Licensing is a process. It requires doing certain activities and tasks to protect, manage, and turn your intellectual property into a money-making licensing deal. The problem is licensing is often misunderstood by most people, creating a lot of confusion and myths about doing it.
As a result, many IP owners think that they can’t do licensing. But that’s just a myth. So in this article, I’ll dispel some of the top licensing myths that keep many IP owners from licensing their IP.
1. Licensing is Hard
Licensing isn’t hard, but it does take time. It’s a process that requires doing things in a certain way. It gets hard when you don’t do it the right way. You wind up making mistakes and doing the wrong things, which makes licensing hard.
A good example is trying to license an unproven IP, such as only a patent or just an idea. Part of the licensing process is proving the value of your IP. Instead, you skip this step and immediately jump to license it without any validation that it works or the customer will buy it.
If you can’t prove it will make money, how will you convince a licensing partner to license it? Now that’s the hard way of doing licensing.
2. Licensing is Expensive
If you have a new invention, technology, software, brand, or other IP types, you have two options: make and sell it yourself or license it. Licensing rights to your IP for cash is a simpler, less-expensive route than making and selling it yourself.
Licensing is one of the fastest ways to reach the commercial market. It’s considerably faster than starting and building a new business, which typically takes about 18 months to 2 years. Licensing and intellectual property can be done in a much shorter time frame, often months instead of years.
It’s a low-cost strategy that focuses your time and money on finding a company with the expertise and resources to bring your IP to market. In effect, you are plugging into a company that is already in motion in the marketplace.
3. Licensing is complicated
While licensing requires a basic understanding of IP rights and how to license them, the process itself is not complicated (although some licensing agreements can be complex). At its most basic level, it involves proving your IP works, and then finding a partner to license it.
So here are three simple steps you can take to make the licensing process easier.
- Make sure your IP is ready for licensing. Please test it and show that it works and customers will buy it.
- Do your homework and research the market to find companies right for your IP.
- Prepare a very brief summary of your IP – what it does, how it works, and why it solves the big problem. Make it short and to the point.
While licensing is not a complex process, it does take time and requires following a sequence of steps to make it happen. While these are only part of the licensing steps in the process, they are some of the most important and will go a long way to helping you get better results with your licensing activities.
4. Licensing is a Legal Thing
The licensing process is often confused as a legal process. There’s not a lot of information on the money-making side of licensing. Most information on licensing focuses on the legal side. Legal is a part of it, but that’s not what licensing is. Licensing is a money-making process.
Most people don’t make money with their IP simply because they can’t distinguish between the income generation activities of licensing vs. the licensing’s legal protection activities.
At the licensing stage, it’s time to make money with your IP. That means taking action to promote and sell your licensing deal. The three steps I detailed above are examples of types of income-generating activities.
The result of these actions is a licensing agreement (the legal part), which in simple terms gives someone permission to use your IP (product, service, technology, or brand) in exchange for royalty payments that generate income for you.
5. Licensing Requires a Professional
While there are many types of licensing professionals, such as agents, attorneys, and consultants, licensing doesn’t require you to retain one (although some licensing parts, such as the licensing agreement, do require working with an IP attorney). Like training to sell real estate or stocks, you must learn the basics of licensing to understand what you need to do. The best way to get a jump start is by learning what the licensing process is.
Licensing is a process that includes:
A vocabulary – the language of licensing;
A procedure – a way of thinking and doing specific tasks and activities;
And a transaction – the agreement that transforms your IP rights into a money-making product or technology.
Licensing doesn’t require a professional, but it does require learning from a credible professional source. And just like learning marketing, accounting, or web design, there are certain skills you must learn to succeed in licensing.
While these are some of the biggest myths in licensing, they aren’t the only ones that hold back many IP owners. The important thing to take away is that licensing is a money-making process that requires taking action with your IP. Once you understand the licensing process, what it is, and how it works, you’ll gain confidence in your abilities to get out there, pitch your IP, and find a licensing partner.