Making Money From Your IP

Posted on 01 Nov, 2021
By IPOS International

Companies typically create and build unique intellectual property (IP) assets because they intend to use them in the products and services they offer. However, your ideas and the assets you create from them may have more market potential than you can realise with your own resources. This is where a monetisation strategy may bring substantial benefits.

As its name suggests, IP is a form of property right. This means it can be licensed and sold (assigned) in much the same way as any other type of asset. As many businesses have discovered to their advantage, IP can facilitate income generation by providing a basis for other firms to sell products and services that use it. In turn, you receive fees, which may be one-off, up-front, on-going, or a combination of all three.

This guide takes you through the main principles and practices of licensing, franchising and IP brokerage. Chapter 1 starts by introducing the main methods of monetising IP directly (i.e. getting paid for providing access to the rights themselves). It briefly discusses what licensing and franchising are, when they may be beneficial and what the differences are between these two approaches. It also looks at when selling your IP to a third party might be a good option.

Chapter 2 focuses on licensing. It takes you through the concept of exclusivity, and how to determine which rights you may want to license. It also sets out how to think about what you should charge, check out prospective licensees, and manage an agreement once you have signed it.

If you choose to set up a franchise to exploit your IP, you will have a wider range of topics to consider. Chapter 3 covers key franchising decisions that may affect how well your IP is protected and exploited.

Parting with rights that you have created may be the best decision if you are not in a good position to exploit them yourself. Chapter 4 deals with selling IP, exploring typical buyer motivations, the types of IP that are generally easier or harder to sell, how to conduct background checks and negotiate an appropriate price.

Chapter 5 then describes several less direct methods to monetising IP. These include attracting advertising or sponsorship, offsetting costs your business would otherwise incur, using IP to set an industry agenda and standards, or to substitute marketing costs to obtain more repeat business.

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