Licensing

Related Terms: Brand Equity; Inventions and Patents; Licensing Agreements; Royalties

A license is simply the right to do or to use something. The word, from Latin, means "permission," thus implying that a license is given by a party who controls something to another. Licenses divide into three basic forms: 1) the right or permission to carry out an activity otherwise regulated or prohibited by government; 2) the right to use a name, image, or representation (including a brand) in packaging, promotion, signage, marketing, and similar contexts; and 3) the right to use and apply proprietary know-how, whether patented or not, for any legal purpose, including its integral embodiment in products. Licensing activity comes in two forms: Licensorsgive licenses to others; licensees receive licenses from others.

Terminology

The word itself, licensing, does not cover all forms and instances of the underlying relationship. For example, users of other people's patents are typically "licensed" to do so, but users of other people's copyrights are said to have "permission" to do so. In municipal government, many activities require "permits." These are functionally identical to licenses in that the permit holder must qualify in some way and is subject to rules. In commercial relationships a franchise is said to be "held" ("franchise holder"), but to franchise someone is equivalent to two forms of licensing (image and know-how). "Certification" is a widely used alternative, as in "Certified Public Accountant"; the CPA, however, is typically licensed by the state. "Certification" connotes something more advanced or refined than "licensing," hence is used in relation to professional permits—but professions well known to be of a high order of skill disdain from using the term. It is impossible to find a "certified physician" or "certified attorney" even though they are all licensed by the state. Conversely, when in ordinary speech someone is referred to as a "certified idiot," we know that the idiocy is of a high order.

GOVERNMENT LICENSING

The most common form of licensing is the governmental kind. After all, most adults are licensed drivers. But state government, in addition, licenses many skilled and professional occupations, including those that form the core of many small business activities. Small business, therefore, is most likely to be touched by this form of licensing. Municipal government issues all kinds of permits, equivalent to licenses. In Miami-Dade County, Florida, for instance, the county requires that all businesses have "occupational" licenses—but here in the sense of occupying a store.

A surprisingly large number of occupations are subject to license. In the state of Rhode Island, for example (picked at random), the state licenses 149 occupations. Thirty-two of those 149 occupations are architects and attorneys; barbers, but also beekeepers and boxers; chiropractors; dieticians, also dentists, and anyone associated with dog racing; electricians as well as professional engineers; funeral directors and buyers of fur at wholesale; hairdressers, cosmetologists, estheticians, and manicurists; investment advisers; occupations associated with the sport Jai Alai; lottery agents and livestock dealers; massage therapists; every kind of professional level nurse and midwife; occupational therapists and opticians; plumbers and physicians; real estate brokers; speech-language pathologists and many school-related occupations; travel agents and tattoo artists; veterinarians; wildlife rehabilitators; and even professional wrestlers.

The rationale behind licensing of occupations is obviously varied and based on the enforcement of health, safety, commercial, and other laws. One rationale behind Rhode Island's licensing of beekeepers, for instance, is to control importation of bee hives from another state, on which a fee is levied. In 2002, the state issued 160 such licenses, managed by its Division of Agriculture and Resource Marketing. Licensing of Jai Alai occupations is evidently part of enforcing gambling rules by the state's Division of Racing and Athletics; in 2002, the state issued 319 such licenses. In professional categories educational requirements must be met. A nurse-midwife, for example, must have completed "an approved educational program in midwifery that is accredited by the American College of Nurse-Midwives." The licensing is handled by Rhode Island's Office of Health Professions Regulation, part of its Department of Health. In 2002, 69 licenses were issued; Jai Alai wins by a wide margin.

Most businesses affected by licensing rules learn of these requirements in the course of qualifications or startup. Information on rules is, however, widely and easily available. The small business owner wishing to check on his or her need for such licensing might begin at the Web site of America's Career/InfoNet (see references) where access is provided to every state's occupational licensing requirements.

IMAGE LICENSING

Marketing of goods and services relies, in the first place, on capturing a potential customer's attention and then holding it by inducing a favorable reaction. Famous icons—be they celebrities, cartoon figures like Mickey Mouse, or widely recognized symbols like the letters NFL, GM, IBM or the five interlocking rings of the Olympics—have a function in attracting attention and in passing on the values that they represent to objects or messages to which they are attached. Icons are created in commerce by arduous performance and promotion, in which case they are brand identities; they are also "borrowed" or "recruited" by associating famous names with products. For purposes of brevity, all of these recognizable symbols may be summed up as "images." Images are licensed for the purpose of helping people market goods.

Underlying such licensing is law which protects brands, logos, and other trade-marked symbols from use by others; individuals also have the right to permit or to restrict their names from commercial exploitation by others. Thus, for instance, a newspaper may use the name Schwarzenegger in a headline but cannot label its paper as "The paper Schwarzenegger reads each day" without the California Governor's express permission. Should such permission be forthcoming, the paper would belicensed to use the name.

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