Creating New Revenue Streams for your Business
There are good reasons to protect your IP. Some of the advantages being: to restrain a third party from infringing your rights, allowing you to use the legend registered trade mark symbol ® or copyright symbol ©, enabling you to offer statutory protection of a registration which is more likely to attract licensees and the list goes on. There is little point in protecting your IP if you are not going to commercialise it however.
What is Commercialisation of IP?
This is the process of getting your IP to the market. Commercialisation creates a new revenue stream for your business. If you review your current IP portfolio, chances are you will be able to identify IP which can be monetised whether by way of a license agreement or franchise for example, or the sale of IP which your business no longer uses or is discontinuing. This is an excellent way of streamlining your business operations, allowing you to focus on the profitable aspects of your business.
A license is an agreement in terms of which the owner of IP (the licensor) grants permission for the use of its IP by another person (the licensee) who makes payment of a license/royalty fee. Licensing arrangements have benefits for both the licensor and the licensee. For the licensor the benefits include:
- reaching a different market using the clientele of the licensee, reducing risk of market failure;
- no additional costs for marketing and distribution; and
- retention of ownership of the IP while receiving additional income.
For the licensee, some of the benefits are:
- an opportunity to create new business using tried and tested products, reducing the chance of market failure;
- no expensive research and development; and
- no expense for the purchase of the IP.
Franchising
Franchising is a special type of license. It is the replication of the franchisor’s business with on-going support from the franchisor. Franchising helps franchisors expand their business and enables franchisees to enter into a market more easily since the business is based on tried and tested IP with a successful business model. One only has to think of some of South Africa’s well-known franchises like Chicken Licken, Sorbet, Hi-Q and Pam Golding to understand the benefits.
Joint Ventures
You may also wish to enter into a joint venture (JV) to monetise your IP. JV’s are business alliances of two or more businesses to embark on a project using existing technology to achieve a goal, sharing the associated risks. In this way, the IP of all businesses involved in the JV can be brought together to achieve success. It is crucial when entering a JV, that the agreement regulates what each of the parties are contributing to the JV, what IP is owned by each business and who will own any jointly developed IP.
In the next article, I will take a more in-depth look and provide more detail in relation to licensing arrangements, providing insight into different types of licenses, items for negotiation and the key terms for consideration.
Bernadette Versfeld
Webber Wentzel
Bernadette.versfeld@webberwentzel.com
