Gregory J. Battersby
Grimes & Battersby, LLC
A Word from Our Sponsor:
Founded in 1985, LIMA has more than 1000 member companies representing over 35 countries who represent all facets of the
licensing industry, i.e., licensors, licensees/manufacturers, licensing agents, consultants and support groups including retailers,
accountants, attorneys, graphic design firms and more. Headquartered in New York City, LIMA has branch offices in London,
Munich, Tokyo, Hong Kong and Shanghai and regional representatives in at least six other regions around the world.
. For
membership information contact:
Louis Caron, VP Membership
350 Fifth Avenue, Ste. 4019
New York, New York 10118
212-244-1944 x 5
212-563-6552 (Fax)
[email protected]
Upcoming LIMA Events
June 12-14, 2012
July 4-6, 2012
Oct. 10, 2012
Oct. 14-16, 2012
Licensing Expo, Mandalay Bay, Las
Vegas (including Licensing University)
Licensing Japan 2012, Tokyo Big Sight,
Tokyo Japan
2nd Annual LIMA Retail Symposium,
Yale Club, New York, NY
Brand Licensing Europe 2012,
Olympia, London, England
LIMA Programs of Interest
LIMA’s Certificate of Licensing Studies (“CLS”)
program—a 60 hour program (in person and on-line
courses covering all aspects of licensing). Contact
Christina Attardo. [email protected]
Free Listing in LIMA Directory of the Licensing
Industry. Contact Louise Attardo at
[email protected]
Listing in LIMANET, the on-line marketplace for
licensing (LIMA Members only). Contact Adam
Berg at [email protected]
Intellectual Property 101
Trademark Protection
1. Can be any word, logo, symbol or the
like which serves as an indicator of
source, origin or sponsorship. Can
also be a product configuration.
2. Rights based on use in many
countries, not registration. Common
law rights & for false designation of
origin (Sec. 43(a) of Lanham Act).
Intellectual Property 101
3. Not all marks are created equal. The “strength” of a
mark is based on the following scale:
a. Generic. Incapable of functioning as a trademark,
e.g., Chair for a chair. Marks can become generic
when overused, e.g., Escalator or Aspirin
b. Descriptive. Conveys some idea about the product.
Only registrable with showing of secondary
meaning, e.g., POCKET BOOKS for books.
c. Suggestive. May imply feature of product without
describing it, e.g., PLAYBOY for men’s magazine.
d. Arbitrary or Fanciful. Strongest type. KODAK (a
coined word) for camera.
Intellectual Property 101
4. Generally, the title of a single book
cannot be trademarked—need
showing of secondary meaning or
title of series of books
5. Character name can be protected as
a trademark if it has developed
secondary meaning, Waldo,
6. Can obtain a trademark for a
character where the copyright
expired, e.g., Peter Rabbit
Intellectual Property 101
International Classification System: Goods and
services are broken down into one of 45 classes. Examples
include clothing (Class 25), toys/games
(class 28) and paper products (class 16)
8. Registration: use vs. intent to use.
U.S. Cost depends on whether filing online or by mail:
Online: $325 per class; Mail: $375 per class
9. Term: Registrations in U.S. for 10 year terms, subject to
renewal for infinite period of time. Rights based on use.
10. Territorial—Madrid Protocol and European Community
Intellectual Property 101
11. Searching—federal, state and common law. All-Class
Merchandising Searches. Search Considerations:
 Consider Other Established Uses
o Penguin books v. Pittsburgh Penguins
o Harlequin books v. Harlequin wall coverings
 Intent to Use Trademark Applications
 Merchandising Classes, e.g. 9, 16, 25, 28
12. Infringement Analysis—likelihood of confusion
13. Counterfeiting Considerations.
Intellectual Property 101
Trade Dress Protection
1. Trade Dress is a trademark concept
2. Trade dress consists not of words or symbols, but of a
sales technique
or any combination that the public associates with a
particular source.
Must be distinctive and non-functional
Intellectual Property 101
Trade Dress Protection--Examples
Intellectual Property 101
Copyright Protection
Covers works of authorship fixed in any tangible medium
of expression from which they can be perceived, reproduced
or otherwise communicated. Must fall into the following
literary works
musical works, including words
dramatic works, including words
pantomimes and choreographic works
pictorial, graphic and sculptural works
motion pictures and other audiovisual works
sound recordings
architectural works.
Intellectual Property 101
2. Simple and inexpensive; Rights commence
upon creation.
3. Register with Copyright Office; $35 filing fee.
Need for filing lawsuit and to get statutory
damages and attorneys fees.
4. Term (under Sonny Bono Copyright
Extension Act in US and most countries):
a. Life of author plus 70 years or for
anonymous works:
b. 95 years from publication or 120 years from
2. International in scope under Universal Copyright
Convention (“UCC”) & Berne Convention.
Intellectual Property 101
Patent Protection
 Used to protect a technical solution in any field of technology,
relating to a product or a method that is new and industrially
 Term in most countries is
20 years from the date of filing
Utility patent protection
Design patent protection
Intellectual Property 101
Publicity Rights
Unique to United States
Covers name, likeness, signature, voice, etc. of performer
used for commercial purposes
Examples: Michael Jordan image, Michael
Jackson name, image & voice
Descendible—Princess Di
Sports Leagues—Properties Divisions and Players
College Athletes
Intellectual Property 101
Umbrella of IP Rights
Counterfeiting Defined
Counterfeiting is the deliberate use of another’s intellectual
property, including trademarks, product designs and copyrights
The use of a false trademark that is identical with or
substantially indistinguishable from a registered trademark
The passing off of a product whose design is similar or
identical to the design of the authentic product
Copyright piracy--the unauthorized copying and distribution
of audio-visual works, software and artwork
Extent of the Problem
 The number of Intellectual Property Rights (IPR) seizures in
U.S. increased by 24% to 24,792 in FY 2011 from 19,959 in
FY 2010. That is a 300% increase since 2002.
