MERCOSUR & Chile IPR SME HELPDESK
Licencing in Latin America
MERCOSUR IPR SME Helpdesk
WHO ARE THE PROJECT PARTNERS?
Project Partners:
• University of Alicante, Spain (General Coordinator)
• Eurochambres, EU
• Steinbeis Innovation gGmbH, Germany
• Instituto Nacional de Propiedad Intelectual, Chile
• University of Campinas, Sao Paulo, Brazil
• University Simon Bolivar, Venezuela
• Association ORT, Uruguay
• Universidad Nacional del Litoral, Argentina
• Senior Experts from Mercosur, Chile and other Latin American countries
• Project duration: November 2013 – June 2015
• Budget: 659.825,68 EUR
MAIN FEATURESOUR SERVICES, OUR OBJECTIVES
Services of the Mercosur IPR SME Helpdesk for SMEs in Europe?
• Facilitate the expansion of European SMEs interested in or operating in the Mercosur region and Chile, through increased know-how of the usage and enforcement of the IP system and the IP rights.
• Provide first-line assistance and support to EU SMEs
operating in or interested in the Mercosur region and Chile, through a Helpdesk service.
• Offer a first-line Helpdesk service to European SMEs on IP protection and rights, including a physical office in Brazil;
• Host a multi-lingual web portal for IP and enforcement issues, focused on MERCOSUR and Chile;
• Offer training via webinars, face-to-face and e-learning modules within SME workshops and clinics;
• Work together with a wide range of stakeholders and networks to ensure the needs of the target group are met;
• Monitor on-going developments in the sector and exert influence for policy-making;
How we do it?
Who is our target group?
• European SMEs • Intermediary & multiplier organisations in EU• SMEs and PROs from Mercosur and Chile• Other stakeholders:
Policy-makers European Commission Services, NCPs, DGs, and IP services (other
Helpdesks, IPorta) Higher education and research institutions and organisations Large enterprises and other stakeholders
FOCUSSED ON SERVICES FOR SMEs
SERVICES
MULTIMODAL PERSONALISED ASSISTANCE
• Info service for EU SMEs including first-line assistance on IP protection and enforcement in MERCOSUR and Chile. Responses within 5 working days.
FIRST LINE ADVICE SERVICES ON IPR PROTECTION AND ENFORCEMENT
• Facilitating contacts to relevant government agencies, EC services and projects, NPs, research organisations, enterprises, attorneys, or consultants for further follow-up
SIGNPOSTING SERVICES AND EXPERT LIAISON
• Facilitates co-ordination users based in the target region
BRAZIL OFFICE
WEB AND INFO SERVICE
• Training and e-learning materials • IPR case studies, interviews, FAQs• Up-to date news and events, bi-monthly newsletter • Step-by-step guide for doing business in MERCOSUR and Chile• Gateway to the Helpline and self-assessment tool
USER FRIENDLY LEGAL SUPPORT MATERIALS
• MERCOSUR IPR SME Helpdesk NetSpace
NETWORKING AND INTERACTION
• English, French, German, Portuguese and Spanish
MULTI-LINGUAL PORTAL AND SERVICES
Identify the various ways of entering the global marketplace.
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GLOBAL MARKETPLACE QUESTIONS
• What are our options in selling abroad?
• How difficult is global marketing?
• What are the potential risks and returns?
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WHY “GO GLOBAL”?
•Earn additional profits
•Leverage a unique product or tech. advantage
•Possess exclusive market information
•Utilize “economies of scale”
What is the external environment facing global marketers?
THE EXTERNAL ENVIRONMENT
SOCIO-CULTURAL ASPECTS
The common set of values shared by its citizens
that determine what is socially acceptable.
