Tag Archives: Licensing

What JK Rowling Needed To Know About Intellectual Property law

J K Rowling and Intellectual PropertyJK Rowling is now a successful writer with one of the most valuable brands. It’s taken her just 21 years to get there. Initially, when she sent her first manuscript to publishers, she was turned down by more than 12 of them before Bloomsbury, a publishing house in London, accepted her book.

Authors starting out will rarely have an agent to look after their interests.  So it’s important in those early days, for a writer to take advice on the publishing agreement before signing it. It’s the same with any project involving IP – it’s vital to get IP advice before implementing your ideas.

Why a publishing agreement is so critical 

Certainly, JK Rowling’s considerable wealth didn’t result from book sales alone. However, the foundations for that wealth began with her first publishing agreement which is a critical contract.

The publishing agreement determines how the intellectual property arising may be exploited. The rights you give your publisher set out who may control the various rights in the work you create.

As the creator of the work, the writer will own the copyright in it. Therefore, the agreement should protect your copyright, and you should never give it away to the publisher. So, if your publishing agreement has a copyright assignment clause in favour of the publisher, don’t sign it before taking advice.

Most publishers will let authors keep the copyright, and will insist on having certain rights, such as the exclusive right to print, or to produce translations, licensed to them. Other rights like film, or television rights might well be left entirely to the author, while it will depend on the type of book and the publisher what happens to book club rights or similar.

At the time JK Rowling secured her first publishing deal, who could have known her books would have so much success? Yet if you are someone creating a business, or an artistic work, or piece of music, you need to assume you will be hugely successful, and not give away your rights unthinkingly.

Ownership of copyright underlies JK Rowlng’s wealth

If JK Rowling had assigned her copyright in Harry Potter to the publisher, she would not have achieved the profits and wealth that her writing gave rise to. It’s because she retained ownership of copyright that she was able to licence others to use the name on merchandise, to license the making of films, and to carve out rights to licensees of her work on a geographic basis.

Harry Potter has been registered as a trademark as have other characters, along with many designs produced around the books’ elements. Securing such IP rights or giving others the right to do so plays a crucial role in the income generated by the brand.

Once you own IP rights which are desirable to others to use, you may license a whole host of businesses in exchange for royalties. Licensing increases your  revenues for as long as there is a market for your creations. And unlike physical property there is no natural limit to the number of people to whom you can give a right to use your IP. So the revenues to be earned from IP far exceed what you would be able to earn from investment in physical property like land which may only be let out to one party at a time.

Consequently JK Rowling’s creations have been used on a variety of goods and services. The movie characters have been licensed to theme parks and other organisations, and reproduced on many different merchandise. Licensing agreements are flexible as they allow you to license as much or as little of your IP as you like.  JK Rowling’s creations have made billion dollar profits as a result.


In conclusion, Rowling’s considerable wealth today is all down to her intellectual property, with her biggest source of income being generated from licensing.

So the moral is to protect your IP if you have ideas to bring to the world. Whether you are an author, designer, software developer, or entrepreneur, don’t ignore IP whatever you’re creating. By taking timely advice and setting your IP strategy you will be better placed to secure essential IP assets and build your business on strong foundations. The future growth of any business is based on its IP.

Why not begin by attending my next workshop by following the link on the sidebar of this blog.


Formula One Trade Mark Dispute IP Licensing

Formula One Trade Mark Dispute underlines need for Careful IP Licensing

Formula One Trade Mark Dispute IP LicensingThe High Court recently published its judgment in a case involving the Marussia Formula One team. The case related to a claim for trade mark infringement and underlined the importance of businesses ensuring they properly manage their IP rights.


The court heard how the claimant had licensed its trade mark to the defendant Formula One team, but that the defendant team had continued to use the trade mark after the licence term had expired. The team was refused permission by Formula One’s governing body to change its name during the course of a season, leaving them with little option but to continue racing and infringe the claimant’s trade mark as a result. Refusing to race would mean forfeiting the team’s entitlement to a substantial amount of money due to it.