 The domestic value of IPR seizures decreased by 5% from
$188.1 million to $178.9 million principally due to greater
 The estimated MSRP for all FY 2011 IPR seizures was $1.1
billion, a slight decline from FY 2010
 The value of consumer safety and critical technology seizures
soared to more than $60 million due to an increase in
pharmaceutical and perfume seizures
Extent of the Problem
Seizures by Domestic Value (in millions)
Extent of the Problem
 European Customs reported 80,000 cases of counterfeiting in
2010 which was double the number of 2009.
 103 million counterfeit products were detained at the borders;
 Cigarettes accounted for 34% followed by office stationary, tobacco
products, labels, clothing, and toys;
 Estimated value of genuine products was over £1 billion;
 85% of seized products came from China.
Extent of the Problem
Industries Affected
 Designer Products
 Automotive & Aircraft Parts
 Food
 Pharmaceuticals
 Toiletries/Cosmetics
 Toys
 Entertainment & Recording Industries
Extent of the Problem
Impact of the Problem
Counterfeiting steals the identity of trademark owners and robs
consumers of comfort, reliability and their personal safety. It is
not a “victimless crime” since:
 Countries are deprived of tax revenues
 Trademark owners are deprived of sales revenue
 Trademark owners lose “goodwill” of well-known brand names
 Consumers are deceived
 Used to fund terrorist activities
 Software industry loses between $12-16 billion a year
 U.S. automobile manufacturers lose $12 billion/year and could
hire 210,000 more workers by eliminating counterfeit auto parts.
Negotiation Basics
Negotiation Basics
Negotiation Strategy
1. Be Aware of Who You Are
2. Know Your Strengths and Weaknesses
3. Know Your Market—Furniture; H Koch & Sons
4. Don’t Let Ego Overtake You
5. Know Your Adversary
License Agreements Basics
A. Overview
1. Type—Exclusive, Non-Exclusive; Form of
2. Basic Terms
a. Compensation:
1. Royalty Rates
2. Domestic v. FOB Rates
3. Split Royalty Rates
b. Net Sales
c. Advance
License Agreements Basics
d. Guaranteed Minimum Royalties vs. Minimum
e. Royalty Periods--Quarterly Reporting
f. Term of Agreement
g. Warranties
1. Power To Enter Into Agreement
2. Non-Infringement
h. Indemnification
1. Product Liability
2. Infringement
License Agreements Basics
i. Insurance
j. IP Rights
1. Responsibility
2. Enforcement Against Infringers
k. Termination
1. Product Introduction Date
2. First Shipment Date
3. Breach --30 Day Notice
l. Choice Of Law
License Agreements Basics
B. Wish List for Licensors
Clearly define the Licensed Property and Licensed Products
Make sure you are comfortable with the financial terms, e.g.,
royalty rate, advance, guarantee
Be aware of how licensee intends to sell product, e.g., F.O.B.
sales command higher royalty rate
Build in performance requirements, e.g., First Sale, Product
Introduction Date, Minimum Sales, Continued Sales
Reps, warranties and indemnities do not have to be equal or
License Agreements Basics
Build in quality control requirements and pay attention to
them—it is necessary to monitor quality
Require product liability insurance—watch the
Disputes and venue provisions do matter—arbitration,
litigation, etc. Consider mediation as a condition to bring
an action
Integration clause saves litigation costs
Build in strong termination provisions
License Agreements Basics
C. Wish List for Licensees
Licensed Property and Licensed Products should cover what
you intend to produce or publish
Understand the financial terms, e.g., guarantees & net sales
definition in particular
How much support will licensor provide? TRY to get them to
include it in the agreement.
Watch the performance requirements—you can be terminated
for failure to meet them
Seek options to renew the term of agreement upon meeting
performance requirements
License Agreements Basics
Seek broadest possible territories and channels of distribution
or get options for them
READ the quality control provisions. Can you comply with
Docket all dates required under the agreement lest you will be
READ the royalty reporting provision. Can your computer
system comply easily?
Watch assignability and non-transfer provisions as they can
stand in the way of a sale or change of control
Current Licensing Royalty Rates*
* As reported in Battersby & Grimes, Licensing Royalty Rates 2012, Walters
Kluwer available at
Agent Agreements Simplified
1. Identifications
 Parties to the Agreement
 Properties to be Included
 Territory
 Categories or Specific Manufacturers
 Term of the Agreement
 2. Agent Grant
 Exclusive v. non-exclusive
Agent Agreements Simplified
3. Agent Responsibilities
 Meet and confer with Licensor
 Develop merchandising plan
 Implement merchandising plan
 Negotiate license agreements
 Collect and disburse royalties
 Investigate infringements
 Oversee audits
 Approve products
 Non-competition
Agent Agreements Simplified
4. License Agreements
 Privity should be between licensor and licensee, not agent
and licensee.
 Licensor should provide form
 Licensor should approve and sign all agreements
 5. Agent Compensation
 Typically a commission
 Retainer not uncommon
 Post-termination compensation--CRITICAL
Agent Agreements Simplified
6. Term & Termination
 Common to include milestones
 Shorter with options vs. longer with milestones
 7. Payments
 Typically made to agent
 Can be direct to property owner
 Alternatives—escrow, lockbox, directly to licensor
PowerPoints of both sessions are available on
LIMA website at
LIMA reference Guide:
“Basics of Licensing”
by Gregory Battersby & Danny Simon
Available at

An Introduction To The Basics of Licensing Law (Greg Battersby)