IP Licensing Model
Creating New Revenue Streams with an IP Licensing Strategy
Many companies own valuable IP assets which their competitors or partners could seek to use or buy outright, offering them quick-to-market benefits. One possibility for cash-strapped businesses to quickly create additional revenue streams is to assess whether there is existing IP in your business which can be licensed out to third parties, in exchange for a fee or on-going royalty payment. Licensing out your IP to third parties can include the white-labelling of your proprietary software to competitors, to licensing out your brand name to companies that can launch it into different products or different geographical territories. The licensing of IP rights either in to the Company or out of the Company is governed by a formal IP licensing agreement.
What is an IP licensing agreement?
An IP licensing agreement occurs between an IP rights owner (“licensor”) and someone who is authorised to use the rights (“licensee”) in exchange for monetary value in the form of a fee or a royalty. The two parties agree on the terms and conditions via negotiation, with the outcome dependent upon the bargaining power of each side. The licensor is always the owner of the licensed IP, and one license can cover patent and design rights, related know-how and a trademark.
In addition to creating additional revenue streams for your business, licensing out your IP can:
- get your products or services to a market or geographical territory in less time
- allow risks to be shared
- lead to an increase in market penetration
- reduction in costs and time
- access to expertise
- increase your competitive advantage
- increased collaboration
- opportunity to minimize capital investment.
What can be subject to an IP licensing agreement?
IP that can be licensed includes:
- Software
- Trademarks for branding of products and services
- Patents for technology (goods and processes)
- Registered product designs
- Copyright for literature or artistic work
