Businesses often develop a broad range of intellectual property (IP) for their use, which can sometimes then receive protection through registration. If you have developed IP for your business, you may now want to commercialise your IP. This article will discuss the best methods in which you can commercialise your IP through an IP licence.

Benefits of an IP Licence

As IP rights are intangible assets for your business, commercialisation of your IP can provide additional benefits for your business. Before you consider commercialisation, your IP must be appropriately registered and protected through IP Australia. Forms of IP that can be registered include:

  • patents;
  • trade marks;
  • designs; and 
  • plant breeders rights.

It is important to note that copyright protection occurs automatically, and you do not need to register copyright over your works.

Once you confirm your ownership of your IP, you can then consider commercialisation. An IP licence is a contract to provide someone with the right to use IP which they do not own. In contrast, you could also assign or sell your IP rights to another party, which means you will no longer own or be able to use your IP. The benefit of a licence is that you will maintain ownership over the IP. Rather than assigning the IP, where you lose all rights to it.

Additionally, if you are considering expanding your business, you should ensure your IP is protected within the market.

Types of Licences

Having decided on an IP licence as your method of commercialisation, you now need to consider which type of licence is best for your business. As the owner of the IP, you are the licensor and can licence your IP to someone else for some form of payment, while still maintaining ownership over the IP. Maintaining ownership allows you to dictate how the licensee may or may not use the IP. There are three key types of licences.

1. Exclusive Licence

An exclusive licence, as the name suggests, is a licence that allows the licensee exclusively to both use and commercialise your IP. This exclusivity also excludes you, the licensor, from using the IP. However, this high exclusivity means that the monetary payment is usually much higher than other licences, making this a profitable type of licence.

Commonly, licensors will include specific restrictions on the licensee’s use of the IP in relation to certain: 

  • products;
  • geographical areas; or 
  • fields. 

These restrictions allow you to either retain IP rights in the restricted areas, allowing you to continue to exploit your own IP.

2. Non-Exclusive Licence

A non-exclusive licence allows you to licence the IP to multiple different parties.

The benefit of this licence is that you can continue to use your IP without as many limitations. In addition, this non-exclusive licence may allow for greater IP commercialisation and monetary payments. You can still dictate certain restrictions on the use of the IP by a range of licensees.

3. Sole Licence

A sole licence is a combination of both an exclusive and non-exclusive licence. It allows a licensee to use the IP but you can still also use your IP. This allows you to have more control over your IP and continue to use it in conjunction with the licensee, unlike an exclusive licence.

Regardless of the type of licence you choose for your business, you will need to outline this chosen relationship in a licence agreement between yourself and the licensee.

IP Licence Considerations

When selecting an IP licence, you should consider the purpose behind you wanting to licence your IP. You should also determine how much control you want to have over the IP and the licensee’s use of it. If you are unable to further develop and commercialise your IP yourself, or if you are looking for minimal involvement, then you may wish to pursue an exclusive licence.

Many potential licensees may be reluctant to agree to a non-exclusive licence, as the value of an exclusive licence for them is much greater. It is important to consider whether you are willing to grant one single licence for a higher fee or grant many licenses for a smaller fee. There are also additional administrative efforts involved in managing either option. If you are looking to continue to use your own IP, or still retain more control over your IP, you may consider a non-exclusive or sole license.

Regardless of which licence you ultimately choose, you will need to have appropriate licence agreements prepared to govern the relationship. You will need to understand this agreement and what your rights are, especially if a licensee breaches the agreement. These agreements will often outline core details such as the:

  • way you and the licensee are permitted to use the IP;
  • length of time that the licence is valid for; and
  • fees you will charge for the licence. 

You need to ensure your agreement captures all your considerations and concerns. It should also explicitly outline the type of licence you are granting.

Key Takeaways

If you are looking to licence your IP, the first and most critical step is to ensure that your IP is actually protected. When looking to commercialise your IP, you need to consider how this may affect your business and your ability to use your IP. If you are interested in commercialising your IP and wish to find out more about which IP licence is right for your business, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.

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