Rahul Bagga
Dentons Link Legal, Noida
rahul.bagga@dentonslinklegal.com

Mohit Porwal
Dentons Link Legal, Noida
mohit.porwal@dentonslinklegal.com

Introduction: licensing as the governance layer of innovation markets

In contemporary innovation markets, licensing is no longer a peripheral transactional instrument. It has become the operating layer of innovation economies the legal and commercial mechanism through which access to technology, data, standards and creative content is structured, priced, monitored and enforced.

This shift is particularly visible in Asia. The region’s ‘land of opportunity’ narrative is not driven merely by domestic invention, but by permissioned diffusion: rapid cross-border movement of technology, platform-based scaling, collaborative research and development and standards-led interoperability. In each of these contexts, licensing performs a governance function that extends well beyond private contract.

This article advances a central claim: in Asia, licensing has evolved into a form of regulatory infrastructure, quietly performing functions traditionally associated with public law, including market-access control, competition discipline and public-interest risk management. The future of Asian innovation will therefore be determined not only by the strength of intellectual property rights, but by the quality and design of licensing systems that operationalise them.

This structural role is recognised, albeit implicitly, at the international level. The Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) administered by the World Trade Organization embeds licensing at the heart of the global IP system, balancing exclusive rights with concerns around technology transfer, competition and trade distortion.

International baseline: TRIPS, technology transfer and the Competition Interface 2.1 the permission architecture of IP rights

The TRIPS Agreement frames intellectual property (IP) primarily as negative rights – rights to exclude rather than affirmative rights to use. This architecture makes licensing indispensable. Without a licence, third-party use remains unlawful regardless of technical feasibility or economic desirability.

Article 28 of the TRIPS Agreement, addressing patent rights, illustrates this logic. Exclusive rights to make, use, sell or import acquire economic meaning only because the right holder may selectively permit use through licensing. In functional terms, licensing is the conversion mechanism through which IP exclusivity becomes productive use.

For Asia’s innovation-driven economies where adoption cycles are compressed and industrial upgrading is policy-driven this permission architecture places exceptional strategic weight on how licenses are drafted, implemented and enforced.

TRIPS article 40: anti-competitive licensing practices

TRIPS is often characterised as disproportionately protective of right holders. This reading overlooks article 40, which expressly authorises members to regulate anti-competitive licensing practices that may impede technology transfer or distort trade.

Article 40 treats problematic licensing conduct not as an anomaly, but as a foreseeable risk in concentrated technology markets. This acknowledgement resonates strongly in Asia, where high-growth sectors repeatedly encounter friction around:

• restrictive or coercive grant-back clauses;
• no-challenge provisions insulating weak IP;
• tying and package licensing without objective justification;
• discriminatory royalty structures; and
• strategic leverage of standard-essential patents (SEPs).

Crucially, article 40 supplies international legitimacy for domestic competition authorities to intervene in licensing arrangements authority that Asian regulators are increasingly willing to exercise.

Regulatory convergence without harmonisation

Asia does not exhibit formal harmonisation of IP or competition law. Statutory frameworks differ markedly across China, India, Japan, Korea and ASEAN jurisdictions. Yet licensing behaviour is increasingly converging.

This convergence is driven by structural forces: global supply chains, multinational compliance expectations, cross-border enforcement risk and the disciplining effect of international standard-setting bodies. The result is a paradoxical but powerful trend – divergent laws, convergent licensing conduct.

For licensors and licensees alike, this means that future-ready licensing strategies must be designed not merely for local legal compliance, but for regional regulatory plausibility.

Asia’s licensing future: five converging trajectories

From ‘asset licensing’ to ‘stack licensing’

Modern technology products embed multiple IP layers operating simultaneously:

• patents (hardware, methods, standards);
• copyright (software, interfaces, digital content);
• trade secrets (processes, optimisation logic); and
• contractual controls (APIs, data access, usage limits).

This produces stack licensing multiple interdependent licences governing the same commercial product. The legal consequence is significant: termination or invalidity of one layer can destabilise the entire value proposition.

Licensing strategy therefore shifts from single-document negotiation to ecosystem architecture.

Licensing meets competition law: the return of market power analysis

Across Asia, competition law is re-entering licensing discourse with renewed force, particularly in SEP-driven markets. China’s IP-related antitrust guidance, for example, reflects a more structured assessment of tying, discriminatory pricing and unreasonable licensing conditions.

Importantly, fair, reasonable and non-discriminatory (FRAND) compliance is no longer judged solely by royalty rates. Regulators increasingly examine process-based factors: transparency, consistency, negotiation conduct and willingness to license. In effect, FRAND has evolved from a pricing obligation into a procedural discipline.

The forward-looking lesson is clear: sophisticated licensing now requires competition-law-aware design, with defensible justifications for exclusivity, bundling, most-favoured-nation clauses (MFNs) and grant-backs grounded in efficiency and market structure.

Illustrative scenario: when licensing design fails

Consider a regional SEP holder licensing connectivity technology to device manufacturers. The licence bundles patent access with mandatory software components, applies differential royalties across similarly situated licensees and conditions renewal on broad grant-back obligations.

The commercial arrangement appears stable – until a downstream original equipment manufacturer (OEM) files a competition complaint. Regulatory scrutiny follows, negotiations collapse and the licensing framework becomes the subject of mandatory restructuring.

The lesson is structural: licensing failure today is rarely about IP validity alone. It is about design choices that cannot withstand regulatory examination.

