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Drill-Bit Manufacturing company, Inc. wants to license its product out to Mexico. Dill-Bit should take certain steps to protect its IPR. Within the Mexico licensing agreement, Drill- Bit manufacturing should lay out what its expectations are and how they should be met.

Drill-Bits success largely depends on the quality of its products. This has been apparent in both the home market and over seas. Its German manufacturer has kept the same standards as in the U.S. which has lead to a licensing agreement that has been completely satisfactory. Drill-Bit must emphasis the importance of this matter in the licensing agreement with Mexico. One problem that can arise is if the Mexican manufacturer does not comply with the integrity of the manufacturing process to maintain quality. This will lead to a gray market. This might happen if the Mexican manufacturer is not able to charge the same premium as in the home market. Since the U.S. licensor might have established such a good reputation of quality in the U.S. market it is able to command a substantial premium for its product there. In the licensing agreement with Mexico Drill-Bit's should therefore make a provision that if its drill bits are not to standard, it will revoke its licensing agreement with Mexico.

Drill-Bits should also concern itself with protecting the company's intellectual property/know-how. This could be done by Drill-Bit (licensor) if they demand that the licensee's employees enter into a confidentiality and non-exploitation agreement in which the licensor could enforce in the event of a breach or threatened breach. Protecting the company's intellectual property is crucial for the success of any business. One other thing that should be mentioned in the licensing agreement is what will happen if the licensee makes any improvements to the licensed product. Who will have control of the new technology?

Payment by the licensee is crucial to the business. It was...

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