Like any skill or profession, success in licensing is built upon certain fundamentals. Get them right, and your licensing activities will be successful. But if you overlook them, you wind up frustrated, trying to figure out why you’re getting nowhere with your licensing program.
While there are many parts to the licensing process, today I’m going to focus on the three of the most important and often forgotten fundamentals you need to succeed in licensing.
The first fundamental is understanding what your IP is. Most people generally think of IP as patents, trademarks and copyrights. What is often overlooked is that your IP is actually more than just a product, brand, book or software. IP extends into many formats including customer information, software source code, business models, databases, operations manuals, professional expertise and much more. For example, patents rights may include not only products, but also the processes to make the product.
If you’re not sure, the best thing to do is create an inventory list of your IP. Then you can figure out what parts of your IP to include in your licensing deal. Nothing is more frustrating for a licensing partner if you fail to give them all the IP rights they need in the licensing deal.
The second fundamental that’s often overlooked is protecting it the right way. Your intellectual property is a valuable asset and failing to protect it puts your IP at risk. Your idea becomes an intellectual property when you protect the legal rights to it. Almost anything can be licensed as long as it has protectable IP rights.
The key is knowing which rights to protect. This goes back to fundamental number one. If you don’t know what your IP is, and which parts are the most licensable, you’ll wind up overspending on protecting the wrong parts of your IP. I consulted a woman who patented a learning assessment toy. It collects data about the kids learning skills by testing them with the interactive toy. Not realizing the real value of her IP was the data collection, she spent all her money on patenting the interactive toy “parts”, completely missing the most licensable part of her IP.
Third, and one of the most important fundamentals, is figuring out if your IP is licensable. Just because you’ve developed an IP doesn’t mean it can be licensed. A big part of what makes your IP licensable is what it offers in terms of value. Remember, the number one key question for a potential licensing partner is can they make money with your IP. The real value of your IP is the way a licensing partner can use it to increase revenues, cut costs, create a new market or gain a competitive advantage.
Your IP has to PROVE it makes money – it’s better, faster or cheaper, solves a big problem or does something no one else does. Licensing partners DON’T license IP…they license money. The more you can show a licensing partner why your IP is valuable to them, the more interested they will be in licensing it. If your IP is in a highly competitive market, such as apparel, software or consumer electronics, costs less to make and sells for more, your IP is very valuable and licensable.
Success in licensing requires making sure you don’t forget about the basic fundamentals necessary to succeed. Most IP owners fail to make money with their IP because they forget about the licensing fundamentals. It starts with a good foundation that includes identifying all your IP parts, protecting it the right way, and making your IP licensable so it’s attractive to a licensing partner.
But like any skill, it’s important to learn the fundamentals the right way. That’s why I urge you to sign up for our free Licensing4Profits newsletter. You’ll receive our latest blog articles with specific how-to “actionable” information on every aspect of licensing – from developing your idea into a “licensable IP” to finding licensing partners to negotiating deal terms and much more – sent to you each week. Plus you’ll also receive our exclusive “subscriber only” articles and offers for free e-courses, webinars, videos, seminars, as well as our latest licensing training program.
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