As an IP owner, it is essential to understand the various strategies for dividing your IP rights. It is crucial to know how to divide and license your IP rights effectively, whether it is a trademark, patent, copyright, or trade secret.
When I was licensing the prominent entertainment properties at the studios, we often divided rights into many product categories to get the most significant return in royalty revenues. Some of the most common rights divisions were by territory (by country or region), distribution channel (mass market, specialty stores, etc.), and scope of products (such as action figures, stuffed animals, men’s shorts, kids’ T-shirts, etc.). Sometimes we even divided rights further, such as action figures less than 5 inches.
You can create a licensing agreement that maximizes revenue from licensing deals by dividing your IP rights. Here are the four ways to divide IP rights.
One of the most common ways to divide IP rights is by territory. This method specifies where the licensee can use or sell the licensed product or service. It allows exclusive rights to be granted in a particular region or country. By dividing IP rights into territories, you can prevent licensed products from overlapping, which can lead to confusion and competition between licensees.
Another way to divide IP rights is by distribution channels. This method specifies the channels through which the licensee can offer the licensed product or service. For example, you may grant exclusive rights to sell the product through certain authorized channels, such as e-commerce platforms or specific retail stores. By doing so, you can protect your IP rights while increasing revenue through these channels.
Field of Use
This method specifies the different ways the licensee can use the IP rights. For example, a pharmaceutical company might license a patent for a drug for one specific medical condition. This strategy allows you to license your IP for different purposes to different entities, maximizing your return on investment.
Finally, you can divide IP rights by time period. This method specifies when the licensee can use or sell the products or services. This method allows you to control the use and distribution of your IP over a specific period, allowing you to reap the benefits of the IP long-term. For example, you may grant a licensee exclusive rights to your IP for a set period, such as five years.
Dividing IP rights helps ensure a well-organized and profitable licensing agreement. By using territories, distribution channels, field of use, and time periods, you can control your IP’s use more while ensuring it is protected and maximizing your revenue.