Licensing

*** Topic for #WorldTrade: Current Events in World Trading
#WorldTrade: @ImpExpNow ideabrokr
*** End of /NAMES list.
#WorldTrad: Welcome...this is it...you made it to the classroom!
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ImpExpNow: howdy!
ideabrokr: hi there!
ImpExpNow: nervous?
ideabrokr: how many are we expecting?
ideabrokr: not really
ImpExpNow: 10 confirmed..
ideabrokr: good
ImpExpNow: I sent out a reminder to the ten last night..
ImpExpNow: 2 sent regrets...
ImpExpNow: so who knows...
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ideabrokr: if I can talk in front of hundreds of people, a few online
won't hurt me :)
ImpExpNow: there ya go..
ImpExpNow: Welcome, cnk5, glad you're here!
ideabrokr: ditto!
ImpExpNow: cnk5, have any news to report from the biz front?
*** Signoff: cnk5 (cnk5 has left the room)
ImpExpNow: well...
ImpExpNow: cnk5 will be back...
ideabrokr: was it something you said? LOL
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ideabrokr: am gonna e-mail you with some more questions about the
site
ImpExpNow: ever had stilton cheese and a granny smith apple?
ImpExpNow: sure, email me anytime..
ideabrokr: not stilton, but yes, the combo's great!
ImpExpNow: stitlton is that killer english blue cheese..
cnk5: welll...lost the connection for a minute...but glad to be
back!
ImpExpNow: about the only thing that can stand up to a granny smith..
ideabrokr: even better! I've only got tangerine juice!
ImpExpNow: and we glad you are!
ImpExpNow: cnk..any news from the biz front?
cnk5: are we talking food beacuse it's dinner time?
ideabrokr: I think so... :)
ImpExpNow: cnk5, dinner comes after cocktails..
ideabrokr: in Seattle and LA, anyhow!
ImpExpNow: right now we are having hors d'ouerves...
ImpExpNow: lol..dinner at 8...
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#WorldTrade
cnk5: Biz was "onm hold" while I planned a wedding and got
hitched...but now I'm ready to get serious about pMorrocan pottry
or...who knows
ideabrokr: welcome gattor!
ImpExpNow: I swear I never get dinner until 8 cause I am too busy
before that...
ImpExpNow: gattor, welcome to #WorldTrade, we are glad you are
here...we so esteem your views!
gattor: howdy
ideabrokr: yeah, I'm 7:30-8ish myself
ImpExpNow: cnk5, you tied the not..way to go..hope you have a long
and happy marriage...
cnk5: Thanks...so far so good
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#WorldTrade
ideabrokr: welcome mark4321!
ImpExpNow: Hey everyone, mark4321 is here..everyone welcome mark4321!
ImpExpNow: howdy mark!
cnk5: Welcome mark4321!
gattor: howdy
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ideabrokr: it happens every time! :)
ImpExpNow: well..
--> ideabrokr probably go ahead and start..people will wander in
later...
ideabrokr: shall we? or wait for mark4321?
ImpExpNow: aw..go ahead..he'll be back.
--> ideabrokr do you have your transcripts running?
ideabrokr: okay. First, thanks to everybody for being here on a
night "off." I appreciate it!
gattor: Some times its really hard to get back in
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ideabrokr: there he is!
ImpExpNow: not for mark, he is expert!
ideabrokr: are you "all" here, mark?
mark4321: hi, sorry had a bad connection
ideabrokr: no problem
ideabrokr: Okay, let me give you a little background, so that you
know how I can speak about the subject matter.
ideabrokr: In my "physical" life :) I was part of the team that
licensed the Mighty Morphin
ideabrokr: Power Rangers
ideabrokr: We were the first TV series to reach $1 BILLION in
merchandise sales worldwide in one TV season
ImpExpNow: Most of that from my nephews...
ideabrokr: I was the contract administrator, and as part of my
duties, I had to oversee licensing agreements
ideabrokr: and a few others!
ideabrokr: licensing agreements worldwide--when I left, I was
managing 500+ contracts
ideabrokr: Now, everybody here know what licensing is?
mark4321: permision to sell a particular product
