Quick Drying Paint & Licensing Negotiations
This is a negotiation exercise. The case involves the negotiated licensing agreement between an American manufacturer in Arizona, and a Mexican licensor in the State of Sonora. Sam Paint owns and operates the largest wholesale paint business in southern Arizona. Although he sells a variety of house-paint products, he is best known for his quick-drying paint, a process he developed and patented in the United States twelve years ago. Sam also holds a Mexican patent for quick-drying paint. Both patents are scheduled to expire in five years. This negotiation takes place in the aftermath of the North American Free Trade Agreement (NAFTA) and the passage in Mexico of a strengthened intellectual property system.
The negotiation exercise is designed to provide firsthand experience in face-to-face negotiations involving licensing issues. A form of License Agreement at the conclusion of the negotiation is included so as to give the negotiators a menu of possible issues about which to negotiate. While the goal of the exercise is to reach an agreement, the option of non-agreement is an acceptable outcome so long as the negotiators put in sufficient time and effort to fairly explore the issues and make maximum efforts toward a potential agreement.