Summit TV takes a look at how to take your intellectual property (IP) to the market with Michelle Reid from Blue Horizon Licensing in part nine of this 13-part series

Transcript

STEPHAN LAMPRECHT: Licensing is the preferred platform for commercialising intellectual property. I’m joined in the studio by Michelle Reid of Blue Horizon Licensing to discuss licensing as a tool to take intellectual property to the market. Michelle, if you think about it a lot of the things we consume daily - buying food, and even going to the movies and so on - we wouldn’t have those things if it weren’t for licensing. How do you define licensing?

MICHELLE REID: Licensing is leasing the right to an intellectual property - in other words a product that’s legally protected. That could be on an item on clothing, it could be a service as in a bank card, it could be in a promotion as we might see often in the fast food industry.

STEPHAN LAMPRECHT: So it could be a trademark that you’re licensing, or a piece of technology in the form of a patent or knowhow…

MICHELLE REID: Sure. Down to something as simple as a puzzle - the image that you would find on a puzzle. That doesn’t only mean a puzzle that’s entertainment-based with a tie into a movie or TV show - it could also be a picture that’s been licensed to the original artist. What they do is they will license that product for the rights on a puzzle…

STEPHAN LAMPRECHT: We know for example from South African case studies and also internationally that licensing is a powerful business tool - would you say that’s the preferred way of commercialising intellectual property?

MICHELLE REID: It certainly offers companies who are wanting to make their mark in retail an opportunity of opening to the door. To give you an example - a company that wants to perhaps market a children’s bicycle, if that bicycle has got a Barbie or a Hot Wheels logo on it you will more than likely find that bicycle will sell a lot faster than without the icon on it.

STEPHAN LAMPRECHT: So it’s similar to franchising which is a form of licensing - so instead of me starting up my own hamburger chain, by going into an agreement with McDonalds I can get into the market easier and a lot of the uncertainty is taken away…

MICHELLE REID: Correct, yes.

STEPHAN LAMPRECHT: You are intimately involved in the licensing business - can you tell us about it, and give us some examples of the work you do?

MICHELLE REID: We work essentially in the entertainment industry. When I say entertainment we represent the biggest toy company in the world called Mattel - the brands that we look after are Hot Wheels, Barbie and Fisher-Price. Barbie is by far one of the biggest girl brands in the world - it brings a lot of happiness to little girls. I think if you are a mom or a dad and you’ve got a little girl of anywhere between two and six years old Barbie has definitely passed her life somewhere along the line.

STEPHAN LAMPRECHT: So you’re in the business of bringing joy to a lot of people?

MICHELLE REID: I certainly hope so, yes.

STEPHAN LAMPRECHT: Give us some ideas in terms of the typical elements of a licensing transaction - how does it work?

MICHELLE REID: Typically what we do - we will engage with a company or they would make contact with us, or we would identify a product that we feel would work exceptionally well with one of the licenses that we look after. We would enter into negotiations and determine whether the company we are approaching - or they’re approaching us - that the product they are looking at and the property would work together. If that does work together we then go to a point where we negotiate on what kind of turnover we believe we will be seeing for that particular product in the market for a 12 month period.

STEPHAN LAMPRECHT: So it’s a lot to do with the business due diligence and the market due diligence of that intellectual property be it a trade mark and so on?

MICHELLE REID: We need to make sure that the property itself ties in with the product that the company is wanting to license. We also then need to make sure that the turnover that’s being proposed that’s going to come from that licensed product is going to be a sizable amount - in other words to cover the minimum guarantee that comes from the contract. There is a minimum guarantee for every contract - and that’s not by product but by contract. You might have a number of products on that particular contract - but there is a minimum guarantee that’s attached to that contract.

STEPHAN LAMPRECHT: You have mentioned the Barbie doll which has been around for decades so a licensing transaction can extend into quite a long term. How do you deal with that? Normally with these transactions it’s a once off that moves on - but in instances like that personalities can change and so on - is that very difficult to manage?

MICHELLE REID: What happens is that the contracts are renewed either on an annual basis - depending on what the product is - or alternatively we could sign a license up for between three and five years. It depends on whether the company that we are working with is comfortable with the product that they are licensing - the product has proven itself on the market with the retailers - and we know that there is longevity within that product. Even though Barbie has been around for 50 years next year - we are looking at a situation where she is constantly having to be renewed and revamped so we can cater to the market because the market is always changing.

STEPHAN LAMPRECHT: The spirit of a win-win relationship obviously if I’m the licensor and you are the licensee - but I just look after my own interests then after a period of time you might withdraw from that transaction - how do you ensure that win-win relationship?

MICHELLE REID: Absolutely. We’ve got to make sure that we also give back into the brand - so we put an inordinate amount of money into raising awareness for the brand. Over the last three years Mattel themselves have put an enormous amount of money into corporate social investment within South Africa which has been incredible - and that of course raises the awareness for the brand.

STEPHAN LAMPRECHT: Often with intellectual property patents and so forth there is a very strong technology side to it - but what we are talking about here has a lot to do with human dynamics and relationships, and the people side - is it challenging? Is it difficult?

MICHELLE REID: It is challenging - but I think it’s no more challenging than any other business. People dynamics are always challenging.

STEPHAN LAMPRECHT: As a last question do you think South Africans - and a lot of your examples are licensing technology and trademarks and brands into South Africa - but do you think we are using the opportunity in South Africa also to take our brands and our products and services into the global arena?

MICHELLE REID: I think there is definitely room for improvement as far as that is concerned. One of the areas that I believe has worked exceptionally well is through the Jeep brand - where Jeep is an international brand, but a local company has taken that brand and has just innovated it incredibly and has taken it to levels that on an international basis has just caused waves right the way around the world.

STEPHAN LAMPRECHT: So the benefit has gone back internationally...

MICHELLE REID: What’s happened is South Africa has formed a platform, and a lot of the innovations that developed here have been taken to other markets around the world.