Cross-licensing

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A cross-licensing agreement is a contract between two or more parties where each party grants rights to their intellectual property to the other parties.

Contract agreement having a lawful object entered into voluntarily by multiple parties

A contract is a legally-binding agreement which recognises and governs the rights and duties of the parties to the agreement. A contract is legally enforceable because it meets the requirements and approval of the law. An agreement typically involves the exchange of goods, services, money, or promises of any of those. In the event of breach of contract, the law awards the injured party access to legal remedies such as damages and cancellation.

Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. Intellectual property encompasses two types of rights; industrial property rights and copyright. It was not until the 19th century that the term "intellectual property" began to be used, and not until the late 20th century that it became commonplace in the majority of the world.

Contents

Patent law

In patent law, a cross-licensing agreement is an agreement according to which two or more parties grant a license to each other for the exploitation of the subject-matter claimed in one or more of the patents each owns. [1] Usually, this type of agreement happens between two parties in order to avoid litigation or to settle an infringement dispute. [2] Very often, the patents that each party owns covers different essential aspects of a given commercial product. Thus by cross licensing, each party maintains their freedom to bring the commercial product to market. The term "cross licensing" implies that neither party pays monetary royalties to the other party, although this may be the case.

For example, Microsoft and JVC entered into a cross license agreement in January 2008. [3] Each party, therefore, is able to practice the inventions covered by the patents included in the agreement. [4] This benefits competition by allowing each more freedom to design products covered by the other's patents without provoking a patent infringement lawsuit.

Microsoft U.S.-headquartered technology company

Microsoft Corporation (MS) is an American multinational technology company with headquarters in Redmond, Washington. It develops, manufactures, licenses, supports and sells computer software, consumer electronics, personal computers, and related services. Its best known software products are the Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet Explorer and Edge web browsers. Its flagship hardware products are the Xbox video game consoles and the Microsoft Surface lineup of touchscreen personal computers. As of 2016, it is the world's largest software maker by revenue, and one of the world's most valuable companies. The word "Microsoft" is a portmanteau of "microcomputer" and "software". Microsoft is ranked No. 30 in the 2018 Fortune 500 rankings of the largest United States corporations by total revenue.

JVC Japanese international electronics corporation

Victor Company of Japan, Ltd., TYO: 6792, usually referred to as JVC or The Japan Victor Company, is a Japanese international professional and consumer electronics corporation based in Yokohama. Founded in 1927, the company is best known for introducing Japan's first televisions and for developing the Video Home System (VHS) video recorder.

Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial to constitute patent infringement.

Parties that enter into cross-licensing agreements must be careful not to violate antitrust laws and regulations. This can easily become a complex issue, involving (as far as the European Union is concerned) Art. 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), previously Art. 81 and 82 of the EC Treaty, (abuse of dominant position, etc.) as well as licensing directives, cartels, etc.

The Treaty on the Functioning of the European Union (2007) is one of two primary Treaties of the European Union, alongside the Treaty on European Union (TEU). Originating as the Treaty of Rome, the TFEU forms the detailed basis of European Union law, by setting out the scope of the EU's authority to legislate and the principles of law in those areas where EU law operates.

Some companies file patent applications primarily to be able to cross license the resulting patents, as opposed to trying to stop a competitor from bringing a product to market. [5] In the early 1990s, for example, Taiwanese original design manufacturers, such as Hon Hai, rapidly increased their patent filings after their US competitors brought patent infringement lawsuits against them. [6] They used the patents to cross license.

Taiwan state in East Asia

Taiwan, officially the Republic of China (ROC), is a state in East Asia. Neighbouring states include the People's Republic of China (PRC) to the west, Japan to the northeast, and the Philippines to the south. Taiwan is the most populous state and largest economy that is not a member of the United Nations (UN).

One of the limitations of cross licensing is that it is ineffective against patent holding companies. The primary business of a patent holding company is to license patents in exchange for a monetary royalty. Thus, they have no need for rights to practice other companies' patents. These companies are often referred to pejoratively as patent trolls.

