(NOTE: This is part 3 of 4 in a series of alerts linking intellectual property and economic strategy. You can read part 1 here and part 2 here. Check back each week for a new installment.)

Selling Intellectual Property

Intellectual property, like real property, can be bought, sold, licensed, exchanged or given away like other forms of property. Proficient management of intellectual property rights becomes profitable if strategic techniques are used. The owner of intellectual property rights has the right to prevent the unauthorized use or sale of that property. As a result, it may be strategic to assign or license these rights to exploit business profits.

There are essentially two ways to convey intellectual property rights – assignment or license. In relation to real property, assignments are the functional equivalent of a sale, and licenses are a lease.

Assignments

Law allows a transfer or sale of rights, which could be the entire interests in the intellectual property. An assignment of a patent is a transfer of sufficient rights so that the recipient has title to the patent. When the rights are assigned, the assignee becomes the owner of the rights with the same rights as the original owner. A business may never want to use a certain intellectual property rights, but may strategically exploit the intellectual property right through an assignment.

Licensing

A license is written authorization to use owned intellectual property rights. Typically, a business will make arrangements to license its intellectual property rights, authorizing a third party to use those rights in exchange for something of value. However, unlike assignments, the owner keeps the ownership of those rights, and can contract for a running rate of payments.

The license allows another to use an intellectual property right within a defined time, context, market line or territory. A license may be exclusive or non-exclusive, and run longer or shorter than the duration of the intellectual property protection, prescribed by law.

Licensing provides a means for an owner of intellectual property to exploit markets which may not otherwise have been available. The terms of the agreement can be tailored to recoup part of the development expense while also tailored to maintain consistent revenue from future profits. Although there is always uncertainties in the marketplace, a license may have a larger upside than a single assignment of rights.

If you have any questions, please contact me or any of the attorneys in Barley Snyder’s Intellectual Property Practice Group.

(NOTE: This is part 2 of 4 in a series of alerts linking intellectual property and economic strategy. You can read part 1 here. Check back each week for a new installment.)

Monitoring and Identifying Existing and New Intellectual Property

For an economy, intellectual property rights create value in a business’s products and services, while also distinguishing goods and services among competitors. An owner may exploit those rights and their value in the marketplace, since the patent owner holds a significant advantage against competitors and a clear advantage in market utilization. As a result, any business should evaluate the potential value of their intellectual property, as a potential right to secure, and then enforce against others.

Ignorance or neglect of intellectual property rights can present inherent dangers to any business. Unfortunately, many businesses often overlook the real potential of intellectual property. Even worse is the situation where a business fails to monitor and police those rights they already have. Although the government gives intellectual property owners rights, it is up to the owner to police or enforce these rights.

Awareness of intellectual property may generate many business opportunities and avoid expensive problems, and having an intellectual property policy is a great first step. Implementing that intellectual property protection policy requires identifying and protecting intellectual property rights that the company already has, including patents, trademarks, copyrights, trade secrets and trade dress. The business can then determine if acquiring those rights is appropriate.

Business owners should protect every particular piece of intellectual property they own, though that may not be economically feasible. A business should perform a cost-benefit analysis to determine whether securing and maintaining intellectual property protection is necessary. Even if a business does not have a marketplace for that intellectual property, any attained rights can be sold or rented like real property.