Licensee and Equity

Two UK technology licensing companies have recently announced deals in which they have sold both a technology licence and a stake in the company to an overseas manufacturer.

Automotive transmission company Torotrak plc have received £8.44 million from Allison, a US-based manufacturer of truck transmissions. According to the press release, the payments have provided Allison with non-exclusive licence rights over Torotrak’s full-toroidal traction drive technology in the medium-sized commercial vehicle together with options to secure global manufacturing and sales exclusivity in this sector (except for Torotrak’s existing licensees in this field). The payments were made as part of a deal under which Allison also paid £2.4 million to acquire 10% of the previously issued share capital in Torotrak.

Loudspeaker and touch sensor company NXT plc have announced a placing of new shares with Japanese touch screen manufacturer Nissha Printing Co. Ltd. In 2008, Nissha paid a £1.2 million up front fee for an exclusive worldwide licence to use NXT’s haptic and associated bending wave technology in certain small touch screen applications.

Recent financial reports suggest that neither company has made a profit this year. The licensees’ investments should ensure that the companies are able to provide the licensees with any technical support they need in order to successfully bring the licensed technologies to market.

The Music World: More than Copyright and Licenses

In thinking about the music world, we usually divide it into two parts. There are the lofty heights of musical creation (aka copyright), on the one hand, and the less elegiac world of commercial exploitation (aka licensing), on the other. Listening today to a podcast on the life and works of Duke Ellington, the legendary US composer and orchestra leader, reminded me that there is an essential space in the music world that bridges copyright and licensing, in which neither copyright law nor unabashed commercial considerations prevail.

The podcast about Duke Ellington was one in a regular series--"Jazz Profiles"-- produced by the U.S. National Public Radio, and it took me back 40 years to a smallish hall in New Haven, Connecticut, where this author, as a college student arriving from the wilds of the American Southwest, somehow found himself at a concert given by the Duke Ellington Orchestra. It was one of the unforgettable experiences where musical legend was melded with the musical experience of the moment, and the memory of that evening provided the impetus for my jazz odyssey from that time to the present.

What struck me in the podcast was a brief description of two aspects in connection with Ellington's musical creations, particularly in the 1930s and 1940s. The first aspect was an observation that, at that time, Ellington preferred not to reduce at least some of his musical compositions to writing, for fear that it would ease the task of would-be imitators. So he urged his orchestra members to memorize the musical work at hand.

In other words, Ellington had turned copyright on his head, seemingly using trade secrets to try and protect at least some of his musical works. What an interesting notion--musical as artistic confidence. Reverse engineer my musical creation, if you like!

Try to reverse-engineer this!

The second aspect addressed the complex relationship between Ellington and his orchestra members about their role in the composition of his works. Apparently, Ellington made liberal use of the musical input of his musicians, usually without adding them as "co-composers" of the resulting work. According to the podcast, some grumbled, some settled for monetary compensation, and some seemed to receive credit of some kind.

We can teach students all we want about copyright ownership and attribution, but the reality of how ownership and attribution play out reveals a degree of complexity that pure law cannot capture. This is especially so when music becomes more of a collective activity, where the composer is also the arranger and also the orchestra leader. The genius of 18th and 19th century composer gives way to more complicated relationships between multiple actors in the creation and performance of music. In that space, neither copyright nor licensing is fully informing.