In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or contribution to the prior art, often through hardball legal tactics. Patent trolls often do not manufacture products or supply services based upon the patents in question. However, some entities which do not practice their asserted patent may not be considered "patent trolls" when they license their patented technologies on reasonable terms in advance.

The economics literature has shown that firms with high capital intensities are more likely to strike a cross-licensing deal. [7]

Non patent law

Other non-patent intellectual property such as copyright and trademark can also be cross-licensed. For example, a literary work and an anthology that includes that literary work may be cross-licensed between two publishers. A cross-license for computer software may involve a combination of patent, copyright, and trademark licensing.

See also

Related Research Articles

A license or licence is an official permission or permit to do, use, or own something.

A royalty is a payment made by one party, the licensee or franchisee to another that owns a particular asset, the licensor or franchisor for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation. A royalty interest is the right to collect a stream of future royalty payments.

<i>Apple Computer, Inc. v. Microsoft Corp.</i>

Apple Computer, Inc. v. Microsoft Corporation, 35 F.3d 1435, was a copyright infringement lawsuit in which Apple Computer, Inc. sought to prevent Microsoft and Hewlett-Packard from using visual graphical user interface (GUI) elements that were similar to those in Apple's Lisa and Macintosh operating systems. The court ruled that, "Apple cannot get patent-like protection for the idea of a graphical user interface, or the idea of a desktop metaphor [under copyright law]...". In the midst of the Apple v. Microsoft lawsuit, Xerox also sued Apple alleging that Mac's GUI was heavily based on Xerox's. The district court dismissed Xerox's claims without addressing whether Apple's GUI infringed Xerox's. Apple lost all claims in the Microsoft suit except for the ruling that the trash can icon and folder icons from Hewlett-Packard's NewWave windows application were infringing. The lawsuit was filed in 1988 and lasted four years; the decision was affirmed on appeal in 1994, and Apple's appeal to the U.S. Supreme Court was denied.

The SCO–Linux disputes are a series of legal and public disputes between the software company SCO Group (SCO) and various Linux vendors and users. The SCO Group alleges that its license agreements with IBM means that source code that IBM wrote and donated to be incorporated into Linux was added in violation of SCO's contractual rights. Members of the Linux community disagree with SCO's claims; IBM, Novell and Red Hat have ongoing claims against SCO.

Industrial property is one of two subsets of intellectual property, it takes a range of forms, including patents for inventions, industrial designs, trademarks, service marks, layout-designs of integrated circuits, commercial names and designations, geographical indications and protection against unfair competition. In some cases, aspects of an intellectual creation, although present, are less clearly defined. The object of industrial property consists of signs conveying information, in particular to consumers, regarding products and services offered on the market. Protection is directed against unauthorized use of such signs that could mislead consumers, and against misleading practices in general.

Intellectual property rights (IPRs) have been acknowledged and protected in the People's Republic of China since the 1980s. The People's Republic of China has acceded to the major international conventions on protection of rights to intellectual property. Domestically, protection of intellectual property law has also been established by government legislation, administrative regulations, and decrees in the areas of trademark, copyright, and patent. This has led to the creation of a comprehensive legal framework to protect both local and foreign intellectual property. Despite this, copyright violations are common in the PRC, The American Chamber of Commerce in China surveyed over 500 of its members doing business in China regarding IPR for its 2016 China Business Climate Survey Report, and found that IPR enforcement is improving, but significant challenges still remain. The results show that the laws in place exceed their actual enforcement, with patent protection receiving the highest approval rate, while protection of trade secrets lags far behind.

A compulsory license provides that the owner of a patent or copyright licenses the use of their rights against payment either set by law or determined through some form of adjudication or arbitration. In essence, under a compulsory license, an individual or company seeking to use another's intellectual property can do so without seeking the rights holder's consent, and pays the rights holder a set fee for the license. This is an exception to the general rule under intellectual property laws that the intellectual property owner enjoys exclusive rights that it may license – or decline to license – to others.

