When you create something new, you (unless you're an employee) are automatically the owner of that intellectual property. But what happens when you no longer have any use for that IP but it still may have value for someone else? Can you make some money from it?
Put simply, yes. In fact, there are two main ways of doing so: licensing and assigning.
What's the difference between licensing and assigning IP?
IP is like any other owned asset in that it can be traded and sold. It can also be rented, which in reference to IP is known as licensing. Both models can bring in income for the IP owner, but two different factors need to be separated to understand each model: who owns the underlying IP and who has the right to use it.
Licensing IP
When licensing, you're selling the right to use the IP to another party while still retaining ownership of the IP itself. This is usually set out in a long-term agreement, as the returns on IP can sometimes take a while to accrue. The kinds of payments made in licensing agreements can vary wildly – some just have a lump sum, whereas others are more like property rentals in that fixed payments are made periodically.
Not only can the payment structure vary, so too can the terms of the agreement. IP owners can choose to grant exclusive, sole or non-exclusive rights, which will affect how many others are able to use the IP at the same time. There can also be other restrictions, like the geographic region the IP can be used in, or a particular use or kind of product it can be used for.
Assigning IP
Assigning, on the other hand, transfers the ownership entirely. This is simply a sale – a fixed sum of money (or other assets) for ownership of the IP, the full terms of which will be outlined in the assignment agreement.
Assignment agreements can be tricky to construct. They need to be comprehensive enough that both parties understand their rights and obligations once they've signed.
Do you have some IP you'd like to like to license or assign? Get in touch with Alder IP today for a free consultation.