SIC 6794 Patent Owners and Lessors

SIC 6794

This classification includes establishments primarily engaged in owning or leasing franchises, patents, and copyrights that they in turn license others to use.

NAICS CODE(S)

533110

Owners and Lessors of Other Non-Financial Assets

The patent owners and lessors industry deals with the sale of intangible rights in property. This business has often become controversial, as it is sometimes difficult to determine who created the property, and who is entitled to transfer rights in it. Another problem has been making a distinction between similar examples of intangible property, such as two similar songs or books.

This industry covers three forms of intangible property: copyright, franchise, and patent. Copyright generally refers to literary or artistic products of an intangible nature; franchise deals with the trademark and goodwill of a business enterprise; and patents concern products and industrial processes.

In general, licensing entails granting permission to perform a specified activity. In the case of this industry, it constitutes permission to use someone else's intellectual property. Copyright, patents, rights in music, and performance rights are all aspects of intellectual property. Rights in these forms of intangible property are protected by law to a similar extent as rights in real property. These licenses are personal to the licensee and thus are not transferable or assignable except by express agreement. They are also generally revocable at any time.

Franchising entails granting rights to operate a business of a uniform type to a franchisee by permission of the franchiser. In general, the franchiser grants an individual, (the franchisee), the right to operate a business under its name. In exchange for a substantial portion of the individual business' revenues and support from the franchiser, the franchisee pays an up-front fee and a portion of revenues and agrees to use specified products and procedures in the operation of the business. According to the U.S. Department of Commerce, 40 percent of all retail sales are from franchise businesses.

The major components of the patent owners and lessors industry include copyright buying and licensing, franchise selling and licensing, music licensing to radio stations, sheet and record music royalties, patent buying and licensing, and performance rights licensing. Each of the various entities that constitute this industry have different organizations and structures.

Copyright Buying and Licensing

Under copyright law, the writer or originator of literary or artistic productions receives sole and exclusive privilege of the making and sale of copies for a prescribed statutory period. This right could be bought, sold, and licensed, just as any other rights in property. For example, the rights to copy and sell the recording of a song could be sold by the writer to another party. This party might license the rights to the song to a third...

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