HOW DO I COMMERCIALISE MY INTELLECTUAL PROPERTY?

The intellectual property (IP) of a company is, in most cases, the most valued asset of that company. So much so, that well-established IP rights can be provided as security to financial institutions to obtain loans or form part of negotiations in large corporate considerations. The importance and concomitant value of IP is often overlooked and as a result not capitalised on by many companies.

Obtaining a patent for an invention; a trade mark for a brand name; a design right for a new design or even having copyright in works is merely the first step in protecting and enjoying the benefits of your IP.

The next phase in the successful exploitation of your IP is the commercialisation thereof. There are a multitude of ways to commercialise your IP which include:

  • IP LICENSING & FRANCHISING

One of the most powerful ways to maximise the efficiency of, and make the most profit from, your IP is by licensing your IP rights to third parties.

All forms of IP (Patents, Designs, Trademarks, Copyright and Confidential Information) can be licensed to third parties in the form of a licensing or a franchising agreement.

In a licensing agreement, the owner of the right (the licensor) authorises a third party (the licensee) to utilise the rights in exchange for a fee or a royalty. The licensing of IP is the most common method of commercialisation.

Franchising agreements are specialised licensing agreements used to expand an existing brand or product and usually incorporates the use of Trademarks, Copyright and/or Know-how.

The terms of the licensing agreements are open for negotiation between the parties but will naturally include the conditions of usage, fees payable, warranties applicable and periods of validity.

  • DISTRIBUTION

Distribution agreements can be concluded with third parties in the event that one does not possess the necessary resources to distribute the product to a region where the demand is high.  These distribution agreements will often be on an exclusive distribution basis.

  • CESSION & ASSIGNMENT

IP is an asset, and as such, rights in IP can be sold or ceded to third parties or even used as security in commercial agreements. A cession agreement as well as assigning the rights to third parties are both forms of commercialising IP.

Where companies do not possess assets in the form of properties etc, the cession of rights in IP can be utilised as security in order to raise capital for further business ventures or product development.

  • MANUFACTURING

Depending on the resources available to an owner of the IP, there may exist a need to enter into an agreement with a factory or other large-scale manufacturer to reproduce the item or product in which the IP subsists.   These agreements will again also mostly be on the basis that the manufacturer will have the exclusive right to manufacture the products in question.

  • PROFIT-SHARING

Where two respective owners of different IP’s wish to collaborate all their IP’s and produce a final product, the profits generated by the jointly-owned IP can be shared between such parties and can be manifested in a profit sharing agreement.

When entering into profit-sharing agreements, it is always advisable that the agreement be subject to the non-disclosure of business practices, models and other trade secrets.

WHAT ARE THE BENEFITS OF COMMERCIALISING MY IP?

The purpose of the commercialisation of IP is to maximise profits and increase the efficiency of the business to its fullest potential. The commercialisation of IP will undoubtedly expand the business to the extent of your choosing.

Stefaans Gerber is an attorney at Barnard Incorporated in Centurion.

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Legalex (Pty) Ltd, registration number 2003/003715/07, is an authorized Financial Services Provider (FSP 5277) and underwritten by Guardrisk Insurance Company Limited (FSP 26/10/75)

 

 

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