Blue License: A Fair Non-Exclusive Licensing Model

farnad.laleh's picture

In our previous post, we described why the SMB sector of the world economy should be more creative and how we can empower this sector to be so. In our opinion, the key factor for doing this, is to share the usage right of the new and first-hand technologies with SMBs. Our proposed sharing model does not necessarily use open technology models as the open models do not generally make a notable profit for the using parties. As the long-term and consistent growth of a company and consequently an economy is based on profit, using the protected technologies can be a more reliable source of income & profits for all companies including the SMBs. To this end, the only remaining model for the shared use of a protected technology is non-exclusive licensing.

As the current dominating model for the non-exclusive usage of a protected technology is royalty, we should give some insights into it. Royalty is a pay-for-ongoing-use model which may work well for the copyrighted stuffs like music records or tangible assets like lands. But when it comes to the protected technologies realm, too many complexities involve in the underlying contract between the licensing and licensee parties. The two major problems of this model are mentioned below:

1. In many cases, the licensed technology is a part of a larger system and it is a challenge for both the licensing and licensee parties to calculate the real value of the licensed technology. A common approach to settle this case is to use a fixed price model for royalty which could be another challenge for the companies with smaller scale of sales, i.e., the SMBs! Many SMBs cannot afford the fixed price model and it may oust them from the business.

2. Another major problem in the embedded use of a protected technology is the renewing speed problem. Technologies are evolved over the time and it is the inherent nature of the technology. When you use a third party technology as a part of your system, the update speed of the licensed technology may not be upon your needs. It may be ahead or back of your needs and other parts of your system. This problem can easily harm your business or keep you completely out of business. Even though you have the ability to technically update the licensed technology by yourself, it is a complicated legal issue to do so.

Removing the royalty from a license agreement can resolve most of the first problem and protecting a technology by a way other than patent, can resolve the second problem! Although patent is the dominating way for protecting a technology, but there is a notable alternative for it which is called trade secret and has been the protecting arm of the companies like Coca Cola for many years. We believe if new technologies are licensed to the SMBs by a proper non-disclosure agreement (the major contract model for trade secrets), most of the above mentioned problems are resolved. To this end, we have proposed an non-disclosure agreement (NDA) for licensing new research results and developed technologies to all sort of businesses including SMBs, which is called ATG Blue License.

The ATG Blue License or simply the blue license grants the rights of direct use, partial use, embedded use, adjustment, and modification of the licensed technology to the licensee through a very simple and straight contract. This license is the core of all our licensing agreement at ATG. We hope this model resolves the problems we have addressed in this and two previous articles in mid or long term.