If you have been anywhere near Traklight or its members, protecting and leveraging your intellectual property (IP) has probably been drilled into your head so many times you have started reciting ‘work for hire’ and non-disclosure provisions in your sleep. Although there are many advantages to protecting your IP, let’s delve into how you can make money off of it, specifically in terms of licensing your intellectual property.
Licensing is a brilliant way to leverage your IP assets to fuel future growth of the company. But there are a couple of issues to keep in mind while licensing. Firstly, always maintain records of your license agreement. Time and again we have harped on the importance of maintaining good records for the purposes of due diligence but in this case, it also helps if a dispute arises. The better organized you are, the sooner you can attend to the conflict, giving you an advantage over your licensee.
Many inventors spend a tremendous amount of time and money to register their IP under the allusion that once you they have the paperwork people will start lining outside their door, checkbooks in hand. Unfortunately, that is not what happens. Most entrepreneurs and companies incorporate protected patents into their products without even realizing they are infringing someone’s patent. It is your duty to monitor all the fields in which your invention is likely useful and ensure it is not being infringed. And in case it is, civilly bring it to the notice of the infringer and offer them a fair licensing deal for using your invention in their product.
Another important consideration that people ignore is building continuing relationships. By licensing your invention you are not selling a product. You are forging a relationship that hopefully will blossom into more lucrative opportunities and contracts down the line. While you may want to protect your IP as a Panda would its cub, compromising on some issues may be in the startup’s best interest if it leads to future licensing deals and business prospects.
Don’t think I forgot about the dreaded ‘E’ word. Yes, I am talking about exclusivity. This is a major bone of contention in a number of negotiations and rightly so. Licensors do not want to be bound to a single licensee without discovering the full potential and application of their invention. They may end up leaving a lot on the table if it turns out there are a plethora of uses they had not even considered. For a big corporation looking to license innovative technology from a small startup, it may make sense why they would want exclusivity considering the amount they are willing to shell out on an unproven product. But please be wary if you are offered a seemingly large amount of money or if they are in a rush to close the deal; they may know something you do not. It may be hard but as an entrepreneur make sure you are not getting a raw deal, take your time, do your research, and talk to experts in the field.
On the flipside if you are looking to license an invention to use yourself then there are a couple of points you want to keep in mind. Even though a company may state that the terms in their license agreement are not subject to change, if you find a provision unreasonable speak out and negotiate. As stated above, companies licensing products want to build positive relationships and will likely consider your proposition if fair.
Making money off your investment is a no-brainer, but if not practiced safely can lead to seriously jeopardizing your ownership rights. Store all your licensing agreements in a secure Vault made specifically for the protection, organization, and compilation of all your IP information.
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