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Welcome to the September issue of Licensing4Profits. Finding a traditional funding source is challenging, especially if you're a start-up. If your intellectual property is generating revenue, either from products, services, or licensing agreements, it's an asset you can use to secure a business loan. In this month's featured article, Is Your Company Suffering from CFC - Cash Flow Constraint?, you'll learn about the advantages of IP loans and the key steps to take in qualifying your IP as collateral for the lender. The use of a patent in the commercial marketplace is what transforms its value into a money generating asset. In our newest special report, Licensing Patents: Transforming Innovation into Income you'll learn why licensing is one of the fastest and best ways to turn your patent into money-making products, services or technologies. Intellectual Property "Rights" are part of the grant clause, and specifies "who gets what". In this month's Key Terms and Conditions: Rights Granted, you'll learn the importance of being very specific about these rights and two mistakes to avoid that can lead to disputes with your licensing partners. Find out what a camera, a monkey wrench and a flash bulb have in common in This Month in IP History. We conclude with this month's question "My company owns a patented pollution cleaning process for use in environmentally contaminated properties, and I'd like to know if this technology can be licensed?" Enjoy! 
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Is Your Company Suffering from CFC - Cash Flow Constraint?
A Pennsylvania snack food company used it to secure a $9 million loan. A furniture company in Los Angeles used it to get a $6 million dollar loan. And a major toy retailer used it to secure over $5 billion.Finding a traditional funding source is challenging, especially if you're a start-up. In many cases, this type of financing is often unavailable or simply too expensive. If your intellectual property is generating revenue, either from products, services, or licensing agreements, it's an asset you can use to secure a business loan. Using IP to secure a loan is not new. Take a look at the assignment records at the USPTO, and you'll find out how often it's used. Similar to tangible asset financing, the lender is extending you credit (loan) based on the value of your IP (intangible assets). Your IP becomes collateral to minimize losses in the event you default. All types of IP, including copyrights, trademarks, patents and even trade secrets, qualify for collateral. Depending on the loan amount, it can include part or all of your IP assets. Some of the advantages of using IP financing include securing additional working capital without diluting equity, immediate access to funds, lower cost of funding, retaining ownership of your IP, and flexible financing options. IP-collateralized loans are primarily provided by specialty lenders. These firms offer financing either directly, or as intermediaries between borrowers and commercial lenders. In recent years, a number of traditional banks and finance companies are also getting into the IP loan market. Another variation in IP financing is a Credit Enhancement Company (CEC). They work with traditional lenders such as banks who are not familiar with IP. Similar to real estate appraisers, they do an evaluation of your IP and provide an analysis verifying that it qualifies as collateral. CECs also guarantee the repayment of your loan to the lender.Here are a couple of key points to keep in mind to qualify your intellectual property for a loan:
- Make sure you've got an inventory of your IP and protected it.
- Get a professional valuation that shows the value of your IP separate from your business.
- Prove the value of your IP, either through licensing agreements or products (services) in the market.
IP-based loans are often a good option if your company lacks any tangible assets, has a low or no credit rating, or isn't generating enough cash flow to qualify for conventional business loans or lines of credit.
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Feel free to pass this newsletter along to friends and associates. You can visit our websites ( www.licensing4profits.com and www.licensingcg.com) to view our blog, special reports, published articles, webinars and audio presentations.
If you are interested in learning about our consulting services, please contact us at (646) 395-9572 or email info@licensingcg.com.
 Best regards,
Rand Brenner
President & CEO
Licensing Consulting Group
Licensing4Profits
About Rand Brenner
Rand has licensed some of the biggest Hollywood blockbusters, including "Batman" and the "Mighty Morphin Power Rangers", both of which generated billions of dollars in worldwide merchandise sales. His career includes executive positions at Saban Entertainment and Warner Bros Consumer Products where he developed numerous licensing and promotional deals with Fortune 1000 companies.
LCG advises clients on the strategic use of IP assets to build business value, increase revenues, lower costs and capitalize on new market opportunities. Our consulting services are designed for small and mid-size businesses, enabling them to benefit from top end IP licensing services typically afforded by large companies.
About Licensing4Profits
Licensing4Profits is the only online resource providing coaching, teaching and training on how to manage and make money with intellectual property. We offer audio workshops, seminars, videos, e-courses, blog articles and webinars. Our goal is to advise, guide and help you master the licensing skills to transform your intellectual property into money-making products, services and technologies.
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New Special Report - Licensing Patents: Transforming Innovation into Income
 Registering a patent is no guarantee of its commercial success. If you don't do something with it, nothing will happen.This special report discusses why licensing is one of the best ways to make money with patents.
Click here to get this report.
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Key Terms & Conditions:
Rights Granted
Intellectual Property "rights" are part of the grant clause, and specifies "who gets what". It gives permission to your licensing partner(s) to use some or all of your IP rights.
When defining the rights, be sure and include all the parts or types of your intellectual property. A good example is licensing patents. In many cases, there is related unregistered IP, such as know-how or trade secrets, that's required for production or to finish the IP development. If your licensing partner doesn't have all the rights they need, they'll be unable to commercialize your IP.
Clearly defining the rights is also very important when you're licensing exclusive rights to more than one partner. If the rights aren't clear, they could infringe upon each other, potentially leading to a dispute between you and your licensing partners.
When preparing or reviewing a licensing agreement, it's always best to seek qualified legal advice before you sign anything.
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This Month in IP History
1870 Patent #107,304 was granted to Daniel C. Stillson for a the improved monkey wrench.
1888George Eastman patented the roll film camera for Kodak.
1930 Johannes Ostermeier was issued a patent for the flash bulb used in photography.
Source: About.com |
Ask Rand Brenner
Q: My company owns a patented pollution cleaning process for use in the environmental remediation of contaminated property. I'd like to know if this technology can be licensed?
A: If the technology does it better, faster or cheaper, it can be licensed.
Potential licensing partners will want to verify that your patented process works and is also cost effective. The best proof is actually using the technology to clean up a property and documenting the results. Video for example, is one the best ways to show a before and after demonstration.
Since there are many different types of pollutants and types of property remediation, such as soil or water, make sure your IP is the right fit for a potential partner. You'll also need to verify it meets the regulatory requirements for environmental remediation.
Most important, before starting the licensing process, do some research to find out what the average royalty rate is for similar types of licensed technologies.
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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