The court held that the defendant therefore had no real prospect of proving, as it had asserted, that the use of the claimant’s trade mark had occurred with the claimant’s consent. It further held that the defences advanced by the defendant were unlikely to succeed and that the defendant would need to provide £1.75 million by way of security for costs if it wished to proceed to trial.


The case shows the importance of considering IP rights at an early stage and ensuring any agreements entered into properly reflect the needs of the parties and protect their interests. In particular, the defendant in this case would have benefitted from ensuring the licence was not timed to expire part way through a season. The facts of the case show the balance of power was strongly weighted in the trade mark owner’s favour, since the licensee was heavily dependent on the owner providing the funds which would allow it to participate in the Formula One season.


Many SMEs could potentially benefit by holding their IP in a separate IP company and having the holding company licence that IP to the company through which the business is operated. This has the benefit of protecting a business’ investment in its IP by ring-fencing its intangible assets. This will be particularly important if the main business falls into difficulties and should be considered at an early stage.


Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd & Anor [2016] EWHC 809 (Ch)

FTC ruling on blog paid reviews

Intellectual Property Value – Do You Need Specialist Skills to Value IP?

What Is Your IP Worth?As intellectual property (IP) becomes more recognised as an asset class, interest in it is increasing – so much so that apparently according to the IPKAT Hong Kong property surveyors have been trying to break into assessing the intellectual property value in a business.

They recently called upon overseas bodies (for example, the Royal Institution of Chartered Surveyors to promote the virtues of having surveyors perform IP valuations.

As the IPKAT says, the question is whether

  1. IP valuation is a sub-category of business valuations or a self-contained professional endeavor; and
  2. (ii) in either case, to what extent must an IP valuation professional understand the legal context of IP rights?

The starting point is to consider what we mean by IP

What is IP?

The term IP is generally associated with registrable rights like trademarks, patents and designs.  However, SMEs also have many non registrable IP issues to consider, such as copyright, know how, trade secrets, database rights, organisational knowledge and more.

Unless an SME takes advice to identify, manage, and protect its IP assets it could be seriously exposed because intangibles are a poorly understood asset class.

There is no one size fits all when it comes to determining a business’s risks and opportunities. Even  two businesses in the same industry, with similar business model, may have different issues to address depending on how they develop their businesses and what contracts and other arrangements they have in place, For one business copyright may be the critical asset, while for another it may be the database or a patent.

They will not necessarily be equally desirable to an investor as their value on exit would be impacted by a number of factors unique to each business.

Why have an IP valuation?

One issue a valuation will consider is whether there is key IP underpinning a company’s competitive advantage. If so, another question is whether that competitive advantage is adequately protected.

Banks and investors may accept IP assets as valuable security to finance an SME’s growth if the business can demonstrate that those IP assets underpin revenues and forecasts, and impact cash flow.

How the strength of the IP asset is critical

A fictional example may help convey how IP works.

Say a company has developed an innovative solution that becomes well known in its industry. That competitors will copy a good idea is inevitable. So, if a company’s asset isn’t protected with a patent or other barrier to entry, it is more vulnerable to copy cats.

However, where there are no patents to protect the product, it is a mistake to assume there is little you can do to prevent a competitor stealing market share. You may not be able to stop them creating similar products but you may be able to protect your competitive position and create barriers to entry through the name you choose for the product.

The name is a potential barrier to entry because it can stop competitors using similar ones to identify their offerings – but only if it is a name that the business can uniquely use.

If the business chooses a generic name (that is, one that describes what the product does, rather than an actual name), the name will not be capable of protecting the company’s asset. This is so even if the company registers that name as a trademark combined with a logo. Such a registration would effectively only protect the logo where the name is generic.

So the upshot is that the business has a product that gives it a competitive advantage. It has a valuable asset, but not as valuable as it would be if the name was capable of stopping competitors stealing market share when providing ‘me too’ solutions.

