Bundling Rights

A frequently lucrative form of OEM arrangement similar to box rights. For example when a computer manufacturer bundled licenses to ISP services, such as America Online® (AOL®), the manufacturer may typically received a fee for each bundle, plus a yield-based fee for every customer who pays to use the service (a common arrangement with bundled services with PCs).

Alternately when tied to consumables (and sometimes a recommendation for continued use), for example detergent (with a washing machine), car tires (on a vehicle), branded batteries (packaged with a device), or film (in a new camera), the bundled product will be at least free or heavily discounted or indeed a fee may be paid, because of the likelihood that the customer will replace and renew worn out items and used consumables with products from the same brand.

Linking warranty protection to continued use of bundled consumables used to be common (i.e., your warranty depends on using only x-brand of consumable), but this practice has generally been held to violate competition law or consumer protection laws, absent a sound technical basis for the link. Some bundling rights are more valuable than others, but also may also be more controversial, for example when maternity hospitals effectively bundle the newborn infant with free baby products such as infant formula and disposable diapers. See Right-of-Endorsement, Right-to-Endorsement.