Some of the most simple inventions turn out to be the most revolutionary

IP is about creating new technologies for a better future

New discoveries deserve the best IP protection & strategy for exploitation

Distinctive brands and logos are beacons for business success

Protect your clever innovations before you tell the world

Technological advancement emerges from innovative thinking about how the pieces fit together

Solving a problem
can be a catalyst for creating new IP

COMMERCIALISING INTELLECTUAL PROPERTY

Once intellectual property is secured by way of an application or registration, the next step is to exploit the exclusive rights in the product or innovation by way of commercialisation of the IP.  Employing a sound business IP strategy from the start can make the process flow smoothly, and achieve the outcomes desired.

 

Commercialisation and exploitation can be achieved in a number of ways, apart from direct use, sales and marketing by the Owner.  As IP is a form of property right, it can be assigned or sold outright.  An assignment document is the minimum required to enable all rights and entitlements to the IP to be transferred. Usually a full IP rights purchase and transfer agreement is applied.   Registers are then updated with the change in ownership.  Additional know-how associated with an invention and all acquired branding and goodwill established in a business can also be assigned.    Further details may need to be considered.

 

Alternatively, IP rights can be licensed to work or exploit the invention and/or brand covering a product, in exchange for royalties.  An inventor may have a clear vision of the concept of the invention, but may not also have the ability to design a prototype of the unit, and/or manufacturing know how or how to market and distribute products in New Zealand and overseas.  We work with a wide network of business experts who can assist with specific aspects of development and commercialisation of your invention.    

 

Establishing business relationships with specialists and experts is essential to the commercial success of IP.  It is also important that these business relationships are clearly defined to avoid unnecessary disputes over who owns various IP rights.  Such concerns can centre about the limits to consent to use and share information on IP being developed and tested.  In some situations a non-disclosure agreement (NDA) or confidentiality agreement can be essential.  We are IP experts who can provide you with strategic and sound IP advice on how you can manage IP manufacturers, designers, technicians, engineers or other businesses as you start to develop and market your IP.    

 

We also recommend you seek IP advice before disclosing your innovative concepts and ideas to third parties to ensure your rights are fully protected and that you are not invalidating rights or consenting to use of rights by third parties unintentionally.  As terminating an agreement can be complicated and expensive, ensuring that the most suitable IP business relationships are established is a positive step to successfully exploiting the invention.          

 

Licensing of IP rights

A license can involve the grant or transfer of IP rights permitting or authorising other parties to exploit intellectual property by way of manufacturing, marketing, exporting, or promoting the product, process or brand.  Without a license that other party would be infringing IP rights.

 

The grant of rights to exploit the IP is normally in exchange for an initial lump sum payment and/or royalties, or other consideration.  A royalty rate can be set as a percentage of the revenue from income from the licensed product, and be payable in 6 monthly or yearly instalments.  Alternatively, the royalty could be a percentage of the manufactured cost of the licensed product, although manufacturing units may not result in 100% sales of such units.  Overall, the consideration paid by the licensee to the licensor for the grant of rights can be whatever the parties agree in the circumstances. 

 

The license can take any written form of agreement between the parties.  However, it is recommended that professional IP advice is sought to prepare a suitable agreement between the licensor and licensee to ensure a workable business arrangement.  For example, a licensing agreement should at least have a definite term and means of termination, it should be clear what happens at termination, the extent of the grant of rights must be defined, the territory the market covers must be clear, and the obligations of all parties must be understood and outlined in the agreement. 

 

The grant of rights may be in the form of an exclusive, sole or non-exclusive license.  The differences between each type of license are vast.  A non-exclusive license allows the licensor to grant other licenses which is appropriate in cases where the royalty rates are not large and where it is better to have more than one licensee marketing the licensed product.  An exclusive license allows only the licensee to freely market the products, even to the exclusion of the licensor.  A sole license allows the licensee and the licensor to market the product or service.

 

Most products require a manufacturer with the expertise and resources to fabricate products.  A suitable agreement should cover all aspects of the business relationship, and govern the limitations imposed by the licensor for the exploitation of the IP, and quality controls on the product being manufactured.  Given that many products are being manufactured from overseas countries, it is critical to have agreements in place clarifying ownership of IP, and limitations on the use of the intellectual property.  

 

Successfully marketing a licensed product is often separate from the manufacture of the licensed product.  However, in some cases a manufacturer will also be a distributor as many manufacturers have established trade channels or supply chains for marketing products.  For these various situations, tailored agreements should be prepared to govern these business relationships and for the protection of valuable innovations and intellectual property.

 

Franchising offers a turn-key successful business system and package for the greater exploitation of a product or service.  It is a business arrangement where the owner of a business with an established reputation and proven competitive advantage can expand its business by granting IP rights to a franchisee who is capable of running a similar business, with the support and input from the franchisor.   The success of a franchise invariably relies on the reputation of the franchise brand, product innovations and established business techniques and systems, and other intellectual property.

 

If a product or service is successfully being marketed in a region and a proven business system for exploiting that product is operating, granting franchising rights may be an effective way of deriving additional revenues by aiding a franchisee to operate a similar business elsewhere with the benefit of business goodwill established from the original business.

 

Well known franchises in New Zealand include McDonalds, Paper Plus, Subway, and various real estate property businesses such as LJ Hooker and Harcourts, and home and garden maintenance operations such as Green Acres and Hire a Hubby.  All these franchises involve the exploitation of IP with at least a comprehensive branding portfolio and an effective business system.  We recommend you seek professional advice if you are considering a franchise arrangement with operating your business.

 

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