How to Use Old IP to Generate New Profits

Licensing an old or dormant intellectual property is a great strategy to accelerate your business growth. Old IP assets can be reused in many ways. This includes applying them to new industries, new products or services, or combining them with other types of IP.

One way you can do this is by acquiring or licensing the IP assets from a bankrupt company. The biggest advantage to this strategy is it’s a shortcut to growing your customer base, getting instant consumer recognition, lowering development costs and shortening the time-to-market. Especially if the intellectual property was a successful product or service.

What happens to your business with instant access to a customer base from day one? Often times these bankrupt or old IPs include an instant customer database from day one. This saves you countless time and money in building a brand and customer base from scratch. It’s like getting funding and knowledge from the beginning at a time when your resources are often limited. This is one of the greatest ways of acquiring other people’s resources.

In addition to lower development costs, you’ll capitalize on the name and brand recognition. Your also acquire all the knowledge and information about marketing and the competitive environment. Even more valuable is the know-how of what worked and didn’t work, which can save you a lot of money and time learning through the school of hard knocks.

A good example is a video game. Video games typically take a long time to develop and are quite expensive. But if you could find a viable video game that was modestly successful in the market, you’d save an incredible amount of time and money. Acquiring rights to the video game significantly reduces the time it would take you to develop and launch it. Plus it would be more like re-launching the game since it already has a built-in audience of players.

Atari, which owns over 200 trademarked video game properties offered exactly this type of opportunity. It emerged from bankruptcy with new owners, and it’s strategy now focuses on developing and licensing its household titles like Pong and Asteroids. The games are well-known across multiple generations around the world, and Atari plans to reinvigorate and capitalize on this consumer recognition by expanding into digital entertainment in mobile and online game platforms.

Sometimes the IP is old but is still a good foundation. In this case, you can update it with new technology to re-launch it. One example is a technology that enables players to add new content to old video games. Sometimes the IP technology fails because the market dynamics change. In this case, the old technology can become successful by applying a new business model. An example is moving from a monthly membership fee to a pay to play model.

In other cases, the IP is invented for one purpose, but is more successful when applied to a different market or product. Viagra was originally invented to cure hypertension and heart disease When it was re-purposed to cure sexual dysfunction, it became wildly successful product. Another example is Play-doh, which was originally developed as a wallpaper cleaner (a trade secret)but was re-purposed and became one of the most famous toy brands in the world.

Some pointers to keep in mind when licensing or acquiring old IP. If you’re looking to acquire a customer base, trademarks and brands are the best bet. Patents on the other hand are the best source for acquiring a technology.

The secret to succeeding with this strategy is thorough due diligence. You must verify everything about the intellectual property. This includes confirming the trademarks are still registered, and all the patents are issued or pending applications were submitted. You’ll also want to check that all the maintenance fees are paid to keep the registrations up-to-date. Make sure that what you are licensing or acquiring is free and clear from any encumbrances, such as employee agreements or third-party agreements signed by the previous company.

Licensing an old IP can give your business an immediate competitive advantage, lower your development costs and significantly shorten the time-to-market. Plus they’re also attractive to investors since they have a proven track record in the commercial marketplace.

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