cnk5: It covers a lot of different areas doesn't it?
ImpExpNow: I think I do, but go ahead and tell us...
ideabrokr: good, I wanted to see what everyone knew
ideabrokr: If someone owns a patent, trademark and/or copyright, they
own the "rights" to that item
ideabrokr: Licensing is their "rental" of those rights
ideabrokr: The terms can be different for each rental
ideabrokr: Different territories, terms, etc.
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ideabrokr: welcome jbjson!
ideabrokr: so whoever owns rights to an invention, a story, etc. can
"license" those rights.
ideabrokr: Is that clear?
ImpExpNow: Howdy, jbjson, just jump in any time!
mark4321: yes
ImpExpNow: clear to me..
ideabrokr: good!
cnk5: In some cases would the licensee have the right to
manufacture and in othe cases just the right to sell?
ideabrokr: good question...yes, on both accounts...each "license"
agreement can be for manufacturing or selling or both...
ideabrokr: the licensor is the one owning the rights
ideabrokr: the licensee is the one getting the rights to temporary
use, either to sell the item and/or manufacture it
ideabrokr: so, if you own the rights to a widget, you can license it
out to a manufacturer to make and distribute for you, and you can also
license out other forms of distribution for it
ImpExpNow: with mighty morphin, who was licensor and licensee?
ideabrokr: one of those other forms of distribution is international
licensing
ideabrokr: with MMPR (power rangers), Saban Entertainment, who held
worldwide rights except for Asia, was the licensor
gattor: Are these license very expensive
ideabrokr: as I said above, we had over 500 licensees when I left,
125 domestic (US), the rest worldwide
ImpExpNow: Who developed the product?
ideabrokr: depends on the perceived "value" of the license..it's all
negotiated
ideabrokr: MMPR came from Toei TV in Japan...it's been running there
for over 20 years!!!
ideabrokr: cnk5...to answer your question more fully
ideabrokr: if you have an "unknown" product, the value of the license
will be small
ideabrokr: as ours were when we first sold MMPR...
cnk5: flat fees...royalties...variety? What is most common
ideabrokr: if it's a "hot" tradename, such as Disney or Coke,
starting licensing fees can be upwards of $100,000
ideabrokr: depends on the industry. It's been my experience that
there's a mix of royalty and flat.
ideabrokr: Flat mostly in patent-related
ideabrokr: royalty in copyright/trademark related items
ideabrokr: copyright/trademark items are audio, visual (TV, movies
ideabrokr: books, records, music, photos, etc.)
ideabrokr: patent items are inventions, and upgrades on items, such
as furniture
ideabrokr: questions at this point?
ImpExpNow: Ok..you've defined royalties and licensing..
gattor: Sounds like paying to be a sales man
cnk5: Can you license the ability to provide services or the use
of equipment?
ideabrokr: gattor, not quite. Good example--lunchboxes.
ideabrokr: There's a company in TN who's made them forever.
ideabrokr: But, year in and year out, they can only sell so many
ideabrokr: So, they go to Disney, pay a license fee for the rights to
put
ideabrokr: Mickey on the lunch boxes, and voila! Their sales go
ideabrokr: up 300%!
ideabrokr: Well worth the license fee because now people
ideabrokr: who didn't buy their lunch boxes before, do now.
ImpExpNow: Mickey is so hard core in sales...say I have an excellent
product idea..should I export it or shouold I license it..what is the
criteria?
ideabrokr: Up to you, but let me present the pros and cons
ideabrokr: With international licensing, you license the rights to
manufacture and distribute your product to manufacturers in other
countries.
ideabrokr: The product is made there, distributed there, there are no
import taxes paid, no shipment not arriving...
ideabrokr: the big companies in this country all do it because...
ideabrokr: it is basically a paperwork job for them.
ideabrokr: they find an appropriate agent for the country
ideabrokr: through the US Dept of Commerce, who scours the country
