How Your IP Counsel Can Help Leverage Your IP Portfolio: Part 1
May 9th, 2023 by Thomas DeFelice | Recent News & Articles |
Intellectual Property (IP) accounts for the majority of your innovation company’s market value because it protects assets that provide a barrier to entry for competitors. Patents, trademarks, copyrights, and trade secrets protect your company’s innovations and brands and prevent others from profiting from their ideas. IP rights enable your company to charge premium prices for your products and services, attract investors, and increase your market share. IP assets can be licensed, sold, or used as collateral, providing the company with lucrative revenue streams and opportunities for growth.
Having an IP legal counsel on your side can be invaluable when it comes to leveraging and monetizing your company’s IP portfolio. IP counsel can help you assess the value of your portfolio, identify potential areas of growth, navigate legal disputes, and ensure that your company’s IP is well protected.
Over the next two articles, we’ll take a look at the different ways your IP counsel can help your company leverage your valuable intellectual property assets. In this installment, we’ll look at how they can assist you in valuing your IP; use the many tools at their disposal to aid in its commercialization; and finally, look at the various avenues available to you for the licensure and sale of your assets.
Assessing the Value of Your IP
Before we begin our discussion of your innovation company’s leveraging opportunities, let’s first talk about how to value your portfolio. Assessing the value of your IP portfolio is crucial to deciding how to manage it effectively. It is a complex process that requires the expertise of your IP counsel, outside consultants, department stakeholders, and software tools. A formal valuation process is typically conducted during significant events such as M&A transactions, licensure deals, or IPOs, but maintaining a clear and ongoing understanding of your IP’s value to your enterprise and the market is critical.
Knowing your IP portfolio’s value is also important to its routine maintenance. Regular investment is necessary for patents and trademarks, such as annuities or fees, to maintain ownership rights. Thus, assessing whether an asset contributes to the value of your company is a vital factor in the decision to maintain a patent or trademark, or whether to divest in some way.
The most important takeaway to understand is that the value of your intangible assets varies depending on how you choose to leverage or monetize them.
Developing new products and brands is a direct way to leverage your company’s IP portfolio and strengthen your market position. By understanding the value of the IP that protects the actual products and services you bring to the marketplace, you’ll be better equipped to make informed decisions about how to allocate resources towards product development initiatives.
In product development, the value of your IP lies in its ability to differentiate your products from those of your competitors. Patents, trademarks, and other forms of IP provide protection and exclusivity for your products and brands in the market.
Your IP counsel can help you identify potential infringement risks and provide guidance on how to mitigate them, as well as identify potential opportunities for collaboration or licensing with other companies in your industry to drive your products forward. Counsel can also use the outcomes of their competitive landscape and whitespace analyses to direct R&D, product, and marketing teams in their work.
Licensing & Selling Intellectual Property Assets
Companies often have a significant number of unused or under-leveraged patents or trademarks in their portfolio which can be transformed into streams of revenue.
In a licensing agreement, your company retains ownership of the IP while an outside party is free to use the asset to develop, manufacture, and sell their own products. The licensee pays royalties to you over a specified term, either as a fixed amount or a percentage of the revenue they generate using your technology or your brand. These agreements can be exclusive or non-exclusive, allowing you to generate multiple streams of revenue from one asset.
Selling your IP requires identifying potential buyers, negotiating terms, and enforcing obligations over the term of the sale. This can be a complex process and requires active engagement from expert IP counsel to navigate.
Licensing and sale opportunities may arise when a competitor or other outside party infringes on your intellectual property rights. Instead of heading straight to litigation, your IP counsel could attempt to strike a licensing deal to avoid an infringement lawsuit. Even in the case of litigation, licensing agreements are often part of a settlement outcome. In any event, both parties stand to benefit monetarily when they recognize their mutual interest.
Leveraging and monetizing your company’s IP portfolio can be a significant driver of growth, revenue, and market share. It is essential to have an expert IP counsel on your side to help you assess the value of your portfolio, navigate legal disputes, and ensure that your IP is well-protected. Your IP counsel plays a vital role in extracting value from your company’s intangible assets, especially when it comes to two of the most likely monetization scenarios you’ll encounter: productization and licensing arrangements.
Check back soon for the second part in this series where we’ll explore how IP counsel can help with partnerships and joint development agreements, attracting venture capital and private equity investment, and how IP affects positioning for IPO or M&A deals.
This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.