| I would like to start speaking on this topic with | | | | countries with large local markets. & it was until |
| reminding that the foreign trade is on of the 5 forms | | | | the end of the XIX century. In the beginning of the |
| of international business (together with currency | | | | XX century it started quickly develop internationally. |
| transactions, employing foreign assets, foreign | | | | After World War II license trade flourished in all |
| investments & international services). & it is | | | | industrially developed capitalist countries. |
| considered to be the most frequent, because | | | | In Russia license trade started in the early sixties |
| nowadays almost every firm is involved in the | | | | when a special firm called “Licensetorg” was |
| international trade (while they are exchanging the | | | | set up, & it has developed fast ever since. |
| goods, services, knowledge etc). Foreign trade | | | | Speaking about license we should differentiate |
| comprises three main activities: | | | | between sale of license itself & sale of patent. |
| - importing (buying goods from foreign | | | | The patent issued for the invention gives its owner, |
| Sellers) | | | | for the period of time of it being in force, the right |
| - exporting (selling goods to foreign | | | | to produce, use or sell the products on the monopoly |
| Buyers) | | | | basis of the invention or specific methods of their |
| - re-exporting (buying goods from | | | | production. The owner of a patent can transfer |
| foreign Sellers & selling them to foreign Buyers | | | | complete ownership to another person, & it is |
| without processing in one’s own country) | | | | the sale of patent on the basis of patent agreement. |
| All commercial activities in foreign trade may be | | | | But if the owner of a patent retains the right for |
| divided into: | | | | invention & only permits to use his right for a |
| - basic activities | | | | certain period of time – it is the sale of license. |
| - auxiliary activities | | | | So in other words the license just gives its owner |
| Basic ones associated with the conclusion of foreign | | | | the right to use invention, scientific & technical |
| trade contract for the exchange of goods. Auxiliary | | | | achievements etc for a certain period of time, |
| ones ensuring their successful performance, I mean | | | | without giving rights for ownership. Licenses are sold |
| carriage of goods, insurance, banking operations | | | | on the basis of license agreement. |
| (financing the deals, settlement of payments | | | | A license agreement is the one according to which |
| between the Sellers & the Buyers, guaranteeing | | | | the owner of the scientific & technical |
| the strict observance of their mutual liabilities). | | | | achievements, inventions, know-how, industrial |
| Conclusion of agency agreements, agreements with | | | | samples, trademarks as well as scientific-technical |
| the Suppliers for export goods & with Importers | | | | & other knowledge associated with them (the |
| for the purchase of goods, agreements with | | | | so called licensor) transfers the right to his |
| advertising agencies & firms dealing with the | | | | counterpart (the so called licensee) &/or permits |
| market research & with the organizations | | | | him in consideration of payment to use them within |
| helping to achieve the targets set for foreign trade | | | | the certain period of time. |
| also refer to auxiliary activities. | | | | International license agreements can be classified |
| There can be 10 or even more auxiliary operations to | | | | according to different characteristics: |
| on basic. | | | | - their subject |
| Agreements & contracts can be concluded | | | | - the volume of |
| either in writing form or verbal. But all the same the | | | | rights transferred |
| first step in concluding any types of contracts is an | | | | - the methods of |
| offer. | | | | safeguarding |
| An offer (or quotation) is a statement by Sellers | | | | The subject of a license agreement can be: |
| (usually in written form) expressing their wish to sell | | | | - inventions |
| the goods. But it’s not a legal document, I mean | | | | - industrial samples |
| if the Sellers for this or that reasons decide not to | | | | - trademarks |
| sell, the Buyers have no legal right. | | | | - know-how |
| Offers (quotations) should include the following | | | | - scientific-technical |
| information: | | | | & other knowledge associated with them |
| - the descriptions of the goods | | | | According to the volume of the rights transferred |
| offered (the quality, the quantity) | | | | there are three types of licenses: |
| - details of prices, discounts & | | | | 1. simple (standard, non-exclusive) |
| terms of payment | | | | 2. non-standard (exclusive) |
| - the date or the time & place of | | | | 3. full |
| delivery | | | | Simple licenses when the licensor permits the licensee |
| There can be different kinds of offers. | | | | to use the subject of the license agreement, |
| - voluntary (free) offers | | | | retaining the right to use it himself or to transfer |
| - firm offers | | | | licenses on similar conditions to any other persons |
| A voluntary offer is the one which is not asked for. | | | | (firms) concerned. |
| Voluntary offers give information about the offered | | | | Non-standard licenses when the licensor gives the |
| & the company itself, state the period for which | | | | licensee the exclusive (monopoly) right to use the |
| they are valid & often enclose different | | | | subject of the license agreement on the condition |
| brochures, catalogs, price lists & other | | | | specified & limited geographically. In this case the |
| advertising matter, & offer to send free | | | | licensor has no right to use the license in the |
| samples, goods on approval, & to grant special | | | | licensee’s country himself or to sell it to third |
