IP Economy New Business Opportunities from Cross-Origin Licensing2019/12/12

Intangible property licensing, such as publication, commoditization, revision, and issuance, that allows IP to be applied across different fields to develop commercial value and further be transformed into tangible property is the major business model of the IP domain. However, the international IP licensing market is extremely competitive, and an image content closest to life is Taiwan’s biggest advantage and may be exempted from multiple communications and reviews with domestic and foreign agents, thus making it highly flexible with high added-value. If large cross-origin resources can be further integrated, the licensed industrial chain will become more complete and mature.


Author introduction: Hung, Chia-Ying
CEO of Foufou Creative Ltd.
English Translator: Transmaster Translation Company


This is probably any day for you and me in Taipei:

“It is lucky if you catch the “Mickey” train heading to the company in the morning. I joyfully buy a cup of city cafe coffee when I pass 7-11 and carefully collect the open point sticker as I check out. I expect to exchange my “Iron Man” mug with an additional purchase price for the coworker sitting next to me who loves “The Avengers.” During lunch, I walk to the neighborhood park with a sandwich and plan to finish the last chapter of the book “On Children.” Before leaving the office, co-workers are purchasing exhibition tickets, so I book three “Peppa Pig” tickets. I think my daughter will be very happy. I read the famous picture book “The Angry Prince” before bed, and my daughter and I fall asleep before turning off the light.”

Although IP has become a popular keyword in the cultural creative industry during the past two years, IP is actually extensively rooted around all people in the city. The aforementioned example of daily life covers at least 10 IP (see the note) and more than five IP business license models.

With the goal of rising IP among an immature domestic licensed industrial chain, the author hopes to share experiences based on practical industrial observations to allow more content creators, designers, manufacturers, distributors, and other relevant enterprises and governmental units establish clearer knowledge and recognition of IP and further consider the possible cross-origin applications and fulfillment in the future together.

I. What is “IP”? It is neither subject to plain image nor equal to “character”

IP stands for Intellectual Property, i.e., intellectual property right. In other words, IP is not subject to plain image, but all the content of an original creation and intangible property, including but not limited to patents, trademarks, copyrights, and business secrets, are attributed to IP. Broadly speaking, IP is not only a plain insert or character, portrait, or such image content, but also includes literature, anime, music, video, games, exhibitions, and business trademarks.

In general, IP is usually confused with or narrowed and limited to a Character or Mascot.

The author considers that the extent of IP is the broadest in terms of definition, followed by Character, and the smallest is Mascot.

Scope of creation content definition ▲Scope of creation content definition

Character may be originated from comics, drama, animation, picture book, social media stickers, and other such creations, which is the virtual character (maybe the character, animal, plant, or virtual organism) in the entire or partial creation. Its name, feature, posture, and virtual world where it belongs can be understood, identified, and memorized by the readers. The favorable impression induced by characters to audiences is usually discussed together with “character economy” due to the potential and business opportunity from the business value created.

The “Mascot” is usually a virtual spokesperson created by an enterprise, government, or local organization for the purpose of marketing reinforcement and promotion. Although the design or aesthetics may frequently be affected by organizational decisions, executive opinions, and other such non-design profession factors, the motivation of creating a Mascot is originally promotion, thematic position, organization demand, and historical background, which differs from the Character, which originated from content creation. It may not touch audiences in general, and the business models may also differ. However, some Mascots are actually popular due to favorable looks or successful marketing strategies, which opens up new business opportunities of character licenses, such as Kumamon, Funassyi, and Oh Bear.

II. License business model “benefits numerous people with one IP”

An IP Licensor, who is probably the original content creator or the owner of such intangible property via commercial transactions (or agent acquiring such rights), engages in derivative commercial cooperation by using content protected by the laws to deliver the cross-origin Licensee of his/her own intangible property through “Licensing” and earns royalties.

IP Business Model ▲IP Business Model

Such licenses of intangible property as publication, commoditization, revision, issuances, etc. that allow IP to be applied across fields to develop its commercial value and further be transformed into tangible property are the primary business model of the IP domain.

The owner (i.e., Licensor) may appoint different agents by regions, periods, or different types of creations or manage partial licenses on his/her own.

The user (i.e., Licensee) may consult or entrust an agent to negotiate the license contract and royalty regarding the scope, period, and use items of the IP. If the Licensee hopes to exclusively use such content in a specific field, both parties shall conclude the exclusive use of right, i.e., exclusive license agreement. In contrast, it will be a non-exclusive license without exclusive rights over such item.

The entire licensing process will be completed when the goods produced against the acquired IP are delivered to consumers or readers, regardless of whether it goes through a distributor or not. With regard to the preceding licensing process, the actual case implemented in the company where the author is at service is considered for interpretation:

Foufou Bunny is a character created by author Hung, Chia-Chi in 2005, and Foufou Creative Ltd. has been appointed as an exclusive creation agent and licensed agent since 2007. A marketing company contacted Foufou Creative Ltd. to purchase Foufou Bunny as commissioned by HiLife Convenience Store for store marketing, including points rewards, additional purchase products, stores, and the design and production of propaganda for omni-channel marketing (including but not limited to banners and billboards).

In this case, the author Hung, Chia-Chi is the IP owner, Foufou Creative Ltd. is the agent, and both are the licensors. A marketing company is the agent, HiLife Convenience Store is the right user, and both are the licensees. Both agents, Foufou Creative Ltd. and the marketing company are appointed to prepare the contract after such license conditions as the license period, use content, regional scope, and royalty are confirmed. Foufou Creative Ltd. delivers the image gallery of Foufou Bunny to the marketing company for the design of various products. Meanwhile, physical production could not be started until the drafts and samples delivered during different phases according to the regulations of the licensor during the design and production process are confirmed by the licensor. This review process may be called “approval” or “supervision” based on the habits of different companies.

