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Strategic Licensing Out Benefits and Alternatives |
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Excerpts from the "Strategic Licensing in the New Economy" By Dennis Fernandez with Sarah Stahnke, Rebecca Sheehan and Mary Chow Fernandez & Associates LLP, 1047 El Camino Real, Ste 201, Menlo Park, CA 94025, www.iploft.com |
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How Licensing Can Add Value to Your Business Licensing technology provides a low-risk way to capitalize on your intellectual property assets. Due to the high cost of manufacture and the comparatively small investment of a licensing program, many of the risks that a company would otherwise face in exploiting its intellectual property are transferred to the licensee. Depending upon the exclusivity of the license, there are varying degrees of risk involved for the licensee and licensor; however, an effective license strategy will minimize risk for both parties. Before a company considers licensing out its technology, however, it should consider whether other ways of taking advantage of its property, such as joint ventures and strategic alliances with other companies, would better compliment its economic position. Once licensing is decided upon, the nature of the company as well as the particular property it wishes to utilize should be carefully considered before deciding the architecture of the license. The Benefits of Licensing Out By licensing out its technology, a company may generate income from unused portions of its intellectual property. In addition to making this potential energy kinetic, licenses enable a company to exploit other markets by allowing the licensee to apply the existing technology to a different market. When an invention is useful to several industries, licensing can prove profitable to both the licensor and the potential licensee as experts in separate fields. Licensing out is not only a good way for a company to enable its invention to reap the benefits of other industries but also a way to capitalize on the potential of foreign markets. Licensing to firms for production and distribution to different populations can enable a company to further profit from its technology while protecting itself from the overhead required to participate in foreign markets.
Licensing out offers the additional benefit of allowing the licensee to advertise itself better as well as to make improvements (which can give the licensee varying degrees of liberty, thereby making the license more desirable) upon the invention. When a company detects property infringement, its most economical plan of action is also to license the property rather than litigate against the infringer. Before licensing in technology, a company should ask itself whether the invention is something it can develop in-house and, if so, whether the time and cost involved are worth the expected return. When looking at potential technology to license in, the company should carefully consider whether the property in question fulfills its production and marketing needs. The terms of the license are the most important aspect for the future licensee, and he must look carefully at these terms, negotiating with the licensor until issues such as long-term profitability/room for growth as well as royalties are resolved to suit both parties. The final consideration for a company to make in acquiring intellectual property through licensing in is whether the licensor is capable of fulfilling its obligations to the licensee financially and otherwise and whether, if additional support may be required later on, the licensor will have sufficient resources to further enable the licensee’s production.
By: Terry Collison If you have a technology policy and a procedure, make sure nobody in the university community actually understands what it is. Complexity is good... More |
