Transferring, licensing and franchising IP assets

By: Novizal Kristianto

There are differences between transferring, licensing and franchising intellectual property rights (copyrights, trademark, industrial design, patent, layout design of Integrated Circuit and trade secret) from one party to another.

Although it is commonly mentioned however the difference is not precisely clear from one to another. The following is short explanation on the difference of those actions:

A. Transferring

Transferring intellectual property rights means transfer of the intellectual property rights of a work/product from the creator/designer/author or the holder of the right (“the Current Holder”) to other party which resulted that the Current Holder lost his right over the transferred intellectual property work/product.

Most of the intellectual property laws and regulations provide that transfer of intellectual property rights can be done by inheritance, testament, donation, mutual agreement (sale and purchase) or other reason recognized by law and the transfer shall be registered at the relevant intellectual property office.

B. Licensing

Licensing intellectual property rights means the Current Holder give a permission to other party in whole or in part to use/exploit/copy/disclose the work/product. With licensing, the Current Holder does not lost his right over the work/product. The Current Holder can use/exploit/copy/disclose the work/product for his own benefit.

The procedure, terms and condition of licensing is stipulated in each intellectual property law and it is also shall be registered at the relevant intellectual property office.

C. Franchising

Franchise means licensing the intellectual property rights including the trademark and the business system and material or the other commercial matters from the Current Holder to other party. The business system including marketing system, operational system, training system, customer service system, accounting system, etc.

There are two system of franchising, i.e. Product and Trade Name Franchise (PTNF) and Business Format Franchise (BFF).

PTNF is franchising that gives the franchisee right to produce the product of franchisor and using the trademark of franchisor. How the product being produce and the trademark being used is commonly not regulated.

BFF is franchising that duplicating the whole business of the franchisor. All business system and material shall be identical with the franchisor. The use of trademark and other commercial matter are also regulated in detail.