- Creative and intellectual thought can be protected by law and turned into dollars and cents.
- Learn to know the value of intellectual property and how to capitalise on it.
- Why do some entrepreneurs with great ideas make millions while others get left behind?
At a time when entrepreneurship and commercial opportunity is widespread, and those featuring on business rich lists are getting younger and younger, the question has to be asked: How do I turn my idea into money?
That’s the million-dollar question. We all know someone who didn’t quite get their brilliant idea off the ground or reap the financial rewards that they perhaps deserved.
There are many reasons why some innovators enjoy fame and fortune as a result of their brilliant ideas. However, chief amongst those reasons is that they have a solid understanding of intellectual property (IP) and the potential value and advantages that it can provide. This, alone, places them well ahead of the curve.
What is intellectual property?
The term “intellectual property” describes a group of rights created by law that afford protection to creative and intellectual effort. It represents the property of your mind or intellect and can be amongst your business’ most valuable assets. Examples of IP include copyright, trademarks, confidential information, designs and patents.
How can intellectual property be commercialised?
Commercialisation simply refers to the process of turning a product, concept or service into money. In the context of IP, this would include the commercial exploitation of brand names and logos, documented material and strategies, knowledge and processes.
Commercialisation simply refers to the process of turning a product, concept or service into money.
But before going too far along the IP commercialisation pathway, it is critical to ensure that whatever IP rights may be commercialised are first protected. Not all IP rights are capable of being registered in Australia. For example, copyright is automatically protected and there is no system of registration. In contrast, trademarks, designs and patents can be protected via a system of registration.
There are numerous ways to commercialise IP but the most common are the licensing and assignment of IP.
For example, a licence may be granted for exclusive (or non-exclusive) use of IP in a prescribed territory, for a set period of time and for specific purposes only. Of course, payment terms for use of the IP are central to a licensor’s commercialisation strategy.
While the terms of an IP licence may be verbal, it is highly recommended that the terms of the licence are documented via written agreement.
An assignment of IP is an outright sale (or transfer) of IP. It involves the IP owner transferring all right, title and interest in the IP to a third party. This may be a viable strategy for those who prefer to receive a once-off, up-front payment, rather than ongoing royalty or licence payments.
A once-off up-front payment for an IP assignment should be regarded as a purchase price, as upon transfer, no future rights or claims in relation to the transferred IP will exist.
Five tips for commercialising IP
Here are the top five things to consider before setting out to commercialise your IP.
- Decide upon which commercialisation strategy may best suit your circumstances and objectives.
- Identify what IP rights exist – this will often involve help from an IP lawyer to ensure that potentially valuable IP is not overlooked.
- Secure your IP rights – register those rights, wherever possible.
- Ensure proper documentation is in place – this is extremely important, particularly so when your commercialisation strategy involves licensing your IP to third parties.
- Enforce IP rights – enforce IP rights against third-party misuse, as required.
Want more intellectual property tips?
Read more tips to assist business leaders and financial professionals in understanding and managing their intellectual property issues in the Chartered Accountants ANZ library.READ NOW.