Promoting Contract Flexibility Through Trademarks : 'Branded' Intellectual Property Licensing Practices

Contract inflexibility seems to stem from two motivations: the urge to control the future, and a quest to improve economic efficiency. In thinking about whether and how contract inflexibility might be reduced, those human motivations must be taken into account. Reforms aimed at greater flexibility might better fit modern economic, organizational, and technological conditions, but if the underlying human motivations that produce inflexibility are ignored, then the reforms are likely to be ineffective or even counterproductive. This paper reflects on both the “future control” and “efficiency-seeking” impulses toward inflexibility, asking whether modern trends are changing the underlying assumptions of those impulses. Then, it examines a novel and still-evolving approach to intellectual property licensing — “branded licensing” -— that has potentially broad application in transcending these motivations toward inflexibility. The branded licensing approach may achieve greater flexibility without compromising stability, the need for which prompts the urge to control the future. Branded licensing offers this greater flexibility without significantly increasing transaction costs, which prompts the concern about efficiency. “Branding” may thus represent a new structure for contracting that will be attractive psychologically, as well as legally and economically. Although as yet visible only in Intellectual Property licensing — examples of which are presented below — the branding concept could be developed in other contracting contexts