SOCIO-CULTURAL ASPECTS
DEMOGRAPHIC MAKEUP:MARKETING CONSIDERATIONS
Population density
Urban or rural
Personal income
Rise of global middle class
Supply of professionals
NATURAL RESOURCES
Differences in Resources create…
International dependencies Shifts of wealth Inflation and recession Export opportunities if resources are abundant Stimulus for military intervention
ECONOMIC AND TECHNOLOGICAL DEVELOPMENTType of Society Description
Traditional
Pre-Industrial
Takeoff
Industrializing
Agricultural, Little Upward Mobility
Social and Economic Change
New Industries
Spread of Technology
FullyIndustrial
Exporter, Technology as Driverof New Innovation
ECONOMIC AND TECHNOLOGICAL DEVELOPMENT
POLITICAL STRUCTURE EXTREMES
LEGAL CONSIDERATIONS
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
Legal Structures favoring or
limiting trade
LEGAL CONSIDERATIONS
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
A tax levied on goods entering a countryLimit on the amount of a product entering a countryExclusion of products from a countryForeign exchange must be sold to a control agency
Common trade alliance
An agreement to stimulateinternational trade
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TRADE AGREEMENTS: DOHA ROUND
Reduces tariffs by one-third world-wide
Patent/copyright protection
Services under international rules
Reduction of farm subsidies
POLITICAL AND LEGAL CONSIDERATIONS
FTAAFTAA NAFTANAFTA European UnionEuropean Union
Trade agreementsTrade agreements
SEICASEICA Andean PactAndean Pact MERCOSURMERCOSUR
RISK LEVELS FOR GLOBAL ENTRY
REVENUE VS.
RISK
ENTERING THE GLOBAL MARKETPLACE
Licensing Legal process allowing use of manufacturing/patents/knowledge.
ContractManufacturing
Private-label manufacturing by a foreign country
Joint Venture Domestic firm buys/joins a foreign company to create new entity.
Export Sell domestically produced products to buyers in other countries.
Direct Investment Active ownership of a foreign company/manufacturing facility.
EXPORT INTERMEDIARIES
Buyer for Export Assumes all ownership risks and sells globally for its own account.
Export Broker Plays the traditional broker’s role by bringing buyer and seller together.
Export Agent Acts like a manufacturer’s agent for the exporter in the foreign market.
LICENCING AS PART OF COMMERCIALISATION PROCESS
Commercialisation is the process of translating IP into marketable goods and services in order to generate profit and growth. The IP financial success of commercialisation depends on the choice of the most appropriate commercial tool, based on:
The organisation’s business objectives and strategy
The form of intellectual property to be exploited
The economic resources at disposition
LICENCING: SETTING THE SCENE
LICENCING
• Drawbacks• Drawbacks
• Advantages• Advantages
Access to expertise Access to innovationAccess to markets
Source of incomeAccess to markets
co-ompete
Licencee is incompetentLicencee challenges agreement
Losing control on information
Protection outdatedUnability to payback royalties
Licencor Licencee
The parties concerned are to be clearly identified
Usually Complex contract terminology explained
Grant of right to be clearly identified...
exclusive vs non-exclusive
Use, reproduce, modify, distribute, etc..
Sub-licenseLimit in geographical scope
Limit in technical /commercial scope: field of use
TIPS AND WATCH-OUTS
Exclusivity of the licence. In Uruguay, Brazil, Argentina and Paraguay, the licence is presumed to be non-exclusive, unless otherwise agreed upon. In Venezuela, there are higher legal restrictions: trademark licences may only be transferred if the business is transferred as a whole.
TIPS AND WATCH-OUTS
Before signing a licensing contract, it is recommended to check through an advisor if the intangible assets have already been protected by a third party in the country. The result of this search shall be the subject of a written report, commonly called “Freedom to Operate” (FTO).
Compensation: lump-sum vs. royality
If royality, How and when? Periodic according to which milestones, selling performance etc..?
If royality, How will they be calculated? Percentage Sale price, unit sold etc.. (brutto vs Netto)
If royality, When payments are due?
If royality, What currency at what exchange rate?
TIPS AND WATCH-OUTS
Price of a trademark licence. Example: In Brazil, the price for the use of a trademark where technology is not transferred should not exceed 1% of the sales of the licensed products, unless there is evidence to the contrary. However, the other MERCOSUR countries do not have specific regulations in this regard.
Mitigating risks
Diligence
ImprovementsInfringements
WarrantiesDispute Settlement
TIPS AND WATCH-OUTSBefore signing a contract, it is necessary to examine the licensee in order to assess whether:o They have expertiseo The products or services that they provide or produce may be complementary
or competitive regarding the products to be licensedo They are capable of introducing the product or service in the marketo They have current or potential clients that may be interested in the products or
services to be licensedo They are familiar with distribution channels o The enterprise is prestigious in the target marketo No problem has been reported regarding the enterprise and its previous
experience as a licensee
Terms of the Licence AgreementCommencement
TerminationDuration
AND Quality…
WATCH-OUTTIPS AND WATCH-OUTSLicence duration. Their duration is normally the same as the one of the IPR that they refer to. Nevertheless, specific time limits may sometimes be set. In the specific case of Paraguay, exclusive licensing contracts may last for up to 5 years. On the other hand, Andean countries may establish time limits under the Andean Pact, e.g. in Venezuela, every IP right has a specific time limit stipulated by Law.