That not all names are equally effective at containing IP value is not generally well understood

Shifting value of IP

IP value is rarely static. Intellectual property rights can change in value over time for a variety of reasons. For example, when you first patent something, it’s possible you have a unique solution to a problem so that your patent provides a strong competitive advantage. But then as other solutions to the problem emerge, the value of your patent may be reduced. On the other hand, if you have successfully marketed your product, despite your patent becoming less critical to your competitive advantage, your trademark may have gained value as your name recognition has increased.

So, failing to give a product a distinctive name that is capable of functioning as a trademark, or not checking whether other people’s rights might prevent use of the chosen name long term impacts the value that is generated, and that would inevitably depress the value of your IP.

IP value is impacted by the choices you make

The above example is designed to illustrate how the IP in question, or the choices you make impact IP value. You need to be ready to make changes if needs be. However, names are not the sum total of IP. There are so many other issues that impact IP value.

There are a number of IP actions required in order to build value and wealth. Implementing effective contracts is a hugely important, but misunderstood aspect of IP protection.

Because it is never possible to foresee what problems and scenarios might arise for a business in the future, it is prudent to secure its IP rights to the fullest extent, so the business has adequate protection to protects its position in the market.

Therefore, identifying IP rights, and protecting and managing them, is essential for any ambitious business.


Clearly IP valuation is not an area in which surveyors would have appropriate transferable skills.

IP and business are closely intertwined. In practice, you need to take both into account. That is why it requires the combined skills of business and IP experts to get the most effective IP valuation and strategic advice.

In a future post, I will explore the different methods for valuing IP.

Copyright Lawsuit

Copyright Lawsuit – “Happy Birthday” Song Copyright Claim Over

Copyright LawsuitA copyright lawsuit involving the world-famous “Happy Birthday” song has ended following a ruling this week. The dispute about the famous song has been finally resolved a BBC Article reports. Watner/Chappell Music will no longer be collecting royalties for the song Happy Birthday following US District Judge George H. King’s ruling.

Copyright Validity

The song’s original copyright was acquired by music giant Warner/Chappell who have made around $2 million a year from royalty payments whenever the song is used in a film, television episode, advertisement or other public performance.

The tune was composed by two sisters Parry and Mildred Hill in 1893 under the name Good Morning all and was acquired by Warner/Chappell in 1935 and, without the court judgement, it would not have been freely available in the public domain in the US until 2030 and in the EU until 31 December 2016.

Copyright Lawsuit And The Ruling

The case was filed by Rupa Marya and Robert Siegel in 2013 because they are making a film about the song and did not want to pay royalties. They argued the song is in the public domain and should not be subject to copyright fees.

The judge ruled that the original copyright granted to the defendants was only for specific arrangements and is not exclusive. Therefore, they do not own a valid copyright in the song. The ruling can be read online here. However, this still does not mean that the song is freely available in the public domain to use because, as Chloe Smith reports for the Law Gazette, there still may be elements of the song that are copyright protected.

Read the full BBC article.

Image rights

Image Rights – How Much Control Do You Have Over Your Image?

Image rightsLast week, the Republic of Ireland readied themselves to vote on what was, for a catholic state, a very controversial referendum; yes or no to gay marriage. The BBC reported here how one family in particular had other controversial concerns about the referendum for an altogether different yet important reason.

This family, unknown to them, were made the “poster boy” of the No campaign. In 2014 they had signed up for a free family photoshoot. In return the family provided consent for the photographer to sell these photos on stock image websites. Their photo was displayed amongst many other seemingly similar photos.  The family felt unfortunate to have been selected for this purpose.

Although the family morally disagree with the use of their stock photo for the No campaign they accept there is nothing they can do to prevent use of their image in this way.

There are many considerations to be made when assigning or licencing your rights; not only in relation to use of your image but also when granting permission for others to use your music, literature and branding materials such as trade marks and logos.

Not giving enough thought to the implications of a licence or an assignment can have unintended effects financial consequences as well sometimes, so take care to consider documents you are asked to sign carefully and if you aren’t sure seek legal advice.

