Licensing Intellectual Property

10th January 2019

Owning intellectual property (IP) not only provides you with defendable rights (against infringers) but adds to your business’ assets, making your brand more attractive to investors.

One way of using this asset is to licence your rights to interested parties (“licence out”). This allows you to retain ownership and control of your IP but you are authorising another party to use some of your IP rights, in return for a fee or royalty payment – how much use you authorise can be controlled by you in the licensing agreement.

You can also licence another company’s IP, for example if you want to use this to develop your own product (“licence in”).

There are many benefits to the licensing of IP:

Licensing Out

• Increasing market penetration – licensing your IP to another business that has the capacity to sell in territories that you cannot.
• Revenue generation – licensing can broaden the reach of your IP into different markets.

Licensing In

• Saving time and costs – by licensing another party’s IP you reduce the time and costs in researching and developing this innovation yourself. This means you can get your product to market much quicker.
• Accessing expertise – by taking a licence, you may tap into expertise that you do not have in-house.
• Competitive advantage – by acquiring a licence to use IP, you may obtain an advantage over your competitors through the knowledge and/or expertise you gain.

How do I get started?

If you want to licence out, think about what you are willing to share and your reasons for doing this. Do you want to give away know-how?
Do market research to help identify suitable partners and to help you prepare for any negotiations. In initial discussions with potential companies make sure you use a Non-Disclosure Agreement.

What paperwork do I need in place once I’ve negotiated a licensing arrangement?

A Licence of IP will need to be drafted, this can be very straightforward, a solicitor who specialises in IP will be able to guide you through the process and ensure the licence meets all your needs.

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