The commercialisation of IP happens in a number of ways including:
- licensing of the IP to a third party or related entity on a royalty-bearing basis;
- assigning ownership of the IP to another entity for a lump sum (possibly with licence-back arrangements); and
- using the IP as a valuable asset to secure financing.
Licensing can be one way of generating revenue streams whilst retaining ownership. Under a licensing agreement, the owner/licensor of the IP grants permissions to a third party licensee to use and exploit the IP on agreed terms. Conditions typically include the scope of rights and the proposed “field of use”. Other key provisions include the financial terms and termination rights. Businesses licensingout its IP should carefully consider the commercial terms. For example, a non-exclusive licence will allow the licensor to grant multiple licences of the same IP to different licensees. An exclusive licence can be maximised by limiting exclusivity to a particular geographical territory and/or field of use. This retains the ability to commercialise the same IP in other territories. A licensor should retain sufficient control over its IP by ensuring robust obligations are placed on the licensee, including allowing the licensor to monitor the licensee’s use of the IP and incorporating appropriate termination rights.
Commercialisation of IP is a complex area which requires commercial acumen, legal expertise and appropriate appreciation of the tax implications, including tax incentives that may be available for the development and commercialisation of IP (such as the UK Patent Box and R&D tax credits in the UK, and the VAT exemptions for qualifying IP transfers in Ireland).