Copyright Laws UK: Getting Out Of Bad Contracts

Copyright laws UKPercy Sledge, the well-known R&B singer, who is reputed to have written the song “When a Man Loves a Woman” died this week. While Sledge had a long and illustrious career in the music industry, his later works never reached the height of fame of his original song. Sledge is said to have composed the melody himself, however there are conflicting stories as to whether he just played a part and what part that was in writing the lyrics. The song reached number 1 on the US charts, after he signed away his rights to it.

Sledge has reportedly said that giving up the rights to the song was the ‘worst decision I ever made’, because ‘I didn’t know any better’.” Although there are debates as to how much of the song Sledge did actually write, what is clear is that if Sledge did indeed write a portion of the song he has since lost millions in royalties.

Understanding Copyright

Copyright is a property right, like many other IP rights. So, it can be sold, bought, given away or left to someone in a will. The copyright owner is the one entitled to ‘exploit’ the work, such as by copying parts of it and selling copies to the public. The rights exclusively enjoyed by a copyright owner include renting or licensing the work to others, broadcasting it, transmitting it over the Internet, adapting it into other languages, and so on.

Understanding copyright is crucial to everyone in the digital world, and especially to those in the creative industries of music, publishing, film, software and more.

Owning copyright gives you a potential source of revenue. The copyright owner has the right to control the sharing of a copyright product, and to stop competitors from exploiting the investment you make in developing your product. As such, it is a right which should never be given away without first receiving proper advice from an IP lawyer.

Music Copyright disputes

Over the years there has been a fair bit of litigation over copyright law within the music industry, such as O’Sullivan v Management Agency & Music Ltd [1985] QB 428 where O’Sullivan ultimately succeeded in having a number of management, sole agency, recording and publishing agreements and transfers of copyright set aside for undue influence.

Undue influence is an equitable principle that prevents the enforcement of contracts that have been entered into unfairly or where the parties do not come to the table on an equal footing. This is particularly common in the music industry given that new talent is often willing to take their chances to reach fame by signing agreements which they may later regret.

Undue influence, duress and restraint of trade

Undue influence is often described as similar to the common law defence of duress. It is successfully applied where there is an unreasonable amount of pressure exerted by one of the parties to an agreement.

Undue influence has been a  common argument in the music industry when new talent entering into agreements have later regretted their agreements once they’ve had commercial success. So artists are now required, as a matter of course, to obtain independent advice before entering into agreements so their interests are protected and the label isn’t open to litigation.

“In the music industry there has been a blurring of the distinction between the doctrine of restraint of trade and undue influence“. This reflects the fact that both doctrines are used to protect the interests of artists who enter into restrictive agreements when their bargaining power is poor. Zang Tumb Tuum Records Ltd v. Johnson [1993] EMLR 61 is a case that dealt with both. Holly Johnson, the lead singer for the band Frankie Goes to Holloywood entered to a contract with Zang in the early 1980s. Johnson later sued Zang for royalties that were withheld because his contract required that the costs of producing the album be excluded from the profits. Johnson successfully argued that when he entered into the contract that he was subject to undue influence given that he had been a starving actor without much work.

One case where undue influence was not a successful argument was Elton John v. Dick James, where John and his writer sued their producer for additional royalties, claiming that when they signed their original contract, they were young, inexperienced and subject to undue influence.  The royalties in dispute were for over $14 million in 1985 with legal fees in excess of $2.2 million. John ultimately lost the case. The judge said that it was a “hard bargain, but that it would be unjust now to set aside”.

In Samuel v Wadlow [2007] is a good example of pressing your luck says the IPkat. Singer-songwriter Seal, having successfully renegotiated his obligation to pay commission to long-time manager Wadlow, stopped paying commission altogether on the basis that he had agreed the terms of the settlement contract through undue influence. The Court of Appeal upheld Mr Justice Gray’s refusal to accept that this was the case. Far from being oppressive, the terms of the settlement contract were beneficial to him and he entered into the deal having received independent legal advice.


