Creating a separate entity, solely for the purpose of owning your intellectual property, can be one of the best way to protect, manage and exploit an IP. Intellectual Property Holding Companies typically handle important IP functions such as filings, assignments, marketing and licensing business opportunities. These types of activities are sometimes better managed in an entity which is not part of the main operating business, especially if there are a significant number of intelllectual properties to manage.

 

The structure of an IPHC is fairly simple. An IP owner forms a corporation (parent company) and creates another subsidiary corporation (the IPHC). The IP is created by or transferred to the IPHC. The IPHC enters into license agreements with the parent company and/or other non-related companies who agree to pay the IPHC royalties in exchange for an exclusive or non-exclusive right to use the intellectual property.

 

The two biggest benefits of IPHC's are tax related and protection from liability claims. There are a number of states (Nevada and Deleware are two examples) and countries (i.e. Switzerland, Holland and Ireland) that are tax havens for intangible income (i.e. royalty revenues generated by an IP). In the case of the US, if the IPHC is set up in one of these states, the income from the IP is not subject to state taxes. The second benefit is to shield your intellectual property (assets) from litigation or a financial disaster that impacts your operating company.

 

Here's a quick example of how an IPHC might work. You invented a new widget and created a new business entity, "XYZ Widgets Marketing LLC" to make and sell the widgets. You then form a second company, XYZ Intellectual Holdings, LLC" ( in Nevada or Deleware), that owns your IP assets. Royalties are paid to XYZ IPHC who receives the tax benefits. If litigation is filed against the XYZ Widgets Marketing LLC and it goes bankrupt, the IPHC enables you to keep your IP intact and continue to benefit from the ongoing licensing revenues.

 

Keep in mind that, in the US, state and federal government is looking for ways to increase tax revenue, and one of the initiatives underway in many states is closing this tax benefit. Whether the Intellectual Property Holding Company is right for you will depend on your situation, and consulting with qualified legal or accounting professionals is the best way to make that decision.

Leveraging IP: The Intellectual Property Exchange  

        

The latest development besides one-on-one deals and patent auctions is IPXI (http://www.ipxi.com/), the Intellectual Property Exchange International Inc. It is the world's first financial exchange focused solely on intellectual property rights. IPXI revolutionizes the way patents are licensed and traded by allowing companies to buy and sell patent rights as units.

 

These "unit license rights" can be bought and sold like shares. For example, one unit license right grants an organization a one-time right to use that particular technology on a single product. If a car manufacturing company wishes to use that technology in 50,000 cars, they purchase 50,000 unit license rights at the market price.

 

The concept especially benefits smaller companies with modest budgets by creating a simpler, faster and cheaper method to obtain IP rights. IPXI's approach does not work for all types of intellectual property. For example, it does not allow exclusive licensing, but should make it easier for companies to make money from their inventions. 

Test Your IP IQ: Play the IP Armor Game

The first step before launching any new intellectual property is to protect it with the right kind of IP Armor (Rights).

 

Here's a quick game to test your knowledge about IP rights. The goal of the game is to correctly identify the IP rights for different types of intellectual property and break into the market before time runs out. Choose the correct type of IP right (patent, trademark, copyright or design) and watch it break down the market walls. A wrong choice will cost you time. Reach level three and your IP is a business success (if only it was that easy).

 

Click the image above or use this link (http://www.ipo.gov.uk/whyuse/armour.htm) to play the IP Armor Game.

 

Source: www.ipo.gov.uk  

Video Licensing Lesson

IP-Intangible Asset with Tangible Rights

When preparing or reviewing a licensing agreement, it's always best to seek quailified legal advice before you sign anything.  

This Month in IP History

• 1894 - Mildred Lord was granted a patent for a washing machine.
• 1952 - ELMER'S glue was trademark registered.
• 1956 -  Cecile B Demille's "The Ten Commandments" was copyright registered.

 

Thanksgiving Day IP

 

 

 

 Source:About.com

Featured Licensing Webinar - How to License Your Product to DRTV Marketers
During this webinar, you will learn:

To view this webinar,click here or use this link -http://tinyurl.com/8hkwhl2.

Ask Rand Brenner 

 

Q: How does one approach or pursue a company to have them license a product?

 

A: The first step is to do your homework. You should research your potential licensees and find out about their producs and services. You want to make sure your IP fits their business model.  

 

The next step is to contact the companies. The best way to do this is to contact someone you know at the company or get an introduction. It's important to find out who the right person is to contact and send the information.  

 

A second approach is using the internet to connect with your target licensees. Information about your licensing opportunity can be posted on websites and discussed in forums. The goal is is to engage with potential licensees who are interested in your IP.  

 

A third way to meet potential licensees is at a tradeshow. You can meet the sales people and you can talk to them to find out if your IP is something that they might be interested in licensing. If so, they may provide you with the name of who to contact at the company to discuss your licensing opportunity.

 

 

Got a question about licensing? Send an email to askrandbrenner@ licensing4profits.com.  You'll get an answer to your question which will be included in a future issue of this newsletter.

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