Licensing in Intellectual Property Rights
Galang Prianggara
• • 30 Mar 2021

These days, any matters related to intellectual work produced by human thoughts, both technology and any intellectual work, is increasingly advanced, sophisticated, innovative and of course has economic value, so it is undeniably very closely related to business transactions. With the progress and the increasing number of intellectual works at this time, of course, the higher the offer for these intellectual property products can be exploited, either privately enjoyed or commercialized.

To be able to exploit or to make use of an object of intellectual work which of course has been recorded and protected by law, there are business law regulations governing the granting of permits to exploit an object of intellectual work from the creator and / or owner of exclusive rights to recipients who wish to exploit these exclusive rights, one of them is by granting a license.

Generally, within Black’s Law Dictionary, the granting of license is defined by “The permission by competent authority to do an act which without such permission, would be illegal, a trespass, a tort, or otherwise would not allowable.

By analyzing this definition, it can be interpreted that licensing is the granting of commercial, exclusive or non-exclusive privileges to exploit an intellectual work / product that has a certain period of time and conditions as well as feedback in the form of royalties on its utilization. The formulation or meaning of licensing is also contained in the laws of each field of intellectual property in Indonesia, including in Law Number 30 of 2000 concerning Trade Secrets, Law Number 31 of 2000 concerning Industrial Design, Law Number 32 of 2000 concerning Layout Designs of Integrated Circuits, Law Number 28 of 2014 concerning Copyright, Law Number 13 of 2016 concerning Patents, Law Number 20 of 2016 concerning Trademarks and Geographical Indications and Laws Number 29 of 2000 concerning Protection of Plant Varieties.

In this case there are two parties related to the granting of licenses. The first party is the licensor or what is also known as the Licensor. The licensor  is the party who owns and / or holds exclusive rights to an intellectual property object, which gives permission to other parties so that the exclusive rights to an intellectual property object can be exploited, whether to make, produce, sell, market, distribute products in the form of goods and or services produced by using the licensed intellectual property rights.

Meanwhile, the other party is the licensee. In this case, the licensee is the party who receives an object of intellectual property to be exploited and subsequently provides rewards in the form of royalties to the licensor based on the number or amount of products produced in accordance with what the parties have agreed. It should be noted, the licensor has the right to grant a license to more than one licensee. This makes the licensing act is  not exclusive (non-exclusive), because the licensor gives licenses to several licensees. It should be differentiated if the licensee asks the licensor so that the licensing is no longer given to other licensing parties and the licensor approves this, then it will be the granting of an exclusive license, which is usually a value royalties for the product will be higher than the granting of a non-exclusive license.

Licensing from the licensor  to the licensee is generally agreed and stated in a written form in the license agreement. The main objective by putting it in the form of a license agreement is of course so that all the agreed terms are regulated clearly and firmly, including the rights and obligations of the licensor as well as the licensee. Article 7 paragraph (2) Government Regulation Number 36 of 2018 concerning Registration of Intellectual Property License Agreement ("PP 36/2018") has regulated the license agreement at least containing the date and place of signing of the license agreement, the identity of the licensor and licensee, the object that is being licensed, the nature of the license either exclusive or non-exclusive, the term of the license agreement, the area in which the license agreement is valid and also the amount of royalty agreed upon. This is certainly so that the license given and received can be beneficial for both parties.

On the other hand, based on Article 6 PP 36/2018, the licensing agreement made by the parties is prohibited from containing provisions that can harm the Indonesian economy and Indonesia's national interests, containing restrictions that hinder the ability of the Indonesian people to transfer, control and develop technology, resulting in unfair business competition and / or contrary to the provisions of laws and regulations, religious values, morals, and public order.

Furthermore, the most important provisions for the parties in the license agreement, after the parties have finished making a license agreement, based on Article 7 paragraph (1) PP 36/2018, the license agreement must be registered to the Minister through the Directorate General of Intellectual Property, in this case the Minister who is authorized is the Minister of Law and Human Rights. The requirements for filing an application for the registration of a license agreement as stipulated in the provisions of Article 10 paragraph (4) PP 36/2018 are (i) a copy of the license agreement; (ii) official excerpts of patent certificates, brand certificates, industrial design certificates, integrated circuit layout design certificates, proof of ownership of the work or related rights, or proof of ownership of trade secrets that are licensed and are still valid; (iii) Power of attorney, if the application is submitted through a Proxy; and (iv) Proof of payment of fees.

The legal implication that occurs if the license agreement is not recorded is that the license agreement has no legal effect on third parties as stipulated in the provisions of Article 15 paragraph (4) PP 36/2018.

Author: Galang Prianggara N. A., S.H.

This Article is generally made for the purpose of ANR Law Firm publication only and should not be treated as legal advice for your legal problem. Shall you have any further questions regarding this topic, you may contact the Advocate who authored this article at