Commercialisation of Intellectual Property

If you have reached the stage where you are seeking to commercialise your intellectual property and innovation, in most cases, this will involve developing or signing an agreement with a commercial partner. In considering such agreements it is important to ensure that your IP is protected and your future rights to use your own IP is not restricted.  Some of the key questions to consider in protecting your IP when entering a commercial agreement are discussed below.

Do you intend to sell or assign your IP to a commercial partner?

Assignment of IP is the same as selling your rights to another party. Under an assignment, the original owners of the IP will lose total control over their IP. They will have no commercial rights, and in some cases the right to use the IP in any way will be lost.

If it is intended to sell the IP rights during the commercialisation of your intellectual property and your innovation, it is important to consider that such assignment of rights can be provided for selected countries, but not divided across different parties within a single country. This provides the original owner the right to keep the IP in those countries where they have a strong presence or reputation, while selling the IP to others in markets where they have no intention to develop it further. Options for reassignment of the IP back to the original owner can also form part of commercial agreements. This can be important to consider when an assignment includes the obligation to pay a royalty on future sales of the innovation.

Will the license provide exclusive or non-exclusive rights over your IP?  

License agreements that provide exclusive rights over IP need to be considered carefully.  Providing exclusive rights to a commercial partner can limit the owner’s own rights to use and exploit their IP. Licensing agreements need to be structured to provide the owner’s the right to use and improve their own IP. On the positive side, an exclusive licensee has the right to defend an owner’s IP should someone use the IP without the licensee’s or owner’s approval. Non-exclusive licensee’s can not do this.

If the market where the IP will be used is highly competitive, then you will need to reach the market as soon as possible. In such a case non-exclusive licensing rights should be considered.  At an organisation level, policies around Corporate IP Ownership need to ensure that selling or assigning IP supports the company or organisation’s vision or industry goals.

Will the commercial partner develop improvements to your IP?  

In many cases commercial partners will aim to make improvements to your innovation so that it better suits their own products or their customers. These improvements can sometimes include the use of the commercial partner’s own IP and know-how. The key question is who will own such improvements.

Ownership over improvements will vary depending on the degree of development work that needs to occur before for your original innovation can enter the market. The greater the investment to be made by the commercial partner the more they will seek to own the improvements. Licensing agreement needs to cover ownership of improvements.

Who will own the IP used in commercialising the innovation?  

During the commercialisation of an innovation new IP may be developed. This includes brands and trademarks, data, product manuals and other copyright material or product registrations (eg for new formulations of chemicals). Ownership of such new IP needs to be considered in all licensing agreements. They should be separated from IP related to improvements made in the innovation.

In many situations it may be important for the owners of the innovation to own all IP used in the marketing of the the final product. The brand or trademark to be used in marketing an innovation can often more valuable than the innovation itself.  For this reason it is always recommended that an IP Search be completed during the development of a brand. Such a search should cover all markets where the innovation will be commercialised.

What level of warranties will you provide over rights to your IP?

Ownership rights over an innovation or even copyright material can never be guaranteed. Patents for example can in some cases take years to be granted and even then post grant opposition claims can be made by any party. Notices of copyright infringement can also occur at any time, sometime decades after a piece of work have been released.

Agreements that require the owners to warrant that their IP will not infringe any other party’s IP should be avoided. To avoid or reduce the degree of damages that may be sought by a party for  possible IP infringement, the owners should always complete an IP search over their IP prior to licensing or assigning the rights over the IP to a commercial partner.