Co-authored by Olivia Camilleri
Your intellectual property is a business asset that can grow in value and generate a profitable revenue stream. Many intellectual property assets have potential for future growth and are highly scalable.
Here are five ways to turn your intellectual property into a money-maker and some things to keep in mind:
Use your intellectual property
The most obvious way to leverage your intellectual property is to exploit it through commercial activities. This involves offering your products or services in the marketplace, whether as part of your current business or as a spin-off business, such as vertical or horizontal integration. It’s important to note that if you don’t use your intellectual property, you could also lose any protections you have in place!
Licence your intellectual property
Licensing your intellectual property gives someone else permission to use it in return for payment of royalties and/or fees. This is a great option when you don’t have the resources or experience to develop or market your intellectual property yourself. Depending on the arrangement, you may also be able to continue using your intellectual property.
Franchise your intellectual property
Franchising allows you to monetise your intellectual property by extending your brand’s reach. It involves giving one or more parties the right to operate under your brand in exchange for payment of royalties and/or fees. The ACCC stipulates under the regulatory code that a franchise arrangement must include:
- The franchisor must disclose relevant documents and information to the franchisee prior to the agreement being signed. This information must be provided again during the course of the franchise agreement;
- Franchisors must provide a ‘cooling-off period’ where franchisees are able to back out of the agreement;
- Both parties must act in good faith;
- Both parties must seek to remedy disputes without resorting to litigation;
- If the parties were to terminate the agreement early, specific steps must be followed; and
- The franchisor must publish relevant disclosure documents on the Franchise Disclosure Register.
It’s important to understand your regulatory obligations, so ensure you seek professional legal expertise.
Collaborate using your intellectual property
Derive value from your intellectual property by collaborating with another party. This might be to expand expertise or to give access to new markets. The type of strategic business relationship you form (for example, a joint venture or partnership) will depend on your objectives and circumstances. It is imperative that a business considers the advantages and disadvantages of joint ventures and partnerships before proceeding.
Engaging in a joint venture can be quite advantageous for a business because it:
- Allows your intellectual property to be used on a greater scale increasing the growth and profitability of your business;
- Provides you with a wide range of resources and access to specialised knowledge which can be beneficial in enhancing your intellectual property and innovating your business; and
- The financial burden is alleviated as costs are shared between the parties.
Whilst there are significant advantages to a joint venture, there are also some disadvantages to consider, including:
- In instances where intellectual property isn’t adequately secured or protected through contracts, such as a Non-Disclosure Agreement (NDA), there can be complications with intellectual property ownership;
- Differences in perspective between the parties as to how the joint venture should be conducted can cause tension and lead to dissatisfied parties and outcomes; and
- A failed joint venture can result in wasted resources, finance and time which negatively impacts parties, particularly the party with a greater vested interest.
Ultimately, if a joint venture is suitable, a business which participates in the venture that has adequately secured its intellectual property will benefit from the venture.
Sell your intellectual property
By selling (aka assigning) your intellectual property, you transfer the ownership and rights to your asset to another party in exchange for payment. In some circumstances, selling your intellectual property can be more beneficial than maintaining ownership. Especially if you are not using or monetising your intellectual property.
TIP: Secure your intellectual property
The first step towards monetising your intellectual property is securing exclusive legal rights to it in the markets you trade (or want to trade) in. This may be with a trade mark, patent, design right or another type of intellectual property protection.
Securing your intellectual property ensures:
- You will have exclusive possession of your intellectual property, preventing others from exploiting it;
- Your intellectual property will differentiate you from other competitors; and
- You can bring legal action against competitors who breach your intellectual property.
In addition, businesses interested in expanding their operations overseas should consider securing their intellectual property through international registration to ensure that their intellectual property is exclusive and protected on a global scale.
(Bonus) TIP: Keep your intellectual property a secret
If you need to share your intellectual property, a NDA is a valuable tool to make sure it stays confidential. A NDA prohibits your intellectual property from being exploited by ensuring it isn’t shared with others. It’s important to get an NDA signed before you start negotiations to leverage your intellectual property.
Contact Coleman Greig’s Intellectual Property team to discuss how your business can make the most of its intellectual property assets.