Terms of the Licence AgreementQuality Standards and control
TIPS AND WATCH-OUTS Quality standards of the products manufactured under a licence. For example, Trademark Law in Paraguay states that, in order for a licensing contract to be registered, it must include provisions that enable the right holder to monitor the quality of the licensed products or services. In the Andean Pact countries, licensing contracts must include regulations on quality standards. In Colombia, the holder of the trademark must effectively monitor the quality of the products or services and is responsible for any potential damage caused to third parties.In Argentina, there are no regulations on quality standards regarding products manufactured under licence. However, there are some rules that prohibit the use of clauses to regulate the commercialisation, production and technological development by the licensee.
Applicable Country Law!
Forum of Dispute:Mediation, Arbitration, court..
SOME SPECIAL ATTENTION!
Copyright licencing: Guarantee access to physical copies to lincencee Protection of valuable assets e.g. master copy or source code by an agreed third party
Trademark licencing: consitent use of the trademark Monitoring through specifications, documentations etc… to preserve standards Auditing and right to visit facility or demand samples
International licensing is not like licensing in a domestic setting. EU licensors exploring new markets need to consider the following:
The level of economic developments of the receiving country.The particularities of the geography, history and culture, including the
language and the economic, social and political systems.Differences in business practices and in the manner that negotiations
are conducted in the receiving country. The legal system and the differences with one own system.The intellectual property system of the country. That includes any
considerations on the constitutional and legal regime as well as to the number of international treaties that the country has signed.
In complex licensing e.g. franchising, the characteristics of the local market and of the financial, real estate and labor systems.
CONSIDERATIONS I
Most aspects of international licensing agreements are the same as domestic licensing agreements. Þ It is foreseen in both events a grant clause defining the licensed
subject matter as well as consideration and termination clauses.Þ Licensors are interested to impose controls in the use of the work,
invention or trademarks. Most legislation would allow licensors to do that without facing legal restrictions.
However,….
CONSIDERATIONS II
Not every contractual provision valid under “EU” law would be necessarily recognized in foreign countries.
The granting clause may require specificity to a more-or-less extent. In keeping with this, the scope of the agreement could be interpreted broadly in favor of licensees unless limitations are express.
Representation and warranty clauses may be the subject to certain form of legal restrictions. The law may indeed impose obligations on the side of the licensor with the purpose to protect licensee.
Notice or marking provisions may be requisite in certain jurisdictions. Jurisdiction and applicable law may also be restricted under local regimes. The
foregoing limitations could include arbitration. The same could be true as to term and termination. Antitrust and competition rules sometimes vary from country to country. Confidentiality or non-disclosure clauses may not be an acceptable practice. Clauses not to compete may also not be valid. In franchising agreements the law may impose a burden on issues like the offering
of the franchise.
CONSIDERATIONS III
GENERAL CHALLENGES AND OPPOTUNITIES Protectionist policies Basic rather than applied research at universities Looking for more developed markets for sources of
innovation favourable to EU export of know-how Different experience and expertise among governoment
University and industry Taxation Antitrust provisions might be ignored Andean community restrictive regulation
SOURCES AND FURTHER LINKS:
• Commercialising Intelectual Property: Licence Agreements, http://iprhelpdesk.eu• Exchanging Value: Negotiating Technology Licencing Agreements, WIPO• Licence Agreements, UNICO• Licencing as a source of technology trade: A picture of Latin America, Luis Schmidt• Licencing in Latin America, http://www.mercosur-iprhelpdesk.eu/factsheet• Licencing IP, Intelectual Property Office UK• Patent and Technology Licencing in Latin America• Successful Technology Licencing, WIPO
CONTACT US:
www.mercosur-iprhelpdesk.euEmail: [email protected]
Coordinating institution:Universidad de Alicante
E-03690 AlicanteESPAÑA
Tel: +34 965909718
© 2014 - A project funded by the European Commission Directorate-General Enterprise and Industry under the Competitiveness and Innovation Framework Programme (CIP) Disclaimer: The Mercosur IPR SME Helpdesk is a free service which provides practical, objective and factual information aimed to help European SMEs to understand business tools for developing IPR value and managing risk. The services are not of a legal or advisory nature and no responsibility is accepted for the results of any actions made on the basis of its services. Before taking specific actions in relation to IPR protection or enforcement all customers are advised to seek independent advice.