Disney, Microsoft, Coca Cola and IBM have all built their empires based on Intellectual Property (IP). The value of an IP can be gauged from its commercial exploitation. For instance, in less than a month that Marvel Entertainment (a Disney entity) released the movie, the Avengers, it grossed over USD 1.3bn in box office revenue. Realising the tremendous potential of its IP, Marvel licensed several such IP to various entities over the years, including licensing Spider Man to Sony Picture Entertainment; the Hulk character to Universal Pictures and film character rights to 20th Century Fox. Another IP success story is that of the Coca Cola company’s world famous mark ‘CocaCola’, which has continued to top the global brands’ lists for several years, with its brand today valued at approximately USD 77.8bn. Similarly, IBM has been topping the U.S. patent recipient list for the past 19 years, which in turn has assured it a USD 1 billion revenue per year from patent licensing.
One of the best and most widely accepted forms of IP commercialization is clearly by way of a license. A ‘license’ is, however different from an ‘assignment’. Explaining it plainly, ‘IP assignment’ means complete and absolute sale and transfer of all rights, title and ownership of the IP and all IPRs related thereto from the assignor/seller to the assignee. An assignee requires that all IP assignments are made without any encumbrance which may affect its title to the IP. An IP license is typically reversionary in nature, wherein granted rights revert from the licensee to the original IP owner (licensor) after a defined period of time.
Hence, if you intend to sell your patented invention, you will enter into an assignment agreement with the buyer of such technology. Whereas, if you wish to grant a temporary defined right to allow a party to use your invention; you would execute a license for the same. Consideration to be paid under an assignment agreement is generally fixed, whereas, in a license agreement the fee may either be fixed or recurring. Unlike in an assignment, a licensee typically has no right to take legal recourse against infringers (unless it is an exclusive licensee). Whereas an assignee assumes complete right and title of the IP owner and can, accordingly initiate legal action in its own name against infringers. A license allows an IP owner to earn monies from its IP, while at the same time retain control over the form and means in which its IP is exploited by a licensee; because the licenseeonly acquires a right to use, while the actual ownership continues to vest with the licensor. Another benefit of licensing is where a licensor itself may not have technical expertise, market knowledge or required resources to develop and market its IP. Thus, an IP owner may decide to retain certain rights in its IP to be explored on its own or through another party and grant all other usage rights to a licensee. For example, a licensor may wish to produce an IP product in-house and to grant a license to another party for rendering marketing, promotion and sale of the licensed product.
Hence, even if as a creator, inventor or owner of the IP you may have a unique, profitable idea, that itself does not necessitate the translation of such a unique idea into a commercially exploitable product for you. The means to commercialize returns on your creative effort is to identify the best potential parties (read licensees), who can undertake steps required to enable your product to penetrate the existing market and create a unique market for your products, without additional infusion of funds or creative efforts from your end.
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