Compulsory licensing and public interest: a policy instrument

In Asia, compulsory licensing is not a theoretical relic. It remains an active policy instrument, particularly in sectors touching public welfare.

India illustrates this clearly. Chapter XVI of the Patents Act 1970 enables compulsory licensing on grounds including failure to satisfy reasonable public requirements or lack of availability at affordable prices.

In 2012, India exercised its first-ever compulsory licence under section 84 of the Patents Act 1970, granting Natco Pharma a compulsory licence to manufacture and sell a generic version of sorafenib tosylate (marketed as Nexavar), a patented cancer drug owned by Bayer. The decision was widely viewed as a landmark affirmation of public-interest safeguards within India’s patent regime, particularly on grounds of unaffordable pricing and inadequate local availability.

However, the ruling also attracted sustained criticism for perceived insufficient scrutiny of the patentee’s commercial diligence and technology-transfer efforts, including limited engagement with alternative voluntary licensing pathways and pricing flexibility mechanisms. From a licensing policy perspective, the episode remains instructive: compulsory licensing in India functions not merely as an exceptional remedy, but as a structural negotiation backdrop.

From a future-of-licensing perspective, the practical lesson is clear: voluntary licensing increasingly operates in the shadow of public-interest intervention. Pricing structures, supply commitments and access pathways now shape bargaining realities.

Digital content licensing and the internet treaties discipline

Asia’s creator economics, film, music, gaming and streaming are licensing-intensive by design. The Internet Treaties administered by the World Intellectual Property Organization provide the international baseline for digital exploitation and enforcement.

The central question has shifted from subsistence of rights to value-extraction mechanics: platform licensing, collective management, territorial fragmentation and technological protection measures.

Data and AI licensing: the next governance frontier

As AI systems increasingly rely on licensed datasets rather than discrete IP assets, licensing will become the primary legal tool governing model training, deployment scope and downstream liability.

Hybrid structures combining copyright, trade secret protection and contract are emerging as the dominant governance model. In this context, licensing is not merely monetisation; it is risk allocation for AI ecosystems.

Contractual engineering of trade secret licensing in the absence of statute

Unlike patents or copyright, India does not have a standalone trade secrets statute. Protection is derived instead from a composite framework of contract law, equitable principles and judicial recognition of confidential information as a protectable commercial interest. In this vacuum, licensing trade secrets is not a question of statutory entitlement, but of contractual engineering.

Recent trade secret licensing negotiations demonstrate that enforceability depends less on the label ‘trade secret’ and more on how precisely the secret is identified, ring-fenced and operationalised within the agreement. Indian courts have consistently emphasised that for information to qualify as a trade secret, it must be clearly identifiable, demonstrably confidential and subject to reasonable protection measures requirements that must now be contractually hardcoded rather than assumed.

One emerging innovation is the use of contractual identifiability mechanisms, where the trade secret is defined not by disclosure of its substance, but by reference to objective identifiers such as controlled inputs, process parameters, dependency matrices, versioned documentation logs or escrowed descriptions. This approach assists courts in recognising the existence and boundaries of the trade secret without requiring public or adversarial disclosure.

Equally significant is the development of ‘use-without-revelation’ licensing architectures. These structures allow parties to exploit trade secrets commercially without reciprocal disclosure by limiting access to raw materials, outputs, interfaces or black-box processes, while contractually prohibiting reverse engineering, inference or derivation.

From an enforcement standpoint, these mechanisms perform a dual function. First, they satisfy the requirement under Indian contract jurisprudence that contractual obligations be certain and enforceable. Second, they position the trade secret as a recognisable legal asset, capable of injunction-based protection without forcing the right holder into the paradox of revealing the secret to protect it.

The broader implication is clear: where statute is silent, licensing design becomes the law in action.

India as a preview jurisdiction

India functions less as an outlier and more as a preview jurisdiction, where the tension between exclusivity, access and industrial policy is already fully exposed.

Section 84 of the Patents Act operates not merely as a litigation trigger, but as a negotiation backdrop. Sophisticated patentees increasingly pre-empt compulsory licensing risk by embedding access commitments, affordability pathways and supply assurances within voluntary licences.

This is not regulatory capitulation. It is strategic foresight.

Implications for drafting and deal design

Future-ready licensing in Asia will require:

• competition-proofing – explicit pro-competitive rationales aligned with Article 40-type scrutiny;
• modularity – clean separation of IP layers to prevent systemic collapse;
• operational enforceability – measurable obligations, audit rights and remediation workflows;
• public-interest resilience – structural defensibility on access, affordability and supply; and
• cross-border dispute planning – arbitration, interim relief and enforcement foresight.

Conclusion: vibrant Asia will be built on permissioned diffusion

Asia’s opportunity story is ultimately a diffusion story technology and creative value moving rapidly, lawfully and profitably across borders. Licensing is the private-ordering mechanism that enables this diffusion, while TRIPS, competition law and public-interest regulation provide the guardrails.

The future will favour actors who treat licensing not as clerical documentation, but as institutional design a governance layer for innovation markets.

For regulators, courts and competition authorities, the challenge will be to recognise licensing not as a private-law afterthought, but as a central mechanism of innovation governance deserving of principled, predictable oversight.

Selected references

• WTO, TRIPS Agreement, Articles 28 and 40.
• Government of India, Patents Act, 1970.
• WIPO, WIPO Internet Treaties (WCT and WPPT).
• Secondary scholarship on China’s IP antitrust and SEP licensing frameworks.