These cases demonstrate the commercial importance of copyright. It is important that anyone who is transferring IP rights should first get independent legal advice. That is the best way to avoid the regrets that an artist like Percy Sledge might have borne throughout his career.

How to get copyright permission

How To Get Copyright Permission And Avoid Copyright Infringement

How to get copyright permissionIn part one of our blog post, Can You Take Images Off The Internet And Use Them In Your Blog Posts or Newsletters, we looked at the law relating to copyright in images.

In this second part, we look at how the use of stock libraries and Creative Commons Licences can minimise the risk of copyright infringement, what to look out for when using them, and how to get copyright permission from the owner.  We also cover the new Orphan Works Scheme introduced by the UK Intellectual Property Office, and the Copyright Hub portal.

As we saw in part one of this blog post, it is usually a breach of copyright to use an image without the owner’s consent. Establishing who owns copyright in an image in order to get their consent can be difficult in practice.

A simple alternative is to buy images from stock libraries or to find images available under a Creative Commons licence.

Stock libraries

There are several image libraries out there, as you will see if you carry out a simple Google search. These include Getty Images, Shutterstock and iStock. Libraries such as these contain thousands of images that be used under licence subject to payment of a fee. There are a variety of licences to choose from, depending on your intended use.

If you want to use a photo multiple times for different projects you will need a royalty-free licence, which does not require payment for each individual use. Other types of licence would cover editorial use and there are also rights-managed services that let you choose the rights you need.

The advantage of using a well-known stock library is the huge choice of images and the range of formats and resolutions available. And most importantly, you are protected, (or at least should be protected), against infringement.

iStock gives an indemnity of up to $10,000 if one of their images is found to infringe. You can raise this to $250,000 if you require greater peace of mind. Other libraries offer similar indemnities.

Be careful if you are using an image from a smaller, lesser-known library. Check the terms of the licence to make sure you are properly covered. If in doubt about this, take legal advice.

Creative Commons

Creative Commons (creativecommons.org) helps creative people share their work by offering model licensing terms. (Creative Commons is one of many interesting approaches to permissive licensing. A review of them is beyond the scope of this article.)

Under a Creative Commons (“CC”) licence, some, (although not all) of the owner’s rights under copyright law are surrendered.

An advantage of this type of licence is that the terms are standard and widely understood. As a result, search engines such as Google or Flickr can easily tell you what rights you have to use an image.

There are a variety of Creative Commons licences you can use. A pure attribution licence allows you to use an image commercially, share and modify it, so long as you attribute it to the owner.

A CC BY-NC-ND (Attribution, Non-Commercial, No Derivatives) licence only lets you use the unaltered image in a non-commercial context; you have to give credit to the author.

Like stock image libraries, you should check the terms of the Creative Commons licence for the image you are using.

One danger of using Creative Commons searches is something we mentioned in part one of this blog. What happens if the uploader doesn’t own copyright in the image? Innocence is no defence. You could still be liable for damages despite thinking you have a licence from the owner. If you really must have a certain image, you may have to carry out your own investigation in order to find the actual owner.

Even then you may not be out of the woods. Has the so-called owner assigned their rights? Or, are the rights owned by their employer? Then there are practical considerations. Even if you get an indemnity from the owner, would they have the funds to cover your losses if you tried to enforce it?

The safety-first route for commercial use of images is to get your images from a well-known image library, if possible. This doesn’t always involve a cost.

Getty Images recently released millions of free images. There is a snag though. Their use is subject to restrictions. These include:

  • You must embed the images on your website or through social media using Getty’s own system.
  • Getty reserves the right to collect analytics data relating to your use of the images.
  • You can only use the images in relation to events which are newsworthy or of public interest.
  • You are not permitted to use them for commercial purposes.

Despite these restrictions they are still a useful resource for some people, such as bloggers.

Orphan works

As the name suggests, orphan works are those whose creator (or other owners) cannot be identified.

