Commercializing Intellectual Property
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The document provides guidance on commercializing intellectual property (IP), highlighting the benefits of licensing as a cost-effective means to bring IP to market while retaining ownership. It outlines types of licenses, essential terms to consider, and emphasizes the importance of due diligence when entering agreements. The conclusion stresses the necessity of careful planning and legal support to protect IP and align with business objectives.
Commercializing Intellectual Property
- 1. 12th July 2013 COMMERCIALISING INTELLECTUAL PROPERTY Michael Sandys, Partner at QualitySolicitors Jackson & Canter (Liverpool)
- 2. Why Commercialise your I.P. To generate income/royalties To take your invention/creation to the next stage To utilise marketing and sales resources of a third party (i.e. to get to market) To protect your interests/limit legal exposure
- 3. Licensing your I.P. There are various ways of commercialising your Intellectual Property (IP) and Licensing presents a cost effective way of bringing your Intellectual Property to the marketplace, whether a Patent, Trade Mark, Design or Copyright. It is essential that the licence terms are in writing and special attention should be given to drafting and negotiating such terms before they are agreed and signed off. By licensing you retain ownership (and certain control) of your IP whilst allowing others to exploit your IP at minimum cost to you and usually because the “Licensee” has something (e.g. market advantage/sales opportunities) to bring to the table.
- 4. Types of Licences 1. Exclusive licence 2. Exclusive and sole licence 3. Non-Exclusive licence 4. Manufacturing licence 5. Joint Venture arrangements
- 5. The Licence Terms 1. Duration “The Term” 2. Define exactly what you are licensing 3. Exclusivity, non exclusivity and sole 4. “Field of Use” 5. Royalty streams and audits (speak to your Accountant) 6. Policing rights 7. Performance targets 8. Improvements 9. Pulling the plug/termination 10. Choice of Law and ADR
- 6. Joint Ventures 1. Corporate joint venture 2. Contractual joint venture
- 7. Manufacturing Licence Agreement 1. R&D 2. Prototypes 3. Control of your IP 4. Protection/Restrictive Covenants 5. Indemnity 6. Selling to the marketplace (by you or a third party distributor/re- seller) 7. Ultimate control of your product and manufacturing and marketing
- 8. Avoid Slipping into Bad Ways Always do your homework/find out as much as possible in relation to who you are entering into a licence with. Ask for references – be inquisitive. Undertake a company / credit search / bank reference. Ask for examples of what they have achieved in the past.
- 9. Avoid Slipping into Bad Ways (Cont) … Ask for a copy of their latest Business Plan. Obtain a detailed cost breakdown and analysis in respect of any prototypes to be created. Set benchmarks and quality control. Spend time developing your objectives and think carefully about the Heads of Agreement (the foundation stones).
- 10. Enforcement 1. The Lawyer’s letter (Civil Procedure Rules) 2. Litigation and the risks 3. Patents County Court/small claims 4. ADR (mediation / Expert Determination) 5. Costs and Insurance (BTE and ATE) 6. Settlement Terms
- 11. Conclusion • It is important to have the correct arrangement in place that supports your IP and reflects your business objectives/plan. • Thought should be given beforehand as to what you want to achieve and how and also the milestones/performance targets (if required). • You should consider the resources that you have and not stretch yourself too far (the reason for licensing). Plan ahead. • Do your homework beforehand and find out who you are entering into a contract with. • Use a well experienced lawyer to ensure that the wording of all agreements are carefully drafted in order to protect your IP and your future market strategy.
- 12. Contact Details Michael Sandys, Partner, Head of Commercial Tel: 0151 702 8747 Email: msandys@jacksoncanter.co.uk