Licensing Tutorial - Marketing and Best Endeavours

L49 Marketing and Best Endeavours

Exporting outside the licensed territory
A licensee must have a sufficiently large area to exercise the licence in to make the licensee's investment viable but not so large that the licensee is unable to exploit the full strategic appropriability the licensed territory represents. Poaching between licensee's of different territories may also need to be prevented to ensure each licensee develops their own market and does not free ride on the past efforts of others.

There may therefore be a contractual ban on marketing outside the licensed territory. Without this such marketing could only be stopped by an infringement action.

EC regulation 773/2004 does block exempt a licensor from licensing technology to another licensee in a particular territory (Art 4 (c)iii) ) and exempt conditions in non-reciprocal agreements from preventing either party from selling into the other's territory (Art4 (c)iv) or from preventing one licensee in a non-reciprocal agreement selling into another licensee's territory (Art4(c)v) providing the other licensee is not a competitor of the licensor. have some sections concerned with restrictions on sales and on passive sales for non-competit

Best Endeavours
Where a licensee is an exclusive licensee within a given territory then the licensor may want to ensure that the licensee makes the best endeavours possible to market the goods in the territory. Such a clause may be implied by a court but often a specific covenant will be included. Licensees should not underestimate the obligations imposed by a best endeavours clause.