Intellectual Property could be Your Business’ Most Valuable Asset
Does your business own Intellectual Property? If you are working in the creative industries, the answer to this question is most likely to be yes. But the more important question is whether you have considered the value of this or how it could potentially help you protect or grow your business value?
The importance of intellectual property in SMEs is often underestimated, perhaps due to its intangible nature. Intellectual Property (IP) includes patents, trademarks, copyright and designs.
What is Licensing?
Licensing is one of more ways in which you can use Intellectual Property to Grow and Protect Your Business Value.
Licensing is the provision of an agreement to a third party allowing the use of your IP within specific terms and limits, (without infringing your rights), but without transferring ownership to that other party.
You may be sitting on great designs, image rights or inventions that you could potentially license out for a profitable sum.
Licensing arrangements are very common and the Intellectual Property Office (IPO) estimates that globally IP licensing arrangements account for approximately £600BN in revenues per annum.
In terms of examples you only need to look at a certain Richard Branson to understand the value of a powerful brand but also probably one of the most successful licensed brands globally.
Many of the well known Virgin businesses are not actually owned or run by Virgin however:
• all of them are licensed to use his brand and obtain the positive benefits of this and
• they generate an ongoing and no doubt substantial revenue stream to Virgin
A licensing arrangement should not be entered into lightly without professional advice, which will ensure that the following key issues are adequately dealt with from the outset:
1. Fees and business targets.
2. Levels of exclusivity provided.
3. Sub licences.
4. Actions upon expiry of the licence or bankruptcy/sale of the licensee etc.
What are the benefits of licensing arrangement to SMEs with the IP assets?
• It generates a new or additional stream of income for a contracted period of time.
• This income is generated by IP asset(s) without having to transfer ownership of assets.
• As the assets are available to be licensed it provides an ability to avoid infringements (or as a solution to an infringement where this may occur).
• It enables your business or brand to expand into a new market with a minimum of risk or investment.
• Successful licensing arrangements may also enhance or strengthen the business more generally (as your presence expands and/or other licensees approach you).
The risks of such arrangement may include:
• Legal issues at the outset can cause practical problems such as sub licensing IP to other group businesses or on bankruptcy trying to retrieve the licensed rights etc.
• Poor execution of the service etc. by the licensee may have a detrimental effect on your brand in that market
• The licensee could potentially become a competitor in that market (or your home market) at a later date
The onus then, is really on the Licensor (or IP asset owner) to be clear on their business strategy, but also that the right amount of time is devoted to selecting the right type of licensee.
Are You Missing out on valuable Financial Opportunities in Relation Your Intellectual Property?
Do you have questions about licensing or how you can use your Intellectual Property go grow or protect the value of your business?
Contact Damian Connolly: damian@sakurabusiness.co.uk or call: 0207 952 1230.
Learn about more ways in which you can use your Intellectual Property to grow and protect the value of your business here.
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