LICENSING CHALLENGES


Of particular interest on the licensing map is South East Asia—a manufacturing powerhouse for all sorts of electronics, electrical components and electronic devices, such as cell phones, semiconductor chips, hard disk drives and brushless DC fans.


Licensors know well that some licensees are more reliable and trustworthy than others. Companies should learn how to deal with the less reliable kind before they have to solve a problem.


As a result of arm’s length negotiations in personal meetings in Taiwan, a Taiwanese DC fan manufacturer entered into an agreement with a licensor, which covered brushless DC fans for sale anywhere in the world. Te licence agreement also covered the Taiwanese fan manufacturer’s subsidiaries, including in the US and in Japan. A non-exclusive and non-transferable licence, without right of sub-licence, granted the licensee the right to practise the process of making, using and selling licensed products under licensed patents in any country in the world, in exchange for timely royalty payments.


Payments had to be made in US dollars on a quarterly basis, with each quarterly payment due at the same time as the corresponding written report, within 30 days of the end of a quarter. Each written report had to list model numbers for licensed products, the number of units sold of each model, and the net sales of each model. The licensee was bound to keep records for the purpose of an audit in sufficient detail to enable the royalties payable under the respective agreement to be determined for a period of five years from the dates to which they pertained.


An auditor was supposed to gather information from the licensee to the extent necessary to verify the records and payments provided for in the licence agreement. If the audit results showed an underpayment of royalties by more than 5 percent, the licensee would be responsible for the audit costs and an additional payment of a certain percentage of the underpaid amount, as well as interest on any unpaid balance.


It was agreed to construe the agreement according to the laws of the US. Both parties submitted themselves to the jurisdiction of the US district court for the Northern District of Illinois, Eastern division, with the proviso that, for any breach of this agreement by the licensee, the licensor could choose to file suit in an appropriate court in the Republic of China (Taiwan). If the licensee defaulted or breached any material provision of the agreement, or


www.worldipreview.com World Intellectual Property Review Annual 2012 25


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152  |  Page 153  |  Page 154  |  Page 155  |  Page 156  |  Page 157  |  Page 158  |  Page 159  |  Page 160  |  Page 161  |  Page 162  |  Page 163  |  Page 164  |  Page 165  |  Page 166  |  Page 167  |  Page 168  |  Page 169  |  Page 170  |  Page 171  |  Page 172  |  Page 173  |  Page 174  |  Page 175  |  Page 176  |  Page 177  |  Page 178  |  Page 179  |  Page 180