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Licensing 101: A Paradox of Piracy for Licensing Business Part 7

17 Apr 2015

So, having sorted your trademark investments & strategy, and made your peace with the imperfections/distortions of the market in which you’re trying to work, the final piece is to come up with your anti-piracy strategy itself.

This can range from a Mercedes Benz approach to a much lighter ‘do it yourself’ version – of course the key differential is cost and effectiveness.  There are plenty of global/regional law firms and/or investigative companies that will manage your entire anti-piracy program for a very significant fee, and you get what you pay for, ie, the more you invest, the more thorough and effective will be that firm’s work on your behalf.

It is a MISTAKE, however (at least in Asia), to think that your anti-piracy strategy may an additional revenue stream for the licensor.  It is not.  It is a cost, and not a potential source of revenue.  The realistic expectation is to make a dent in the amount of counterfeit product in the market, NOT winning any damages from 3rd parties.  You will spend far more in legal bills trying to extract damages from a third party than that reward would ever be, and harkening back to an earlier point, since most of these counterfeit operations are organized crime, they tend to have paid off the powers that be and rather fade away and become untraceable.

Shy of hiring an expensive global firm to handle your overall strategy, you can also hire law/investigative firms on a country by country basis – and this will be less expensive and a more flexible approach (for instance, in some markets firms will work on contingency as part of their fee) but of course, it means more parties & relationships to manage, and requires the licensor to perhaps know more about the intricacies of customs duties in Indonesia, than perhaps it cares to know.  Nevertheless, this is the most cost-effective approach, and if you’re working with agents, you can involve them and seek their assistance in managing these relationships which they will generally do, but they won’t share the costs of the anti-piracy program; they will expect the licensor to fully bear these costs.

After all of this, however, and coming back to the key idea that a licensor’s relevant consumers CAN in fact be targeted and that doing so will go the farthest way to minimizing the impact of piracy, the most important thing for a licensor to do is a) make sure you’ve got a licensee in the market producing good product at the right prices, and b) then making sure all key retailers know who the official licensees are and encouraging them to buy only from them.  Following these two key steps I think gets you already 60% of the way there.

Till next time folks!