This might conjure up images of dusty old books, or visuals on the internet that have done the rounds without ever being attributed to a creator. However, the scope of the orphan works scheme goes well beyond this, and applies to tens of millions of UK creative works.

In October last year, the UK Intellectual Property Office (UKIPO) introduced the orphan works licensing scheme, which is designed to:

  • Protect people who wish to use orphan works by granting a licence for their use
  • To reunite owners with their lost works by offering a searchable database
  • To remunerate owners of orphan works should they ever come forward

Of course, these licences do not come free and users will need to pay for the right to reproduce the work. The fees collected are partly to cover an administration charge for running the scheme, and partly to remunerate the owners of copyright work, if they claim ownership in the future.

However, unlike the other licensing models, the UKIPO will need to be satisfied that the applicant has carried out a diligent search to find the owner before they grant a licence to use orphan works.

This could involve contacting a range of artists’ associations, searches through multiple online search engines, checking for watermarks, reviewing stock image libraries, liaising with trade bodies and collecting societies, and making other investigations, such as inspecting relevant museum and other catalogues.

The Copyright Hub

Kick-started by a government fund, The Copyright Hub is a non-profit organisation that runs a web portal to help users and copyright owners request and grant permission to use copyright works.

The idea was to make it as easy as possible to find and license content.  The initiative should help increase revenues for copyright owners, reduce instances of copyright infringement, and provide a useful source of creative materials.

The Copyright Hub also helps to raise awareness of copyright protection and licensing, by:

  • publishing information about copyright through the online portal;
  • offering an accessible platform so users can find out how to get copyright permission; and
  • making it easier to trace copyright content back to their owners.

So, in practice, the aim of both the Copyright Hub and orphan works is to implement Hargreaves’ recommendations in order to make it easier for people to locate and license creative works.

The complexity of copyright

As you have seen, using images downloaded from the Internet online is fraught with danger. While some improvements have been introduced by the law recently, the situation is still complex.

Litigation and the payment of damages is not uncommon. So, the safest course of action is to assume you can’t use an image without the consent of the owner. Even when you get consent, it is sensible to take legal advice to understand the terms of the licence. Alternatively, use a reputable licensing platform.


Licensing and franchising

Licensing And Franchising, What Is The Difference And Does It Matter?

Licensing and franchisingRecent comment in the FT illustrates some of the complexities faced by successful brands which have grown through licensing and franchising.  One of the key issues, is how ownership, control and use of the brand can be spread between different businesses.  The FT article, Virgin group: Brand it like Branson, is a fascinating look at some of the hurdles faced by Richard Branson, and provides some revealing information.

For example, the group makes about £120m a year from licensing its brand to other companies.  Some of those companies are publically concerned about the fact that damage to the brand as a whole, could impact their business, and that they have little power to prevent it.  Virgin America, in its IPO prospectus, explains that:

“The ‘Virgin’ brand is not under our control, and negative publicity related to the Virgin brand name could materially adversely affect our business”

The Virgin brand has been valued at roughly £1bn, and is an excellent case study for anyone hoping to grow their business through licensing and franchising.  However, there is little information available to educate brand owners on how these two strategies differ, and overlap.

There is a world of difference between licensing and franchising but it’s not always easy to distinguish between them. In fact, some “licensing” deals are so close to franchising that they blur the boundary between the two.

The distinction matters because franchising involves a number of formalities. Licensing, on the other hand, is less prescriptive as it covers many possible business arrangements. It enables you to make income from all kinds of intellectual property – your know how, ideas, creative output, reputation, patents, trademarks, designs, and so on.  You can license as much or as little of your business as you like.

To understand the difference between licensing and franchising the starting point is to look at what each term means.


Franchising is a way to scale a business once it is successful and proven. It involves finding franchisees with the skills necessary to operate branches of the same business. McDonald’s is one of the best known examples of a business that has grown through franchising. (By contrast, Starbucks has grown by opening its own branches).

