As a form of exporting technology licensing has certain potential drawbacks The

As a form of exporting technology licensing has

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As a form of exporting, technology licensing has certain potential drawbacks. The negative aspects of licensing are that (1) control over the technology is weakened because it has been transferred to an unaffiliated firm and (2) licensing usually produces fewer profits than exporting goods or services. In certain Third World countries, there also may be problems in adequately protecting the licensed technology from unauthorised use by third parties. In considering the licensing of technology, it is important to remember that foreign licensees may attempt to use the licensed technology to manufacture products that are marketed in the exporters’ market or third countries in direct competition with the licenser or its other licensees. In many instances, licensers may wish to impose territorial restrictions on their foreign licensees, depending on antitrust laws and the licensing laws of the host country. Also, patent, trademark and copyright laws can often be used to bar unauthorised sales by foreign licensees, provided that the licenser has valid patent, trademark, or copyright protection. As in all overseas transactions, it is important to investigate not only the prospective licensee but the licensee’s country as well. The government of the host country often must approve the licensing agreement before it goes into effect. Such governments, for example, may prohibit royalty payments that exceed a certain rate or contractual provisions barring the licensee from exporting products manufactured with or embodying the licensed technology to third countries. The prospective licenser must always take into account the host country’s foreign patent, trademark, and copyright laws; exchange controls; product liability laws; possible counter trading or barter requirements; antitrust and tax laws; and attitudes toward repatriation of royalties and dividends. The existence of a tax treaty or bilateral investment treaty between the licensers’ country
437 Global Marketing Copyright World Education Council and the prospective host country is an important indicator of the overall commercial relationship.
438 Managing Strategic Marketing (Master of Business Administration) All rights reserved; no part of this text may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is in the text without the prior consent. Activity What are the types of licensing?
439 Global Marketing Copyright World Education Council Whether or not a restraint is reasonable is a fact-specific determination that is made after consideration of the availability of competing goods or technology; market shares; barriers to entry; the business justifications for and the duration of contractual restraints; valid patents, trademarks, and copyrights; and certain other factors. The U.S. Department of Justice’s Antitrust

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