In intellectual property, licensing refers to the practice of “granting” (licensor) or “leasing” (licensee) the IP rights of a patent, trademark, copyright or trade secret. A license agreement is required for one party to use IP owned by another party. Understanding how an IP license works can be difficult but rewarding for those who seek to introduce a product or service to market and need the support of another entity to execute.
The Risks and Rewards of an IP License
Whether you are the licensee or licensor, there are benefits and risks to a license agreement, especially when the agreement is being executed in a foreign country, such as Italy, where local laws and rights can differ from other regions. Consulting with an IP attorney in this case can significantly mitigate risk for the client, provide valuable industry insights on how licensing works for Italy, and also guide the client throughout the lifecycle of the license agreement.
Whether a client is seeking a license agreement in Italy for a trademark or patent, an in-country IP firm can begin to help by providing the client with essential, up-to-date information that may not be available elsewhere. While there is some information available online regarding laws and rights for licensing, for instance, on the Italian Patent Office website, this information may not always be up-to-date or complete as required to develop an agreement. Local IP firms maintain daily face-to-face contact with the office to remain informed with the most recent updates.
In some cases, information must be collected first-hand as it is not always made available online. For instance, if a certain right is still applicable, whether it may have been transferred to other subjects or even if it has been declared partially or completely null. Remaining familiar with the local Patent Office in Italy can provide much needed on-the-ground support that can contribute greatly to a robust agreement for the client.
The Challenges of Local Legislation
Due to the potential changes to local legislation that can affect an IP license agreement, the information needs to be quickly understood in the local language. An in-country IP attorney can provide support in both Italian and English, when needed, and the IP firm can provide translated documents for applications and agreements.
In an initiative to encourage new entrants to the Italian market, the Licensing Executives Society (LES) of Italy translated the Italian Code of Industrial Property into English. According to LES Italy, “Patents, trademarks, designs and other IP rights are indeed a driver of success which must be promoted at an international level. The final goal should be not only to find new markets for products, but also to finance a company’s growth.”
While language can be a challenge for foreign companies, local attorneys and organizations are welcoming to foreign investment in Italy and will be accommodating throughout the setup and execution processes.
Using an IP License to Enter New Markets
As mentioned above, there are many benefits to an IP license agreement for both a licensor and licensee. For the licensor, they are able to make more profit on their IP without the need to expand their own business or increase their costs. Additionally, it can help them to maintain a foothold in certain regions or markets, which can protect them against competitors who may otherwise facilitate the needs of the licensee.
A local IP firm in Italy can foresee potential issues for certain industries and also provide advice on specific rights, such as license delimitation, whereby a license agreement can be exclusive or non-exclusive to a particular activity in a region or country. For instance, if an IP owner wishes to manufacture, import and/or distribute products of the IP in the same region as the licensee, this is made possible with a non-exclusive agreement. It is also worth noting that in the European Union, the IP owner and other licensees still have the right to import goods, even if there is an exclusive agreement with a licensee in that country or region.
A licensee should also consult with a local IP firm to understand how their rights can be affected by local or regional legislation. Exclusivity can have an effect on the success of the licensee, if they don’t have the exclusive rights in their country of activity. Additionally, due diligence is a crucial part of the license agreement to ensure that the IP owner has the rights they claim to hold over the asset and they are able to license those rights. Due diligence will provide valuable information about the IP assets, which can also influence the compensation the licensee will receive.
Entering a new market can be risky for any business, whether they are the IP owner or the licensee. By receiving support from a local IP attorney, both parties can be equipped with the local knowledge and resources necessary to protect their rights and ensure a fruitful relationship. Consult with a licensing expert who can take you through the process step-by-step and advise you throughout your agreement.
Article by: Corrado Fioravanti