You can franchise almost any type of business. Under a franchise, the owner (franchisor) retains control of the brand and licenses (that is, grants permissions to) the franchisee to use its successful business model and brand. In exchange, the franchisee puts up the initial capital for the business, helps to promote the brand and pays a licence fee. The franchisor supports its franchisees by providing training, know how, marketing and other resources and skills.

Licensing of intellectual property (IP) is at the heart of a franchise contract.  So, in fact, a franchise includes licensing. Typically, this will cover know how and other confidential information, trademarks, logos and designs, and copyright materials. For some businesses there may be patents, too.

An essential element of a franchise (and one of the features that distinguishes it from a straight licence) relates to the formalities involved in setting up a franchise, and the degree of control the franchisor retains.

A franchise agreement will usually give the franchisor the ability to control how the business is run. For example, if a customer visits a branch of McDonald’s while on a trip abroad, expecting the familiar service they are used to at home, it is important that they should not be disappointed. Any unpleasant surprises due to changes in the business format could damage McDonald’s brand generally, not just that particular outlet. For that reason, McDonald’s franchise agreement contains strict quality control provisions.


The essence of licensing (which is also the basis of franchising) is the owner retaining ownership of its IP while granting others the right to use it.  The terms can vary considerably.

Having said that, some licensing can look a lot like franchising. For example, in the 1850s the inventor of the sewing machine, Isaac Singer, sold licences to entrepreneurs to sell his machines in different parts of the USA. He also offered training in the use of the machines. In this case, the IP licensed was a patent, brand name and know how. Strictly, this was licensing, but it is so similar to what we think of franchising today that some people even consider Singer the father of franchising.

A clearer case of licensing is a car wash that has developed a successful process for getting its customers to opt for hot wax and other optional extras. It might license that process to other car wash businesses in return for royalties. These might be payments each month to use its way of promoting the wax, so that more customers buy it. In this example, the IP being licensed is “know how”.

Another example of licensing is a software licence, such as for Microsoft Office. The software is licensed to you – you do not own anything more than the right to use it. The software is licensed subject to strict terms and conditions.

Brand licensing

If you have built up a brand name, one way to scale your business is to issue a licence to a third party to deliver a related product under your brand name. So, a successful fashion designer might license a perfume manufacturer to create a perfume range for its label.

Another option if you have a successful product or brand, is to grant a license to someone to sell your product under their own brand name. An example is the model Twiggy producing a range of clothes for Marks & Spencer. Similarly, a cook such as Nigella Lawson could grant a licence to a company selling cooking utensils and crockery to use her name on its products. An established licensing model is explained in this article involving Disney’s licences to use its characters (and its brand) on third party merchandise.

Luxury brands are highly sought after for licensing, as their brand brings a cachet to the product to which they lend their name. But brands should beware of veering too far away from their market or offering licences too liberally. Pierre Cardin is a classic example of this. By engaging in indiscriminate licensing, it devalued its brand and lost much of its cachet.

Brand extensions that involve licensing your products or services to different categories are more likely to fail. For instance, Harley Davidson perfume proved to be an extension too far. And despite the fact that Virgin has been able to apply its brand to records, financial services, airlines and a variety of other products and services, it failed in its bid to extend its brand to cola.


Franchising is extremely expensive. So, licensing can be a good way to start if you are interested in franchising your business. Rather than diving straight into franchising with all the due diligence and formalities that it entails, you could start by finding a few licensees who are willing to license some or all of your business model. (Although beware that in some countries, such as the USA, and certain parts of the EU where franchising is heavily regulated, you want to avoid calling what is essentially a franchise a licence. It is unlikely to escape the regulators’ attention.  They will look to the essence of the agreement rather than its name).

Whether you are licensing or franchising, the important thing is to protect your IP. Your brand, patents, know how, trademarks etc. are precious assets, which should not be shared casually. The terms on which you grant licences or franchises need to be carefully considered.

You can read more about licensing and franchising, and other issues surrounding brand protection on our website.