for the best companies to do deals with
ideabrokr: since their own reputation is on the line, and they known
their own country better than any outsider
ideabrokr: they are the best sources of companies to work with in
each country
ideabrokr: I also did a short stint in exporting to the
Philippines...
ideabrokr: half the time our products ended up on the black market
at the dock...
ideabrokr: never reaching the big marketplace...with licensing
agents, you rarely run into those problems...
ideabrokr: okay, questions on this part?
cnk5: The Dept of Commerce will locate the agents?
gattor: They make a commitment by purchasing a license
gattor: which cost money
ideabrokr: yes cnk5, they give you a list of approved agents for each
country
ImpExpNow: How about this..we find a hot item in USA..can we get
license rights for say Japan, have it made and distributed there and
make money this way?
ideabrokr: gattor--right! The foreign manufacturer has an investment
in the product too, so he's gonna make sure it gets out there!
ideabrokr: ImpExpNow--exactly! Then you're acting as an agent for
that product into Japan.
cnk5: I like that idea!
ideabrokr: By the way, there are no requirements for being an agent,
except honesty and networking...
ideabrokr: Inventors here do it for each other all of the time...
ImpExpNow: ideabroker, no int'l legal requirements?
ideabrokr: With licensing, it gives you an easy, quick entry into a
foreign market without the large capital outlay
ideabrokr: int'l requirements--if you have a relationship already set
up with that country, no
gattor: Paying out money means you would have to have customers
ideabrokr: if you don't, then you'll have to check with the Dept of
Commerce for each country's requirements
cnk5: what is involved in "having a relationship"
usually--registration, fees?
ideabrokr: gattor--paying out money to who? The manufacturer is the
one who has the distribution already in place...
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mark4321: how do you determine what is a fair price for a license?
mark4321: whether your buying or selling the rights
ideabrokr: cnk5--business relationship. You already have business
contacts in those countries, you've done business there.
gattor: paying out money to whom is selling the license
ideabrokr: mark--first, you only "rent" rights...just like an apt.
mark4321: sorry fair rental price
ideabrokr: That "rent" is determined by the value of the product, the
demand for it, what the market will bear, etc.
ideabrokr: gattor--the licensees, the manufacturers are the ones who
pay the license fees.
ideabrokr: they are the ones who want to be able to make the product
and distribute it.
ideabrokr: they do this instead of paying for a huge advertising
campaign for their product, or in addition to one...
ideabrokr: it's basically used to give a mfg company multiple
streams of revenue. If they get the rights to make a product
ideabrokr: and then get the rights to distribute it retail, through
catalog, via the Internet, in overseas markets, through vending
machines, etc.
cnk5: I, like gattor maybe, thought you pay for the rights then
find a manufacturer so you'd have to have customers first . That's
not the case...you're strictly an agent?
ideabrokr: then they have the market pretty well sewn up for the
product.
ideabrokr: then they have the market pretty well sewn up
ideabrokr: sorry, I didn't page down :)
ideabrokr: As an agent, you get a percentage of putting the deal
together between the owner of the rights and the mfr who wants to
ideabrokr: rent them for a while...
ideabrokr: cnk5/gattor--you both produce a product
ideabrokr: or I should say
ideabrokr: "have the rights" to a product
ImpExpNow: idea, how would you appraoch a USA manufacturer who you
wanted to broker a license...
ideabrokr: I come along, and tell you that I know a way you're not
getting money for that product
ideabrokr: have an example from the papers recently