The license cooperation project with HiLife Convenience Store regarding the character P-Foufou Bunny created by the Foufou Team ▲The license cooperation project with HiLife Convenience Store regarding the character P-Foufou Bunny created by the Foufou Team

After the gifts, point stickers, and various promotional items are completed, they will be available on the shelf for relevant marketing activities. It is a common gift license project operated by convenience stores, supermarkets, department stores, and other such retail sale channels known by consumers.

In a gift license project, the licensor may earn royalties, while the original owner and agent may split the income based on an agency agreement. The licensee’s agent may earn design and production fees for various scripts. The right users may stimulate such brand marketing targets as consumption amount, intention, frequency, or APP downloads via such marketing projects. In the meantime, consumers may get favorable and demanding gifts for free or at a discounted price through point collecting activities. This is the “benefits to numerous people by one IP” license business model.

III. IP economy = content×design×license

In summary, all the operators in the industrial chain earn intangible property and create overall industrial economic effects by allocating intangible property and content with value that is hard to estimate through professional division. This business model is the first step toward understanding the “IP economy.”

The most important key in this model is definitely the “content” as the basis of all else. In other words, the licensor provides the licensee with sufficient content to create value, i.e., the basis of this business model.

First, we need to identify the differences between “content license” and “design service”: “content license” means that the creator produces a set of content before providing it to the licensee to interpret and apply in various profit-seeking or non-profit seeking behaviors. In other words, the motivation and process of producing content is purely creation behavior without the task empowered to solve a certain problem or purpose. Meanwhile, “design” is the creation behavior and activity of the designer to “solve a problem.”

Therefore, in a mature industry, the order is that the content should be able to generate market volume and affect the energy and power of consumer behavior before the licensee is motivated to purchase the license, and the licensee may contribute new value to profit seeking or non-profit seeking behaviors engaged through license purchase.

The content producer should be focused on creating maximum value of content, instead of thinking of the best interest of the licensee. Thinking and creating the best interest derived from such a license is the job of the licensee or its agent purchasing the license and the designers participating in the plan.

The Taiwan initiative comprehensive selection fair was organized at Huashan 1914 Creative Park in September 2018, gathering more than 10 character IPs worldwide ▲The Taiwan initiative comprehensive selection fair was organized at Huashan 1914 Creative Park in September 2018, gathering more than 10 character IPs worldwide

The question is hereby proposed for identification, which is related to Taiwan’s current content industry. Unlike the well-known global IP copyright through which the brand energy is usually accumulated over decades, the content industry in Taiwan generally lacks proper support resources. Raising funds for animation, movie, drama, and stop shooting is hard, and production or fund raising by loans are not news. However, to develop character from a plain image to a world player with deep value and a complete world vision, cross-industrial cooperation and contribution is required to have a chance of producing content that may perform on the international stage.

In an international license exhibition, all IPs intending to get on the world license stage must have complete exhibition data from the basic license handbook, IP annual and long-term development plan, introduction of content to be broadcasted or published (animation, comic, picture book, or other publication), marketing resources (large FRP exhibition action figure, large performance puppet), and commoditized market performance prepared. However, this is only the eligibility for competition.

Each superior of a licensee with a budget should ask himself/herself questions like: “Should I use the money to buy “Toy Story” or a super-hot sticker in Taiwan?”

Of course, this question has no standard answer. The answers may be affected by different industries, purposes, and budget scales. However, we can extend the line of questioning to: “How much will it cost to produce the content of “Toy Story” and the “super-hot sticker”? How big are the economic scale and employment opportunities, and how much license value will be brought by them respectively?” These two questions are definitely positively correlated.

If we carry out further evaluation, what is the advantage of the super-hot sticker author prevailing “Toy Story.” The most common opinion is the regional advantages, which include:

  • Close to local people”: the image content is closest to life, from the perspective of sense of life, humor, festival, and news sharing the same frequency with local consumers;
  • Highly efficient”: save the communications and reviews of domestic and foreign agents at different levels. The image or consensus may be acquired very soon via a call, meeting, or line;
  • “Flexible and high added-value”: the regulations governing well-known international image copyrights are voluminous and checked at all levels. It is relatively easier to communicate and negotiate with local authors. In addition to image licenses, local authors may draw exclusive images or even help with product design drawings, and post Facebook fan messages to increase the number of fans reached, as well as purchases.

However, considered from another angle, when the “content producer” does not have enough resources to produce content and needs to serve as an illustrator, product designer, and promotion editor in a so-called “license project” due to life pressure, then the producer no longer focuses on creating the maximum value of content but on satisfying the benefit of the licensee. The long-term result is that it is impossible for us to create the “IP economy” brought by “Toy Story.”


Conclusions and suggestions

Whether public domain or business IP, regardless of literature, anime, music, video, game, exhibition, or business trademark, if we want to discuss the mature license industrial chain, we need to focus on the discussion of what should or could we do to make good “content.” Content with high value requires large cross-origin resource integration and contribution, which may be the cooperation between author and multimedia creator or the combination of publication content and interaction. Independent creative power is very strong in Taiwan’s private sector. How to urge, match, and contribute resources to integrate these small IPs and create world-class content will be the key for Taiwan’s IP standing on the international license stage. More aggressive discussion and promotions are expected to continue.



Mickey, 7-11, city cafe, The Avengers, Iron Man, On Children, Peppa Pig, Lima, Angry Prince, the 10 aforementioned IPs, may probably be more than 10 due to different copyright ownerships and agency agreements.