Commercialization of Trademark in Malaysia through Licensing: A Dummies’ Style Guide

If you own intellectual property (IP) like a trademark, patent, or industrial design, you might be sitting on a goldmine! However, IP is only valuable if you use it. One of the most effective ways to make money from your IP is by licensing it. In this article, we’ll walk you through how licensing works in Malaysia, explain the different types of licenses, and why licensing your IP can be a game-changer for your business.

What is ‘Licensing’?

In simple terms, licensing is when you, as the owner of an intellectual property, allow someone else (a licensee) to use your IP. This could be your logo, brand name, or design—whatever is part of your intellectual property. In return, the licensee usually pays you royalties or a fee.

By licensing your IP, you're giving the licensee permission to use your IP for a specific purpose, within a certain area, and for a set time. The key here is that you still retain ownership of your IP, but the licensee gets the right to use it in their business.

Licensing vs. Franchising vs. Assignment: What's the Difference?

You might have heard of licensing, franchising, and assignment. While they all involve giving others the rights to use your IP, each one works a little differently:

• Licensing: You allow someone to use your IP, but you still maintain ownership and some level of control. The licensee pays you for the right to use your IP, but they can’t sell it off or give it to someone else.

  
  

• Franchising: In franchising, you let someone use your brand and business model, but you have much more control over how they run their business. You might tell them exactly how to run their operations, like the menu in a restaurant or the layout of a store.

  
  

• Assignment: This is the biggest difference. When you assign your IP, you completely sell it to someone else. The buyer then becomes the new owner and has full control over it.

  
  

Types of Licensing Agreements

Licensing isn’t one-size-fits-all. There are different types of licenses you can offer, and each gives you different levels of control over how your IP is used. Let’s break them down:

1. Exclusive License

With an exclusive license, you give one party the sole right to use your IP within a specific area or market. This means that only they can use your IP in that area. You also agree not to use it yourself or give anyone else the right to use it during the term of the agreement.

Example: Imagine Padini, a well-known Malaysian clothing brand, decides to license its “Vincci” brand to a distributor in Indonesia. The distributor is given the exclusive right to sell Vincci products in Indonesia. This means Padini cannot license it to anyone else in that country, and Padini itself can’t sell the products there either during the agreement.

2. Sole License

A sole license gives the licensee the exclusive right to use your IP, but with one key difference: you can still use it yourself. The licensee is the only one who can use your IP alongside you, and you both agree not to license it to anyone else.

Example: Beryl’s Chocolate, a popular Malaysian chocolate brand, might grant a sole license to a distributor in East Malaysia. The distributor is the only one allowed to sell Beryl’s chocolates in that region, but Beryl’s itself can still sell there as well. No other distributors can be appointed in East Malaysia, but Beryl’s can continue its operations.

3. Non-exclusive License

In a non-exclusive license, you give permission to multiple parties to use your IP. You, as the owner, can still use it, and so can anyone else you decide to license it to. This type of license offers the most flexibility.

Example: Petronas, the giant Malaysian oil company, owns the “Petronas” logo. It might give non-exclusive licenses to several merchandise manufacturers to produce items like caps, T-shirts, and keychains with the Petronas logo. Multiple companies can sell Petronas-branded items, and Petronas can also continue using and licensing the logo to others.

How Does Licensing Work in Malaysia?

If you're considering licensing your intellectual property in Malaysia, it’s important to know that the agreement must be in writing. While it’s not mandatory to register the license with the Intellectual Property Corporation of Malaysia (MyIPO), it’s highly recommended. This registration puts others on notice that the license exists and helps protect your rights.

Why Licensing Your IP is a Smart Move

Licensing is more than just a way to earn extra money—it’s a powerful business tool that can open up new revenue streams and expand your brand. Here’s why you should consider licensing your IP:

1. Generate Passive Income

Licensing allows you to earn royalties or licensing fees from your IP, which means you can generate a steady income without having to do the work yourself. For instance, big companies like Disney make billions every year simply by licensing their characters and brands to third parties.

2. Expand Your Reach

Licensing can help you expand your business into new markets that you might not have access to. By letting someone else use your IP, you can enter new countries, regions, or even industries. This is especially useful for brands looking to go global without having to handle the complexities of new markets.

3. Protect Your IP from Infringement

When you have licensees, you essentially get extra eyes on your IP. Your licensees can help spot any unauthorized use or infringement of your intellectual property, making it easier to protect your brand and ideas.

4. Increase Brand Visibility

Licensing also helps your brand gain visibility in markets where you might not have a direct presence. When your IP is used in products, services, or promotions by licensees, it’s another way for your brand to be seen by a wider audience.

Conclusion: Licensing is a Win-Win!

Licensing your intellectual property is a great way to generate extra income, expand your brand, and gain more control over how your IP is used. It’s a win-win situation, where you can earn passive income while letting others help you grow your brand.

Before diving in, it's always a good idea to speak with an IP expert to make sure you’re making the right move for your business. They can guide you through the process and help you choose the best type of license for your goals.

Need Help?

We’ve been helping businesses with intellectual property for over 10 years and have successfully assisted many companies with licensing and other IP issues. If you’re thinking about licensing your IP or just have questions, don’t hesitate to WhatsApp us for personalized advice!