ideabrokr: a woman in Baltimore came up with an idea, but the product
ideabrokr: was already out there, but she figured out a way they
weren't selling it
ideabrokr: and making additional money from it.
ideabrokr: the way they weren't selling this product was through
vending machines.
ideabrokr: She went to a vending machine company, with facts and
figures in hand (having scoped out the market)
gattor: The person between two companys?
ideabrokr: BUT NOT WHAT THE PRODUCT WAS...
ideabrokr: and told them that if they sold this product, they would
ideabrokr: triple the number of vending machines they would sell in
this country.
ideabrokr: They asked her to tell them what the product was, and at
that point, she produced an agent agreement
ideabrokr: Once they signed, making her their agent and giving her
25% of whatever they took in from this new product coming in to their
vending machines, and their having to sell additional vending machines
to hold all of the goods,
gattor: Do they have to sign before you tell them product?
ideabrokr: then she told them what the product was.
ideabrokr: If they didn't want to sign, they never found out what it
was.
ideabrokr: On the other side, she went to the people with the
product,
ideabrokr: and gave them the same story--there was a way their
product wasn't being sold, and if they'd give her 25%, she'd tell them
cnk5: She got 25% of gross or net for how long? Is that a
commmon %?
ideabrokr: Always gross--licenses are negotiated--no two are
alike--although with this particular product, I would guess 2-5 years.
mark4321: Does she have a right to audit their books to ensure she
is receiving the correct royalties?
cnk5: OK...I have to know...are you going to tell us the
product?
gattor: She sold them a marketing idea
ideabrokr: mark--always part of a license is an audit--I could spend
about two hours on the 30 or so clauses in a standard licnese
agreement
ideabrokr: gattor--the product side, yes a marketing idea, on the
marketing side (vending machines), she sold them the product
ideabrokr: cnk5--women's pantyhose! they're putting pantyhose in
vending machines in ladies' rooms in business bldgs all across the US!
gattor: I like that
cnk5: great idea!
ideabrokr: my female students always groan and say, "Why didn't I
think of that?"
mark4321: ingenous
gattor: as long as the panty hose is lycrose 15% is good idea
ideabrokr: that's a prime example of being a licensing agent without
owning the rights to a product
ideabrokr: gattor--if they're in the bathroom, you can easily go in
every 10 minutes when you rip the old pair and get a new one! LOL
ideabrokr: that's why I say for overseas licensing
ideabrokr: you have to have a relationship in the country you're
ideabrokr: interested in--in order to be a successful agent there.
gattor: Those will not rip...
ideabrokr: you can also be an agent here for overseas companies who
want to license here...
ImpExpNow: my wife is constantly complaining about pantyhose..she
says the cheap ones are the best...
ideabrokr: and that's what's going into the machines from what I
hear...
gattor: The new one's are the ones that have lycrose in them
ideabrokr: more questions?
gattor: no girdles?
ideabrokr: not in this particular deal...
ideabrokr: the one thing you'll have to have in overseas
ideabrokr: licensing, especially for bringing money out, is someone
ideabrokr: you probably already have in import/export...
ideabrokr: a good tax attorney
ideabrokr: we set up corporations worldwide, just to avoid the
overpayment of taxes
cnk5: What is the best way to research common terms of these
agreements for an idea or product?
ideabrokr: on taking out MMPR money out of each country
ideabrokr: cnk5--terms of a license agreement you mean?
cnk5: yes
ideabrokr: okay...go to an Office Depot, Staples, Office Max, etc.
cnk5: and also agent agreements
ideabrokr: check out their legal software, most of them have a
cnk5: I imagine a common agent % in one indistry could be
dfifferent than another
