Challenges Of Selling Intellectual Property Rights
According to the International Trade Administration, intellectual property (IP) includes an individual’s or entity’s creations, such as images, symbols, logos, art, literature, and inventions. Discovering the challenges that may arise when selling IP rights can help the owners to overcome them. If you have questions about selling intellectual property rights, consider contacting an experienced IP lawyer from War IP Law, PLLC, by calling (202) 902-6362 to schedule a consultation.
Understanding Intellectual Property Rights
People tend to think that IP only involves trademarks, copyrights, and patents. However, intellectual property generally encompasses anything considered novel and unique. With this in mind, if a business develops a new design or process that solves a particular problem, it becomes the business’s intellectual property.
IP refers to intangible assets, including a business’s strategic and financial resources. While there are several types of intellectual property, some common examples include:
- Business designs
- Confidential company information
Why Sell Intellectual Property Rights?
There are three main reasons why IP owners may want to sell their intellectual property rights:
- Recover the funds used to register the IP. Registering a patent or trademark can involve significant costs. If a business cannot quickly earn revenue and has an interested buyer for the IP, it can be beneficial to sell the rights.
- Eliminate the IP maintenance costs. These expenses might be significant, especially if the IP in question is a patent. If a business determines that the return on investment (ROI) on the IP is too low, it may want to sell the rights to avoid losing those rights completely due to being unable to afford the maintenance costs.
- Benefit from goodwill and brand recognition. Occasionally, a trademark may gain recognition among a business’s consumers. When this happens, the trademark’s value can increase significantly, meaning that it might be worthwhile to sell it.
Does Intellectual Property Have Value?
Intellectual property does have value. Three standardized practices exist for estimating the value of IP, including an estimate based on costs, an estimate based on the market, and an estimate concerning the property’s previous and potential economic benefits. The following includes more information regarding these estimates, including their challenges:
- Estimates based on the market: These estimates arise by looking at the worth of similar IP rights. However, these can be challenging to identify. For instance, it would be hard to determine the difference in value between the logos of leading sports brands.
- Estimates based on costs: Companies may determine these by considering the costs involved in creating or replacing the IP. However, these costs do not take into account an IP right’s eventual worth, and there is no way to identify whether an existing piece of IP can perform to the same extent as new IP.
- Estimates based on previous and potential economic benefits: Out of all types of estimates, this is probably the most useful for determining an IP right’s value. Despite this, several factors influence the economic benefits of an IP right, including the business’s location, customer service, and the value of any goods associated with the IP, which may unfairly deflate or inflate this estimate.
IP owners can benefit from learning more about the challenges of selling intellectual property rights. A knowledgeable intellectual property attorney from War IP Law, PLLC, may be able to help with your IP issues.
Is It Legal To Sell Intellectual Property?
Like other types of property, it is perfectly legal to sell, buy, transfer, or inherit IP. Artists, authors, and investors might not have an interest in licensing or monitoring and may want to focus on creating things instead. In this scenario, selling IP rights can effectively raise revenue, but it is crucial to consider the long-term consequences of forgoing licensing profits over a single sale.
When considering selling a piece of intellectual property, it is helpful to make several considerations beforehand. First, consider the IP’s value and determine whether the market for the property can improve. If it is unlikely that the value may increase and the IP owner has no desire to license or use the IP, it might be worthwhile to agree on a fee to transfer the property’s ownership rights. However, as with other properties, the value of an IP right may increase over time, meaning that the IP’s eventual worth could be significantly higher. To combat this challenge, buyers may want to include a clause in the sales agreement stipulating bonus payments following the sale if the purchase results in improved sales for the buyer.
How Do You Market Intellectual Property?
To market intellectual property rights, consider the following tips:
- Define the intended marketing process. This helps businesses gain effective and consistent results when transferring their IP to others. Businesses can benefit from outlining, revising, and deploying a marketing process concerning their IP and from updating their strategy frequently to reflect any feedback gained from prospective licensees.
- Consider the marketing resource’s ROI. This refers to not investing more in marketing the IP rights than what the business can potentially gain from licensing or selling the right. Doing this improves the chances of gaining a profit from selling the IP.
- Consult with stakeholders. This allows companies to ensure that their IP value estimates are accurate and that the IP marketing plan considers other relevant data. During this step, the aim is to identify whether it is necessary to carry out further market research, whether it is appropriate to adjust the marketing approach and strategy, whether the marketing plan’s ROI differs, whether there is a change in the prospective licensees and target markets, and whether it is worthwhile to continue attempting to sell the IP right.
Contact a Lawyer for Help With Selling Your IP Rights
Many challenges exist when attempting to sell IP rights, and intellectual property owners can benefit from understanding these in order to overcome them. For instance, the American Bar Association states that when selling research and development IP rights to the United States government, it is necessary for businesses to learn about any applicable regulatory requirements beforehand so they can take appropriate measures to secure their remaining IP. To learn about the challenges of selling intellectual property rights, consider contacting an IP attorney from War IP Law, PLLC, by calling (202) 902-6362 today.