If you own a business, you have intellectual property. This is your brand, logos, technology, software, etc. And, once you have it established with patents, copyrights and trademarks, those assets can be monetized through licensing. However, whether to monetize your IP and how to monetize it will differ for each business and the business owner’s goals.
Decide whether to monetize
The decision on whether to monetize really revolves around your goals. What do you want to get out of monetizing your IP? Is it simply increasing cash flow? Is it making your technology an industry standard? Is it to expand your brand or some combination?
Some people think of licensing as free money, but licensing can have some real downsides. First, some countries are notorious for stealing IP. Once you license your IP, if you are not extremely selective, you could license to a company connected to one of the notorious countries. Suddenly, your “better mousetrap” could pop up on Amazon without any connection to you.
Quality can become an issue as well. Even if you have strict requirements on how your Staten Island, New York, IP can be used, you always run the risk that those using your IP not keeping the same standards as you. For example, if you are a major-label hotel chain, and you license your brand to private hotel chains, customers will not distinguish between them and you. Their errors and quality issues will be your errors and quality issues. The only way to protect yourself is to follow up and check, which can add an additional layer of work to your business that should be factored in when determining the licensing fee.
When you do decide to license your IP, there are several things that you should consider when developing your licensing agreements. Of course, the first is cost. You should price the license commensurate with the value and costs associated with the license. Cost can be a lump sum, a royalty or some other recuring fee. Specify the term as an indefinite license is rarely advisable. Where can the business use the license (regional, nation, international, etc.)? Will the license be exclusive or non-exclusive, and will the license be assignable? You could quickly lose control by just making the license assignable because they could cut their rights up and usurp your control. And, do not forget to limit the rights associated with the license, like reproduction, adaptation, distribution, etc.
Finally, work with your Staten Island, New York, attorney to craft breach language. This includes what happens if there is an infringement, indemnification from their bad acts, and which laws will govern disputes between you and the licensee.