| discounts on orders received within the indicated | | | | persons (firms) which excludes any competition on |
| period upon return of a detachable form or card | | | | the market of the licensee’s country. |
| (often prepared). | | | | In case of an exclusive license the agreement may |
| A firm offer is made when a seller promises to sell | | | | contain the following clauses: |
| goods at a state price, usually within a stated period | | | | - a different time |
| of time. According to English or American laws, the | | | | limit on the use of the license as compared with the |
| Sellers making a firm offer have the right to | | | | validity time of patent |
| withdraw it at any time before it has been accepted. | | | | - limitations of the |
| In Russia the Sellers can’t withdraw it or change | | | | fields of the license application |
| the terms offered before the stated time. But in | | | | - the limited rights |
| practice no reputable seller would risk his reputation | | | | of the license to produce the goods himself |
| by withdrawing his offer before the stated time. | | | | - an improvement |
| While concluding contracts & agreements we | | | | & alteration clause |
| can face the different formalities. For example | | | | - an advertising |
| agreements & contracts concluding abroad are | | | | clause |
| to be signed by the Trade Representative or his | | | | Full license when the licensor gives the licensee the |
| Deputy (first signature) & by the official of the | | | | monopoly right to use the subject of the license |
| Trade Representation specially authorized to sign | | | | within the certain period of time. The licensor remains |
| agreements & contracts (second signature). The | | | | the owner of a patent & can break the license |
| names of persons entitled to sign documents & | | | | agreement in certain circumstances at his opinion |
| contracts on behalf of the export & import | | | | & can use it upon the expiration of the term of |
| associations abroad are published in the official journal | | | | the license agreement. But while it is in force, the |
| of the Ministry of Foreign Economic Relations called | | | | licensor has no right to use it himself or sell similar |
| “Foreign Trade”. | | | | licenses to other persons (firms). |
| Agreements & contracts concluding in the | | | | Also there can be various modes of payment under |
| country are to be signed by Director General of the | | | | license agreements: |
| foreign trade association or his deputies (first | | | | 1. by periodic installments on a royalty basis |
| signature) & by directors of the firms or their | | | | 2. by periodic installments on a royalty basis along |
| deputies (second signature). Sometimes senior | | | | with the first payment at the time of the conclusion |
| engineers of the firms are legally authorized to sign | | | | of the license agreement (at the rate of 5-25 % of |
| these documents. | | | | its price) |
| Now I would like to speak about different types of | | | | 3. by a lump sum (fixed sum) with the distribution of |
| contracts. | | | | payments within the validity period or without, I |
| 1. contracts for construction works | | | | mean a one-time payment or by installments. This |
| 2. lease | | | | mode of payment is usually practiced in case of |
| 3. contracts of sale | | | | accompanying licenses, when they are sold in addition |
| - turnkey contracts | | | | to the contract of sale of complete equipment or |
| - large-scale | | | | turnkey factory construction |
| contracts on a compensation basis | | | | As it was mentioned above there are also auxiliary |
| - barter deals | | | | contracts & now I would like to say a few |
| - compensatory | | | | words about them. To ensure fulfillment of the basic |
| deals | | | | contracts successfully & profitably, a number of |
| 1. license agreements | | | | auxiliary agreements (contracts) are to be concluded: |
| In international trade contracts for construction | | | | - Marine Insurance |
| works, lease & contracts of sale are most | | | | Policies or Certificates |
| frequent among a variety of basic deals. License | | | | - Charter Parties |
| contracts stand apart from all the above contracts, | | | | (Voyage Charter Party, Time Charter Party, Demise |
| because they don’t deal with selling & | | | | Charter or Bareboat Charter Party) |
| buying physical goods, but with the sale & | | | | - Agency & |
| purchase of ideas, scientific-technical knowledge in | | | | Distributorship agreements etc. |
| the form of licenses, patents & know-how. As a | | | | & the last thing I would like to say is that apart |
| rule there are practically no standard license | | | | from marketing carried on regularly by special |
| agreements. Each license agreement is more or less | | | | marketing departments at manufacturing works or |
| unique, I mean has its own specific individual | | | | branch ministries, which helps plan foreign trade, |
| characteristic. | | | | foreign trade activities proper comprise several |
| License trade emerged much later than goods trade | | | | stages: |
| at the time when capitalist economy reached a high | | | | 1. market research work (analysis of the market |
| level of development, which was accompanied by | | | | conditions) |
| growing division of labor not only in the field of | | | | 2. choosing proper methods of trade on this particular |
| industrial production, but also in scientific research, | | | | market |
| project & design work & its industrial | | | | 3. planning the foreign trade operation |
| application. | | | | 4. carrying on a publicity campaign |
| Trade of scientific-technical achievements on the | | | | 5. preparations & conclusion of a contract of |
| basis of license agreements appeared as far back as | | | | sale with foreign counterpart |
| in the XVIII century. During the second half of the | | | | 6. fulfillment of contract obligations. |
| XIX century license trade was mainly practiced in the | | | | |