Home Resources Forms
& Publications
Fact Sheets Making the Most of Your IP
 Printable PDF
Making the Most of Your IP
Strategic options for commercialising your
intellectual property (IP)
Once you have secured protection for your IP, you are ready
to tackle the commercialisation process. Essentially,
commercialising IP is the process you undertake to move
your innovation from “just another brilliant idea for a
product or service” to the market place. You need to
consider many issues before commercialising your IP to
identify what you think will work for your business. There
is no one ‘best’ strategy. How you commercialise your IP
depends on your particular IP, your circumstances, business
capabilities, understanding of the market and your ability
to generate finance.
You need to consider whether you want to commercialise
in-house or with a partner. Or you might decide that you
do not have the capability to manufacture, market and sell
your product in-house but do not wish to partner with
another company either. In this case, you may be able to
outsource some of the required tasks. There are many
options for taking your IP to the market. A couple of the
most common are listed below.
Remember that there are different issues to consider when
commercialising in Australia as opposed to internationally.
Licensing
Licensing your IP to another party can be an effective way
to exploit IP, particularly if you don’t have the resources or
experience to develop and market your product or service.
Essentially a licence is a contract where the IP owner gives
permission to a licensee to commercialise that
intellectual property. A licence may extend to all aspects
of commercialisation, from developing it further, to
manufacturing products, marketing, promoting and selling those products. As with all other aspects of commercialising
your IP, licensing needs to fit in with your business strategy
and practices.
An exclusive licence is the most commonly used mechanism
to commercialise intellectual property with a partner but
there are many other types of licenses including know-how,
trade mark and non-exclusive. Licensing arrangements are
a fairly common method of exploiting copyright, patents,
design and trade marks but any type of intellectual property
can be licensed. They give the licensee the right to use (but
not own) the IP. The owner of the rights will usually get
payments (in the form of royalties) in return for its use.
The value of these rights is a commercial agreement based
largely on the IP of the creation or invention.
Another approach is to take out a licence on someone else’s
IP. For example, a franchise is a type of licence. You may
have a good idea but find someone else has already thought
of it. Taking out a licence is a cost effective alternative to
investing in development which has already been done. If
you think licensing is for you, we recommend you seek the
advice of a licensing expert to help you negotiate a good
deal
Franchising
When the owner of a successful business wants to expand
without borrowing capital to develop, they can license IP
to franchisees. This generally includes trade marks, logos,
promotional material, the business system, various processes
and shop fitouts.
Franchising is a method or system for distributing goods
and services. The franchisor owns the IP rights over the
marketing system, service method or special product. The
franchisee pays a fee or regular royalties for the right to
trade under the brand name. The franchisee benefits from coordinated marketing efforts
and a developed business system.
Assignment
Unlike licensing where the creator or owner of the IP retains
ownership and some control over the use of the IP, an
assignment is an outright sale. When IP owners transfer
their ownership, they can’t impose any performance
obligations on the new owner.
Even with the complete loss of IP ownership, assignment
is worth considering as an alternative commercialisation
strategy. For example, an owner may prefer to receive a
substantial up-front lump sum payment for the assignment,
instead of smaller royalty payments throughout the
commercialisation period, which is the case with a license.
Capitalising on the financial rewards up-front may be the
preferred option and often is the option with a smaller
amount of risk compared to licensing.
Such a lump sum payment should be regarded as a purchase
price. The owner should factor into that purchase price all
the costs of taking the intellectual property to its state of
development to the time of the assignment. These will
include all the direct costs of research and development,
all indirect costs, all out of pocket expenses such as the
cost of materials, the cost of any outsourcing, and the cost
of protecting the intellectual property. As well, the lump
sum amount should incorporate a profit component, and
the potential market value of the technology or IP.
Who can help?
In the first instance,
IP Australia’s website provides further details about
commercialising IP rights, along with web-links to relevant
agencies. IP Australia recommends that you seek professional
advice from a patent attorney, trade mark attorney, IP lawyer
and/or business planner before making any final decisions.
|
