Types of Intellectual Property Rights (IP) and Monetising your IP
Forms of IP and Monetising your IP
• 24 Nov 21
Intellectual Property has fast become a precious commodity used as collateral for both existing and start-up businesses. As with other forms of collateral, various classes of Intellectual Property Rights (IPR) have been established in order to cover different types of innovation. The following article will outline the classes of Intellectual Property Rights and some of the methods used to monetize IP.
Understanding Types of Intellectual Property Rights
In order to effectively manage your business’s IP, it is important to understand the different classes of Intellectual Property Rights. To help you pick out the most appropriate IP classification for your ideas, we have broken down the basic outline of every class.
A patent is an exclusive right granted for an invention. An invention is a product or process that provides a new way of doing something, or that offers a new technical solution to a problem.
A patent owner has the exclusive right to make, use or distribute their patented invention. Third parties cannot commercially make, use or distribute such patented inventions unless the patent owner’s consent is obtained. A patent generally lasts for up to 20 years from the date of registration.
Prerequisites for invention patents:
- Must have a unique characteristic that is not part of the body of existing knowledge in its particular technical field
- Must be of practical use
- Must be disclosed and described by the applicant in a way that enables others to make and use the invention
- Must represent a non-trivial extension of what was known by a person with average knowledge of the technical field
- Subject matter must be considered “patentable” under applicable law
A trademark is a distinctive mark that identifies goods or services that are provided by business entities in the course of business. A trademark owner has the exclusive right to use the relevant distinctive mark to identify its goods or services.
Trademarks have traditionally encompassed visual distinctive marks (e.g. logos). It should be noted, however, that non-traditional marks such as sound or smell can also attract trademark protection (e.g. the Intel Inside chime). Trademark protection typically lasts for 10 years, but may be extended for further periods of time upon the payment of relevant fees.
3. Registered designs
A registered design refers to the ornamental or aesthetic aspects of an article. The owner of a registered design has the exclusive right to use that design. This right generally lasts between 10 to 25 years, depending on the territory. One example of a registered design is the Coca-Cola bottle, without any text or branding.
Copyrights protect literary and artistic works – these include songs, novels, paintings and films. A creator of a literary or artistic work that fulfils various criteria (including originality) owns a copyright in such work.
The owner of a copyright for their literary or artistic work has the exclusive right to use such work, as well as the exclusive right to authorise others to use such work on agreed terms. There is no requirement for a person or corporation to obtain a registration in relation to copyright. The copyright subsists throughout the lifetime of the creator and for a period of time after their death (typically around 70 years).
5. Trade secret
Trade secrets are confidential business information that provides a business with a competitive advantage. These could include manufacturing or industrial secrets and commercial secrets.
Generally, there are 3 requirements for information to be fulfilled in order to be considered a trade secret:
- The information is not generally known among, or readily accessible to, circles that normally deal with the kind of information in question
- It must have commercial value due to its secrecy
- It must have been subject to reasonable steps by the rightful holder of the information to keep it secret
Unlike other IPRs, trade secrets are protected without registration. As such, they can be protected immediately and for an unlimited period of time. The unauthorised use of such information by persons other than the holder will be regarded as a violation of the trade secret.
6. Domain names
Domain names refer to website addresses. A domain name is registered by an organisation to enable internet users to locate the organisation’s site on the web. Domain names are registered and protected on a global level by 1 organisation – ICANN.
Registered domain names serve as protection against unauthorised uses of website addresses by another person or entity, and have become increasingly important given the proliferation of e-commerce.
Monetising your IP
Granted that IP could prove extremely valuable, businesses may choose to assign some of their IPR to third parties in exchange for a fee. These activities have, in many cases, proven to be a substantial source of revenue.
Methods of IP Monetisation
Depending on the financial standing, business capabilities, and the market within which your IP exists, it is possible to generate a significant profit using various methods of monetization. It is important to consider whether you would like your IP to be commercialized within your business or alongside a partner, whether you are looking to have your product marketed, manufactured, or sold, and whether or not you want to outsource. The following methods are some of ways you can monetize your IP and make it work for you.
Selling your IP - Intellectual Property Assignment Agreement
The complete sale of IP is referred to as an assignment. This takes place when ownership is legally transferred to an individual or entity for an up-front sum of money. If your business is looking to gain an immediate profit, this strategy can help you to achieve that goal. Once the IP owner has transferred their ownership, there can be no further participation or expectation concerning the IP and its performance or function.
Licensing your IP
IP licensing is when the owner of IP rights grants permission to an individual or entity to make use of the IP under terms agreed upon by both parties. There are various forms of licensing available which can be a valuable method for commercializing IP. This method of IP monetization can be especially useful for a business with limited funds and resources needed to develop or market the product or service.
Any class of IP can be licensed, but is more commonly used for copyright, patents and trademarks. The use of the IP is negotiated between the parties involved and can only be used within the constraints of the agreed upon conditions, also known as legal exclusivity.
Sell products under your IP
Another great way of monetizing IP is to create marketable, sellable products using your own IP. This will require all the necessary resources, research, funding, and expertise needed to produce innovative and creative products which can be taken to market.
Sue IP Infringers
In certain business contexts, IP owners do not commercialize their IP or sell products, but rather generate income by suing IP infringers who misuse their registered IP. Another name for a company such as this is a non-practising entity or NPE.
Collaborate with Investors
IP can draw significant attention from potential investors. If your company and its IP could prove valuable to a specific investor, make sure to make information about your IP available to them. Collaborating with investors could thrust the business into the commercial market and propel the business toward success.
When it comes to legal basics, it can seem overwhelming at first. But, it doesn’t have to be. GLS offers a host of free Startup resources to help set you on your way. You can also browse our list of over 200 Legal Templates and Tools, to choose the products your Startup needs at each critical stage of business.
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*The above content does not constitute, nor is it offered as, legal advice of any kind. GLS Solutions Pte Ltd is not a law firm and any support provided pursuant to this entity is not regulated legal advice or legal opinion.