Strategy Session... Licensing at the Right Stage of your IP Development Process

 

Most IP progresses through the 4 key development areas - concept, research, development and commercialization. One of the keys to successfully licensing your IP is understanding the stage of IP development and how it impacts your ability to license your IP.  These include a number of licensing variables such as royalty rates, payments, investment risk, revenue potential, the development cost and time.

 

As an example, if your IP is in the research or development stage, royalty terms for a licensing deal may be based on contingencies, or what-if. If your IP is in the commercialization stage, then royalty rates could be negotiated on firm terms. Keep this in mind as you develop your licensing strategy. When you're in the concept stage, the value is very low, and increases as it moves toward the commercial stage. The higher the value of your IP, the stronger position you will be in to to negotiate a more valuable licensing deal.   

Royalty Rate Myth #2 - There is a standard royalty rate. Contrary to popular belief, rates are negotiable. There are ranges for different types of licensing, from sports to technology to art. Look into royalty rates for your type of intellectual properties, and you'll find a range, not a specific rate.

 

1. Consumer recognition of the licensed IP
2. Television, movie, publishing or other current or anticipated exposure for the licensed IP
3. The licensed products on which the licensee will be authorized to use the IP
4. The territory and channels of distribution offered to the licensee
5. The extent to which there are other supporting licenses in place
6. The start date and term of the license
7. Retailer interest in the licensed property and/or licensed products
8. Advertising commitments by the licensor, licensee or other licensees

Keep in mind that, even after considering all of these factors, the royalty rate will ultimately be the result of the agreement of the parties.  It comes down to negotiating a rate that is mutually acceptable to both the licensor and the licensee. 

Licensing4Profit$ Webinar













Learn about developing a licensing mindset, how to think about your IP in terms of leveraging its' money making power, and what types of wealth creating opportunities can be created through licensing. Click here to view this webinar.

The Licensing4Profit$ webinar series is designed for anyone - inventor, business owner, entrepreneur or startup - to quickly learn the processes, procedures and systems for controlling the money making power of intellectual property through licensing.   

  

Upcoming webinars 

  

Oct 18, 2011 - 7 Money Making Benefits of Licensing

Nov 15, 2011 - 5 Steps to a Wealth Creation Licensing Plan   

Dec 13, 2011 - 6 Ways to Create Lucrative Licensing Deals  

 

This Month in IP History

• 1879 - William Lincoln was issued a patent for a lamp.
• 1959 - the first episode of Rod Sterling's "Twlight Zone" was copyright registered.
• 1991 - Pizza Hut was trademark registered.

Source: About.com Inventors 

Negotiating Checklist - Reports and Audits

 

Report and Audit terms insure that royalty payments are properly accounted for and paid in a timely manner. Reporting specifies when and how the licensee should pay royalties (i.e. quarterly) and auditing gives the licensor (IP owner) the right to review the review the licensees books to make sure payments provided by the licensee are correct.

 

Following are some examples of Reporting and Audit terms that should be included in a license agreement:

• Reporting made quarterly /annually, within __ days of end of quarter/year
• Reporting in writing, and certified by company officer/ auditing firm
• Reporting with copies of/ names and addresses of sublicensees
• Reporting together with payment of royalty accrued
• Audit (inspection) of books permitted at any time during business hours/at specified times
• Audit by Licensor's authorized representatives/Certified Public Accountants 

6 Ways to Increase IP Value 

 

Building value is key to developing a successful licensing program. This 4 minute video discusses 6 ways you can build value for your IP.