2 Ways Licensing Generates Revenue and Saves You Money

 

Leveraging intellectual property means using it in different ways to create revenue. One of the most powerful ways is controlling rights to other people s IP. A second and often overlooked way is to use it to get money from a partner who covers the costs to develop and test your IP.

The is the second article in the 5 part series on the 8 ways licensing leverages intellectual property (you can read the first article here). In this article, I’ll discuss Other Peoples Ideas (OPI) and Other Peoples Money (OPM).

You don’t have to own IP to make money with IP. Many inventors cannot exploit their IP because they don’t know how or have the ability to do so — but you can. As an agent or deal finder, you help IP owners license their IP to third-party marketers and get paid a commission.

By acquiring what is known as a master licensing agreement with sub-licensing rights, you control the rights to someone else’s IP. You then re-license (sublicense) it and collect a percentage of the royalties paid to the IP owner. One of my clients used this strategy. Their business model focused on getting master licensing rights to IP from Universities and sublicense these IP’s. This is a pure licensing model. They didn’t make or sell anything. Instead, they use other people’s IP (OPI) to generate revenue.

Money is often perceived as a big challenge to making money with IP. Most IP owners assume they need money to finish developing their IP. Product development is expensive. Especially when it’s in high-tech or medical technology areas where it can run into tens of millions dollars. But there is a way to use licensing to partner with a company to pay the development costs (OPM). A startup with surgical technology did just that. They partnered with a larger company and gave them exclusive rights to their surgical technology in return for license fees and development funding.

Using licensing to finish development or testing is a faster and less expensive route. Through a development license, your licensing partner pays for development. It’s also a great way to build a licensing partnership by creating a licensing deal based on the successful development of your IP.

You don’t have to own IP to make money with it. You only have to control it through licensing to leverage it. You can also use it to get money by partnering with a company (or investors) willing to invest in its development and ultimately its launch into the commercial marketplace. Using licensing to leverage your IP means you don’t have to do it alone. You can tap the resources of licensing partners and vastly multiply the income-producing power of your IP.

In the next article, I’ll discuss how to leverage IP to get OPW – other people’s work – and OPR – other people’s resources.

Rand Brenner Author
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience includes medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the Mighty Morphin Power Rangers. Rand is a featured speaker on licensing at investment conferences, trade shows, colleges and startup events. He’s a published writer with articles appearing in several prestigious trade magazines. Rand also mentors at Cal State Fullerton Business School and is a judge for their startup business plan competitions.

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