Intellectual property (IP) assets are among the most valuable pieces of property that many businesses own, and yet they are often overlooked or treated carelessly. IP includes the elements of an organisation’s brand identity, which means that it often has inherent value; it represents your company’s reputation and its relationship with its customers. When used effectively, IP builds trust and helps to grow your customer base - but there are also ways to further exploit this value that most businesses never consider.

In fact, IP assets can generate a new revenue stream for an organisation if they are managed and protected correctly. Many intangible assets need to be registered for protection, and it is vital to secure trade marks for your most important brand assets. This is also true of any new innovations your business develops or invents, which must be protected by patents.

However, one of the biggest mistakes that we see businesses make is to register their IP assets so that they are legally protected, and then fail to exploit their maximum commercial value. If your organisation does not use its intellectual property to add value, the rights of ownership over these assets are essentially worthless. Worse, failing to effectively commercialise your intangible assets means your business is losing out on potentially lucrative revenue streams. 

Here, the intellectual property experts at JMW Solicitors explain the different routes businesses can take to commercialising their IP and enjoying its maximum value, while also ensuring it is fully protected and secure.

Selling Your IP

If you have built a recognisable brand, any registered intellectual property assets that comprise your brand identity may have significant value. For businesses, that will often mean IP assets that are eligible for trade mark registration, such as logos, company and product names, slogans, and more.

Alternatively, you may own a piece of intellectual property that has value outside of its relationship to your business. For example, if you own the copyright to a popular work or a patent for a desirable invention, these might have inherent value that another business might want to purchase.

If you are not actively using these rights to generate revenue, the best option may be to sell them. This does not only apply to copyright-protected material or patents, but may also be the case with brand assets. Unfortunately, companies with well-known and widely recognised brands often go out of business; if you are in a position where you own the rights to the brand elements of a business that no longer trades, it may be difficult to utilise these to their full potential. On the other hand, a new owner may have the resources and infrastructure to do so, and this could represent an opportunity to sell IP assets that are not otherwise generating income for your organisation.

While selling your IP is a very effective way to commercialise it, particularly if it is valuable in its own right, it is also final. Under most contracts of this nature, once you have sold the assets, you will no longer be able to use them; or, you may be required to pay a licensing fee to do so. For this reason, you should only consider selling your intellectual property under circumstances where you no longer intend to use it. Thankfully, if you aim to commercialise IP on an ongoing basis without losing ownership, there are other approaches you can take to achieve this.

Licensing Your IP

If you do not want to sell your intellectual property, a better way to commercialise it may be to license it to someone else. For works that are subject to copyright, for example, you may decide to license these rights for adaptation or reproduction, which offers you a new revenue stream beyond simply selling copies of the original work.

Licensing is even possible with brand assets - you might license your intellectual property to another company for the purposes of a collaboration, or create a franchise model in which you license your IP to franchisees in exchange for a monthly fee. If your business model is suitable for franchising - for example, if you operate from a physical location or serve a local customer base that could be replicated elsewhere - this can be an extremely valuable source of ongoing revenue, and help to grow the value of your intellectual property as it becomes more recognisable to new audiences.

There are many different types of licence or franchise agreements, and provisions can differ significantly depending on the needs of the organisations involved. For this reason, it is important to discuss the requirements of your business with a legal representative when determining the right approach, and to ensure that the deal you strike is suitable for your business’ ambitions.

Estimating the Value of IP Assets

To sell or licence your intellectual property, you will need to estimate its value. You can use several methods to do this, each of which is suitable for different circumstances; the method you should use depends on the nature of your IP assets and the protection that applies (whether trade marks, patents or copyright), your intentions (whether to sell or license), and the nature of the market. Here, we will explain some of the most common ways to estimate value, to help you get the most from your IP.

If you need more support to correctly value your IP ahead of a sale or other arrangement, contact the experts at JMW Solicitors. We can support you throughout the process of selling or commercialising your IP, and tailor our services to your needs - this means that whether you need support in registering and protecting assets, managing an IP portfolio, or implementing policies within your organisation to keep assets secure, we can help.

Market Value

To estimate the value of your intellectual property according to market value means comparing it to other, similar assets that have recently been sold. In theory, this can give a very clear indication of the price you can expect, but it is difficult simply because so many intellectual property transactions are confidential. As a result, it can be difficult to find the information you need for the purposes of comparison.

Working with an intellectual property expert can help in these cases, as a solicitor will often be more aware of the market conditions and value of IP transactions than a business in one particular industry. These transactions may also have different provisions that will affect the value, and may not offer a like-for-like comparison. However, thanks to their experience, a solicitor can recognise the factors that will affect this value and help you to reach a reasonable approximate price.

Development Costs

The second way to assign value to IP assets is to consider the costs incurred in developing the asset. This accounts for all the expenses of designing and developing the product (including the labour and materials required to build and test prototypes) and of registering the asset. However, it fails to consider the current market value or potential future value of a piece of IP.

The costs are usually simple to calculate and use as the basis to set a price, so this is appealing in cases where the commercial viability or value of a product is impossible to take into consideration. For example, if you have invented a new product and protected it with a patent, but have not yet brought it to market, the value of purchasing the asset may be primarily that the buyer will avoid the costs associated with development.

Potential Future Value

The third method is to evaluate how much the IP could be worth to its new owner or licensee, by taking into account factors like the size of the market, the value and market share of competitors, and the novelty of the asset itself. This method is more theoretical than either of the other approaches, and as a result, it may be more difficult to reach an accurate estimate.

In some cases, it may be beneficial to combine these approaches, and consider every factor - from the costs to develop and register the IP asset through to its future potential - in order to reach the most accurate value. However, the most important consideration in setting a price is that you consider it fair, and that your buyer is willing to pay it.

Protecting registered assets

As we have said, there is little sense in securing trade marks or patents if you do not use them to their fullest extent. As well as ensuring that you explore the different ways of commercialising your IP, this also means monitoring for potential infringement. If you are unaware that infringement has taken place, you are not in a position to respond or fight back against it. In such circumstances, your legal registrations are effectively meaningless because you are not using them actively to protect your assets.

Our JMWatch service monitors trade marks and can alert you to take action if a competitor tries to register an infringing asset. In this way, you can ensure that your IP remains protected and prevent any infringement that could mislead your customers. As well as monitoring trade marks, you should remain aware of your competitors and any new intellectual property they bring out - if you suspect infringement, contact a solicitor for advice before you take any action.

The team at JMW Solicitors is extremely experienced in supporting businesses to protect and exploit their intellectual property, and can provide a comprehensive package of services tailored to your needs. To learn more about how we can help, call us today on 0345 872 6666 or use our online enquiry form to request a call back.