IP Monetization: Everything You Need to Know
IP monetization refers to the act of using intellectual property (IP) to generate revenue.3 min read
IP monetization refers to the act of using intellectual property (IP) to generate revenue. IP is being monetized in many different industries, ranging from media to healthcare. There are a number of ways to derive revenue from IP, each of which requires a special set of skills and abilities. With the introduction of new laws and growing competition in the IP market, monetizing IP is becoming an increasingly challenging task.
Different Forms of IP
Examples of IP or intangible assets include:
- Patents, which are technical inventions
- Trademarks, such as brand logos, slogans, words, and jingles
- Copyrighted materials, such as written materials, computer codes, and drawings
- Designs, such as industrial design of products
- Trade secrets, which are methods of doing something known only to certain individuals or organizations
- Domain names, which are website addresses
- Others, such as a company's goodwill
Monetization of IP
IP is the product of a unique combination of know-how and human thought process that confers some benefits to its owner. The development of IP assets is vital to the competitiveness, growth, and innovation of an entity. Since it is typically proprietary technology, IP is worth protecting in the same ways as other valuable corporate assets. It can be used to generate another source of revenue to strengthen overall profits and diversify risks.
IP and other intangible assets are often developed as part of the overall productivity and growth of a company. Although these assets contribute to the company's main economic asset, supplementary monetization means may be implemented to generate other means of revenue.
For instance, it is common for ancillary intangible assets to become by-products of a company's main business activity. Instead of being pushed to the sideline, such assets may nonetheless be used to generate revenue. In another example, the monetization of main intangible assets may generate multiple revenue streams instead of the traditional single revenue stream. In the past, patents were only regarded as tools that provide rights for exclusion and prohibition. However, they are now increasingly gaining significance as intangible assets.
IP monetization means deriving monetary value from IP development. While it was historically focused on e-commerce, high-tech, and pharmaceutical, and brand royalties, it is gaining importance in more industries, including:
- Financial services
- Medical devices
- Other industries that rely significantly on technology
Today, patent trading is an integral part of the financial world. In 2016, about $600 billion worth of patents were traded globally. Payments of royalties on patent licenses are also on the rise worldwide.
Many IP owners in industry, academia, and government focus intently on creating IP without knowing how to effectively monetize it. This is usually characterized as technology push exceeding market pull in the early stages of product line strategy development. It often results in stranded innovation, a situation where a significant amount of money and resources has been invested to create novel IP, but a lack of expertise prevents the owners of the IP from getting a reasonable return.
How to Monetize IP
In any IP monetization campaign, the first step should be to clearly identify the goals. Basically, there are two paths you can take:
- Deriving value by spinning off new businesses that are focused on improving the market infrastructure for products based on the IP.
- Approaching global businesses or partners to offer licensing opportunities in certain fields where the IP can be implemented.
Each method of monetizing IP requires specific skills and abilities, as well as a good understanding of IP management practices to ensure that real value will be achieved. These skills include:
- Quality assurance
- Product management
- Business development
- Documentation development
- Strategic partnering
- Regulations and practices that apply to the trademarking, patenting, and licensing of the IP
Monetizing IP can generate considerable financial and strategic value, giving IP owners and investors a wider array of options.
The state of the IP marketplace and the law continues to change at a rapid pace, with significant business and legal developments occurring regularly. IP monetization at the global level leads to greater opportunity and complexity as it becomes a fundamental part of many IP monetization programs. A large portion of Europe is beginning to adopt a unitary European patent, while IP laws and strategies are rapidly maturing in Asian economies.
If you need help with IP monetization, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.