Intellectual Property (IP) is a valuable asset for your business. You can register or protect your ideas and your brand through copyright, trade marks, patents and design. Most businesses overlook IP protection however, it should be a core component of your business and marketing strategy. Below, we explore two ways to leverage the commercial value of your IP with an intellectual property (IP) licence or assignment.
If you are the owner of the IP, you are the licensor and have the right to licence your IP to a licensee. Licensing ensures that the ownership remains with the licensor.
The terms of the licence will be mutually negotiated and agreed to as it is in both parties’ best commercial interests. The terms of the licence govern the relationship and can include the payment of rights in the form of royalties for the use of the product and period.
Types of Licenses include:
- Exclusive: The owner of the IP can grant only one licence and not use the IP themselves.
- Non-Exclusive: The owner of the IP can grant more than one licence and use the IP themselves
- Sole: The owner of the IP can grant only one licence but can use the IP themselves.
An IP assignment unlike licensing is an irrevocable and permanent transfer of IP. It is the sale or transfer of IP ownership from an owner (assignor) to the purchaser (assignee). It can be arranged by deed or agreement, which can transfer present or future rights in IP in exchange for a lump sum payment.
Why Assign or Licence Your IP?
Do you want to commercialise your IP? Do you want to manufacture, market or distribute your IP? If the answer is no, you may want to think about assigning or licensing your IP. We set out some further uses below.
Assignment or Licensing IP can allow investors to invest in IP without having to worry about the expensive and time-consuming development phase.
Manufacturing and Distribution
You can have your IP exclusively manufactured or distributed by licensing the rights. This allows control over those who manufacture or exploit your IP, as well as distribution areas while you enjoy the royalties.
IP Licensors may like to use an exclusive licence to commercialise and exploit their IP. They will gain royalties and the rights to the product without being concerned with the process or marketing required in the exploitation phase.
IP Holding Company Structure
Large multinationals often set up and use a holding company as a means to protect their IP. This structure requires the assignment of IP to the holding company which will in turn licence the IP to subsidiary companies.
An employer should use an employment contract that ensures employees assign all IP they create during their employment to the business. If this is not set out in a contract, an employer can also ensure that employment is terminated should IP be misused.
Most universities require Honors or Ph.D. students to assign current, and future IP to protect any work created. Universities typically enter into agreements to allow for co-ownership of patent-worthy inventions and to share profits.
Is Licensing or Assignment Most Suitable for Your Business?
The difference depends on the payment structure. If you choose to licence your business’ IP, you will have a flow of royalties for the use over an agreed period. If you decide to assign your business’ IP, your will receive a lump sum. It is up to you which option has the most commercial value for your business.
If you have any questions or need an IP licence or assignment drafted, get in touch with our IP lawyers on 1300 544 755.
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