In patent law, a patent pool is a consortium of at least two companies agreeing to cross-license patents relating to a particular technology. The creation of a patent pool can save patentees and licensees time and money, and, in case of blocking patents, it may also be the only reasonable method for making the invention available to the public. Competition law issues are usually important when a large consortium is formed.

This is a list of legal terms relating to patents. A patent is not a right to practice or use the invention, but a territorial right to exclude others from commercially exploiting the invention, granted to an inventor or his successor in rights in exchange to a public disclosure of the invention.

A patent portfolio is a collection of patents owned by a single entity, such as an individual or corporation. The patents may be related or unrelated. Patent applications may also be regarded as included in a patent portfolio.

Trademark recognizable sign, design or expression which identifies products or services

A trademark, trade mark, or trade-mark is a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks. The trademark owner can be an individual, business organization, or any legal entity. A trademark may be located on a package, a label, a voucher, or on the product itself. For the sake of corporate identity, trademarks are often displayed on company buildings.

Microsoft v. TomTom, Inc. was a court case brought by Microsoft against TomTom in 2009. According to Microsoft, TomTom was violating Microsoft's software patents on the FAT32 file system.

Patent monetization refers to the generation of revenue or the attempt to generate revenue by a person or company by selling or licensing the patents it owns. According to a 2006 survey of patent owners at the European Patent Office, about half of small and medium-sized enterprises (SMEs) take patents for monetary reasons.

A copyright troll is a party that enforces copyrights it owns for purposes of making money through litigation, in a manner considered unduly aggressive or opportunistic, generally without producing or licensing the works it owns for paid distribution. Critics object to the activity because they believe it does not encourage the production of creative works, but instead makes money through the inequities and unintended consequences of high statutory damages provisions in copyright laws intended to encourage creation of such works.

Typefaces, fonts, and their glyphs raise intellectual property considerations in copyright, trademark, design patent, and related laws. The copyright status of a typeface—and any font file that describes it digitally—varies between jurisdictions. In the United States, the shapes of typefaces are not eligible for copyright, though the shapes may be protected by design patent. Typefaces can be protected in other countries, including the UK, Germany, and France, by industrial design protections that are similar to copyright or design patent in that they protect the abstract shapes. Additionally, in the US and in some other countries, computer fonts—the digital instantiation of the shapes as vector outlines—may be protected by copyright on the computer code that produces them. The name of a typeface may also be protected as a trademark.

The smartphone wars or smartphone patents licensing and litigation refers to commercial struggles among smartphone manufacturers including Sony Mobile, Google, Apple Inc., Samsung, Microsoft, Nokia, Motorola, Huawei, LG Electronics, ZTE and HTC, by patent litigation and other means. The conflict is part of the wider "patent wars" between technology and software corporations. The patent wars occurred because a finished smartphone might involve hundreds of thousands of patents.

<i>Microsoft Corp. v. Motorola Inc.</i> United States court case about software licensing

Microsoft Corp. v. Motorola Inc., 696 F.3d 872 was a United States Court of Appeals for the Ninth Circuit case about Reasonable and Non-Discriminatory (RAND) Licensing and foreign anti-suit injunction.

The following outline is provided as an overview of and topical guide to patents:

References

  1. Shapiro, Carl, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting” Innovation Policy and the Economy , MIT Press2001, p119 et seq.
  2. Statement of Jeffery Fromm, Hewlett-Packard Company, "Patent Pools and Cross Licensing", 2002, p8
  3. Ed Oswald, “Microsoft, JVC agree to cross-license patents” BetaNews January 16, 2008, 2:29 PM
  4. The agreement does not necessarily include all of the patents that each owns
  5. "Archived copy" (PDF). Archived from the original (PDF) on 2006-09-01. Retrieved 2006-09-15. | Patent Flooding
  6. Mark Nowotarski, “Introducing Patents into a Major Service Industry” les Nouvelles , March 2003
  7. Galasso, A. (2012), Broad Cross-License Negotiations, Journal of Economics & Management Strategy Volume 21, Issue 4, pages 873–911. http://onlinelibrary.wiley.com/doi/10.1111/j.1530-9134.2012.00348.x/abstract