ideabrokr: boilerplate license agreement in them, which you could use
ideabrokr: as a starter, since each license is individual
ideabrokr: as to an agent agreement...not out on the common
market...one of the prize possessions that my classes get upon
request...and again, it has to be modified for use
ideabrokr: there are also
ideabrokr: a series of books put out by Nolo Press
ideabrokr: www.nolo.com
ideabrokr: that deal with "intellectual property" which is what
ideabrokr: patents, trademarks, copyrights and licensing
ideabrokr: fall under--most of them have forms
ideabrokr: I don't know which ones would have agency ones off the
ideabrokr: top of my head, though.
ideabrokr: more questions?
ImpExpNow: ideabroker, this is very interesting..
ImpExpNow: I have always traded in things you can touch..
ideabrokr: thanks!
ideabrokr: now you can trade in ideas!
ideabrokr: thus...tada!...the Idea Broker!
cnk5: it is VERY thougt provoking
gattor: I like to learn more about trade in ideas
gattor: what are the pit falls
ideabrokr: same as you would have in import/export
ideabrokr: is the product, or idea, ultimately going to sell?
ideabrokr: mfrs can license the rights to products, and then
ideabrokr: the stuff sits on the shelf
ImpExpNow: So ideabroker, how do people find you for further
information?
gattor: if you found a product in Canada and then looked for it
here. And find usa does not have it.
ideabrokr: email--ideabrkr@ix.netcom.com and very soon through...can
I say it.. Imp?
gattor: Please...do say
ImpExpNow: sure, idea...go ahead..
ideabrokr: through a WONDERFUL new site called Learn Online.
WONDERFUL classes! WONDERFUL instructors! :)
mark4321: In our classes about Import/Export there was little to no
use for attorneys. In trading ideas how important are attorneys?
ideabrokr: www.NonCreditEd.net
ideabrokr: the business side of trading ideas can be done without
ideabrokr: an attorney, the agreements should be run by them to close
loopholes before they're signed
ideabrokr: they're also important if highly technical material is
involved, and that's one case in which licensing overseas won't work,
for obvious reasons.
ideabrokr: Make sure you check out NonCreditEd.net...it'll be up and
running soon...
ideabrokr: right?
gattor: okay
cnk5: sound good!
mark4321: have you ever had a problem where a license agreement
wasn't adhered too overseas and what did you do about it?
ImpExpNow: soon, but not yet..
ideabrokr: not trying to put you in a spot, Imp
ImpExpNow: no prob, idea..lol..
ideabrokr: mark--you pull the license
ideabrokr: you keep the money, you get the goods back, and they lose
out
ideabrokr: all depending on what's negotiated
ideabrokr: anything else?
mark4321: thank you
ideabrokr: you're all very welcome, and thanks for letting me ramble
on
cnk5: Thanks very much...definitely worthwhile!
ideabrokr: Imp--anything you want to say in closing?
gattor: What about an idea that a manufacturer could make money
at.
gattor: how would you sell that
gattor: only one manufacturer
ideabrokr: that's what takes me over six hours to teach in person,
gattor
ideabrokr: lol!
ImpExpNow: ideabroker, I enjoyed this very much...
ideabrokr: thanks to all...and now, DINNER!!! :)
gattor: Do we get transcripts?
ImpExpNow: And thank you for sharing this with us...there are a quite
a few people who want transcripts...
gattor: yes
mark4321: yes
ImpExpNow: yes...I'll send transcripts..
cnk5: yes
gattor: thank you
cnk5: thkx
mark4321: thanks, John
ImpExpNow: So, folks, should idebroker offer a class online?
cnk5: yes
mark4321: yes
gattor: I think so...if there really is a way to sell an idea
ideabrokr: thanks, do I curtsy here? :)
ideabrokr: gattor--done every day
gattor: Ideas are plenty full
ideabrokr: cute--gotta go! Thanks!
*** Signoff: ideabrokr (Leaving)
cnk5: take care all...dinner is ready!..Bye
mark4321: bye
*** Signoff: cnk5 (cnk5 has left the room)
*** Signoff: mark4321 (mark4321 has left the room)
gattor: Thanks ImpExpNow
gattor: bye
*** Signoff: gattor (Leaving)
ImpExpNow: adios all!

