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If you are a business in England, it is helpful to know how your intellectual property rights can benefit you financially. You use intellectual property rights primarily to protect intangible assets belonging to your company. They can be extremely valuable assets, so a robust intellectual property strategy can significantly benefit your business. In this article, we will discuss the most effective ways to monetise your intellectual property rights.
The Importance of Intellectual Property Rights
Intellectual property rights can include:
- trade marks;
- design rights;
- copyright; and
- patents.
All of the above can be extremely valuable, despite being intangible assets. When companies are valued, it is often the intellectual property valuation that makes up the bulk of the total market value of the business. This is because intellectual property is strongly linked to the brand. Therefore, it is crucial to a business’ reputation and customer base. The commercial value of large companies will always include high-value intellectual property rights as part of the overall value.
Licensing Your Intellectual Property Portfolio
Intellectual property, in the same way as tangible assets, can be:
- bought;
- sold; or
- licenced.
Licensing your intellectual property assets is an excellent way of monetising your portfolio. Licencing agreements permit third parties to use your intellectual property in agreed ways while retaining your ownership.
You can easily licence intellectual property assets like design rights, particularly if you are already part of the relevant market. Nevertheless, you should remember that once you licence your product, you will not hold a monopoly over the design rights during the licence period.
Licencing your intellectual property assets is also a valuable method of breaking into other regions with your products, particularly if you are not presently able to do so. This is beneficial for increasing your business’ exposure geographically and can even increase the value of your intellectual property portfolio as a result of the growth of your brand internationally.
If you decide to grant a licence to another business, you may wish to inform the Intellectual Property Office, which you should do within six months. As such, you should make the decision to licence certain intellectual property rights with appropriate legal advice. Further, you should draft all contracts with the assistance of a professional to ensure all points are covered appropriately.
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Selling Your Intellectual Property
Intellectual property is a crucial business asset with its own individual value. Notably, you can obtain an intellectual property valuation for your company to assess its worth, which is vital for monetising it. However, it is commonplace when companies are sold to other companies to see an intellectual property portfolio worth millions of pounds.
In contrast to licensing, selling your intellectual property results in a complete loss of ownership. You should seek legal advice to make this type of decision, as the result is final unless you were to repurchase your intellectual property rights. You should also ensure you obtain a formal intellectual property valuation. Intellectual property can be valued in ways including:
- comparing other assets;
- estimating future earnings that you could make; and
- evaluating any other costs attached.
The greater the reputation your intellectual property has in relation to your business, the greater your portfolio valuation is likely to be. If you wish to sell your intellectual property, you should get a sale agreement drafted by a legal professional. While you will obtain one large fixed payment when selling your intellectual property portfolio, it also means you will not gain any future revenue.
Key Takeaways
Your intellectual property portfolio is useful for not only expanding and developing your brand but also generating revenue for you and even regular cash flow. Monetising your intellectual property rights in such a way can come in different forms. However, the two main ways to generate income are by licensing or selling your intellectual property rights. To manage this, you can develop an intellectual property strategy. This plan is beneficial for your business, and you should bear this in mind even when starting a new business.
If you need help or advice around licensing or selling your intellectual property, our experienced intellectual property lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Licensing is a great way to generate revenue for your business. It permits third parties to use your intellectual property in agreed ways for a fee. You do not lose ownership of your intellectual property when it is licenced, which is a huge benefit. But, you should seek advice before entering into a contract with another business.
The two main ways of generating income from your property are licensing and selling. Licensing involves a contract allowing others to use your intellectual property under specific agreed terms, whereas selling is a one-time transaction that permanently transfers ownership for a larger fee.
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