History of licensing

By Simon Young, November 2, 2007 @ 2:37 pm

According to Licensing Best Practices, a book by the Licensing Executives Society, the history of licensing is closely related to the history of patents. The English word patent is related to the French patente, meaning a privilege delegated by the king to let people “exert certain acts, usually in exchange for something more tangible”. Our story begins with a king, a patent and some glass.

1449

King Henry VI issues England’s first patent to John of Utynam for stained glass manufacturing, granting John a state-granted limited monopoly

1552

The English monarchy begins issuing ‘letters patent’—essentially licences that gave monopolies and trade protection for entire industries

1624

The English Parliament passes the English Statute of Monopolies, outlawing royally sanctioned monopolies. The law, aiming to protect inventors and encourage innovation, made an exception for patents of new manufactures

1770

The Saintbury Chemical Fluid for the Obliteration of Marks on the Skin profits from the endorsement (licensed, of course) of the Right Honourable Countess Dowager of Spencer and Jersey

1933

The Walt Disney Company signs a contract with master merchandiser Herman ‘Kay’ Kamen. As America suffers the Great Depression, Kamen sets an unprecedented standard in licensing Disney merchandise, making Mickey Mouse a star, and earning Disney more money from licensing than from its Silly Symphonies and Mickey Mouse cartoons combined

post-1945

The Japanese economic miracle is built on licensing as Japan develops dominance in consumer electronics, optics and other fields. As LESI (Licensing Executives Society International) notes: “[Japan’s] strategy of extensive licensing allowed it to jump-start the country rebuilding and, in the case of consumer electronics, to dominate worldwide markets with its innovations.”

1970s–80s

The pharmaceutical industry becomes the first industry to make use of systematic licensing in Western Europe and the US to speed up product development
Sohio (now BP) and Union Carbide (now Dow Chemical) lead the charge of chemical and petrochemical companies in licensing process technology to developing countries and competitors

Mid-late 1980s

Licensing becomes a mainstream business strategy, with IBM being a notable example. Companies like IBM, Intel and Procter & Gamble add millions to their bottom lines through licensing

Present & future

In the words of Bradley Mitchell, Inveratek’s commercialisation manager: “Licensing is gaining a lot of traction as a business model. In a globalised world, business is becoming a lot more specialised. Division of labour is going a step further. What used to be a complete supply chain in one company is again breaking up, as people come up with different ideas around the world. There’s further and further specialisation of resources.”