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Brazil

Here is a interesting asnalysis:
Today's Wall Street Journal (January 19, 1998) carries a solid analysis by

George Melloan of the IMF's role in "fixing," actually precipitating, the

events leading Brazilian currency devaluation. He writes, in part:



"Congress succumbed in October and a grateful IMF handed Brazil a $41

billion IMF package. But Brazil went the way of the Asian tigers anyhow....

Brazil still had some $45 billion in October when the IMF proffered its new

credit line and dispatched a $9 billion first tranche. This was supposed to

show the markets that Brazil could easily defend its admirable Real Plan,

which pegged the real to the U.S. dollar but allowed a very gradual

devaluation.



"The markets were not impressed. What's a lousy $54 billion in a global

foreign exchange market that turns over at least $1.5 trillion every day?

The only people who were impressed were Brazilian politicians, for whom $41

billion looked like a lot of money, quite enough for them to go on merrily

spending as if there would be no tomorrow, funding welfare programs and

pork-barrel projects. The markets, instead of looking at the IMF bailout,

were looking at the behavior of the politicians, the swollen Brazilian

budget, its vast and heavily featherbedded public sector and its $300

billion in debt that was compounding rapidly because of the high interest

rates the central bank was using in a vain effort to defend the Real Plan.



"The silence at the Treasury and the IMF last week was surely because those

institutions knew that they had sold Congress a bill of goods. This was not

a time to bluster, but rather a time for damage control. Francisco Lopes,

Brazil's new central banker hired to do the dirty work, had ill-advisedly

declared that the devaluation was consistent with the IMF deal last October.

That must have embarrassed Camdessus and company, who have taken a lot of

flak for promoting those disastrous devaluations in Asia. Mr. Lopes and

Brazilian Finance Minister Pedro Malan were summoned to Washington, perhaps

to try to help Mr. Camdessus, Mr. Rubin and Mr. Summers work out a

better-sounding story.



"But finding a better-sounding story isn't easy. The string of disasters

midwifed by the global money managers since 1997 is reflective not only of

misjudgments but of a fatal flaw in the existing "architecture." ...[A]

president who spends most of his working hours figuring out how to buy votes

with public money is not likely to be very critical of a multilateral agency

that does pretty much the same thing. It subsidizes two very influential

constituencies, international bankers and the profligate politicians who

preside over such places as Russia, Indonesia and Brazil.



"These bankers and politicians got the IMF's number a long time ago. They

knew that institutions, like natural organisms, fight for self-preservation.

The IMF keeps itself in business by winkling money out of rich nations such

as the U.S. and handing it out to the poorer brethren, who usually are poor

because of gross economic mismanagement. In this age in which income

transfers are deeply imbedded in politics, the IMF doesn't lack for clients.



"What is absent is any convincing evidence that this has made the world a

better place. Africa appears to be regressing, despite the billions poured

into it by the IMF, U.S. aid agencies and the World Bank. Asia, acting

partly on IMF and Treasury advice, took a big step backward, in terms of

living standards, with the 1997 devaluations, as did Mexico in 1994. The

Brazilian and Russian governments, living well beyond their means, were

shielded from reality for far too long. The people in such places now must

pay a price and their politicians will blame everyone but themselves,

including Bill Clinton and Michel Camdessus.



"The IMF has proved that it is impossible to get good conduct from

politicians by subsidizing their bad conduct. President Fernando Henrique

Cardoso made himself very popular when he killed hyperinflation and gave his

country a solid currency with the Real Plan. But he didn't follow through by

reforming government itself. Had there been no international safety net

supplied by an act of Congress, he might have seen fit to work harder. There

should have been plenty of evidence around that a monetary policy alone

cannot compensate for governmental indiscipline.



"So it's back to the drawing board for the U.S. Treasury and the IMF. Will

they really come up with some new "architecture" this time, something like

going out of the global management business? Don't count on it."

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