For many businesses, intellectual property will be their most valuable asset. Licensing your IP to other businesses is a lucrative way to earn a passive income. Patents are the most common way to earn revenue from your IP, but copyrights and trademarks can also earn revenue. Nevertheless, there are pitfalls here and you want to ensure that your interests are protected when you license your IP to another company. In this article, Structure Law Group’s Los Angeles IP attorney will discuss how to protect yourself when licensing out your intellectual property.
IP license agreements and chain of title
Intellectual property is licensed out to another business using a licensing form. The form, which can likely be downloaded somewhere online, creates a contract between you and the licensee for use. However, license templates found online will not necessarily protect your company’s interests when licensing your IP.
One of the major stumbling blocks for some companies is that it is unclear who owns the IP they are attempting to license out. This creates a potential loophole for licensees. Companies need to be sure that their employee and contractor agreements stipulate that ownership of the IP belongs to the company specifically. Licensing IP with disputed ownership can result in serious problems and lawsuits, and can encumber revenue that the IP generates. IP owners will need to resolve any disputes related to the chain of title prior to issuing licenses for their IP.
Licensing IP could impact its value
Additionally, the value of your IP may not necessarily be obvious in a changing market. Having the IP appraised against the current market allows for a strong foundation for creating fair licensing agreements that reflect current market values.
Another issue comes into play when companies are using the IP in the general context of the market. If you license your company’s IP to another company, it could potentially eat into your company’s market share, thereby causing the devaluation of the IP. Market research could help a company determine how licensing its IP will impact its presence in the market. Alternatively, companies can elect to license their IP for specific uses that do not impact their market. This is important because you do not want to dilute the value of your IP.
It’s important to understand that the company that you license your IP to will also impact the IP’s value. If you want to earn a larger passive income from the license, you will need to find a company that is capable of turning your IP into profits. A share of those profits will belong to you as part of the license agreement. A solid company on sure footing will inevitably provide greater revenue potential. Thus, vetting your licensees becomes an integral part of the process.
Intellectual Property Attorney Los Angeles
Businesses that want to operate in a competitive market need to be careful about how they license their IP. A Los Angeles IP lawyer can help these businesses conduct due diligence that will protect their market share and IP assets, whilst preventing abuse or misuse of the IP. Call Structure Law Group, LLP today at (310) 818-7500 or visit us online to learn more about how we can help.