Licensing A Success Story WORLD INTELLECTUAL PROPERTY ORGANIZATION UNITED REPUBLIC OF TANZANIA

15 The Inspiration Mandy Haberman, a UK citizen and a mother witnessed a friends child spilling juice over a carpet Instead of brooding over the clean-up involved, decided to solve the problem of leaking cups June 10, 2014 Copyright

16 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 ) Additional patents both for the UK and overseas were later filed and granted June 10, 2014 Copyright

17 Licensing efforts…failure Companies involved in manufacture of infants/childrens 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!! June 10, 2014 Copyright

18 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 June 10, 2014 Copyright

19 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 June 10, 2014 Copyright

20 Licensing An Individual Inventors Story WORLD INTELLECTUAL PROPERTY ORGANIZATION UNITED REPUBLIC OF TANZANIA

21 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 June 10, 2014 Copyright

22 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 June 10, 2014 Copyright

23 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 June 10, 2014 Copyright

24 Merchandising Building & Managing A Global Brand Copyright 2007 Xellect IP Solutions June 10,

25 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 June 10, 2014 Copyright 2007 Xellect IP Solutions 25 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?"

26 The Merchandisers June 10, 2014 Copyright 2007 Xellect IP Solutions 26 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 o Also, 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 o Along 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

27 Net Effect June 10, 2014 Copyright 2007 Xellect IP Solutions 27 Over 250,000 figures were sold for each character prior to the film's release Demand continued to expand, eventually reaching over 25 million units sold by 2007

28 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 June 10, 2014 Copyright 2007 Xellect IP Solutions 28

29 Copyright 2007 Xellect IP Solutions June 10, A Piece of My Intellect For a Pot of Gold WORLD INTELLECTUAL PROPERTY ORGANIZATION UNITED REPUBLIC OF TANZANIA

30 WIPO RESOURCES FOR SMEs


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