Your business intellectual property is not only your most valuable asset; it’s also one of your most powerful business tools. The strategic use of your IP can help you avoid the competition, generate more revenue, and cut your financial risks.
Why go head to head with a big competitor? Licensing creates strategic partnerships with bigger corporations. Your business gets access to new markets, industry experience, and manufacturing capabilities-while, maintaining its independence. Budget-conscious corporate partners get to cut costs by essentially outsourcing their R&D and innovation. Proctor & Gamble, IBM, and Hewlett-Packard are just a small example of big corporations actively partnering with small companies for IP development.
When does it make sense to license in IP (from others) or license it out (to others)? Key reasons to license in IP include reducing R&D costs to develop new products, improve existing technologies, or get new products to market faster. A 2006 survey of more than 450 industry-leading companies found nearly 75% of the company executives used licensing as a top strategy for accelerating new product development.
Licensing out your IP is an effective strategy for generating more revenues from your IP. By licensing out your IP, your company generates income from your IP’s “unused portions.” You exploit other markets by allowing the licensee to use your IP in a different market. A 2004 survey conducted by the Licensing Executives Society, companies in the healthcare, digital information, communications and electronics, and industrial markets indicated that maximizing revenue was the main reason for out-licensing their IP.
Licensing reduces your financial risks. You can expand internationally without the overhead risk by licensing production and distribution rights to companies in different foreign markets. You can reduce your infringement litigation risk, either by letting one or more of your licensees take legal action on your behalf or turning an infringer into a licensing partner and avoid a costly litigation action.
Intellectual property is the power that keeps your business moving forward. It can be leveraged to increase revenues, lower overhead costs, and reduce financial risks. It’s a sustainable and highly renewable resource that is your greatest competitive advantage – if you know how to manage it for the highest return at every stage of its life cycle.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money Making Power of Licensing was released in 2019 and is available on Amazon.com. He’s also a published writer with articles appearing in several prestigious trade magazine including The Licensing Journal, Intellectual Property Magazine, and License India. Rand also mentors at the Cal State Fullerton School of Business and Economics and is a judge for their startup business plan competitions.