Ideas become marketable intellectual property when they become an IP or intellectual asset. Registered IP includes patents, trademarks, and copyrights. Non-registered intellectual property includes know-how, trade secrets, business processes, business systems, marketing systems, and copyrights.
The key to moving your idea from a concept into a “licensable” intellectual property is to secure its rights and start building its value. Delivering your IP into the market in some form, such as test markets, limited sales, or using the information, is one way of creating a market for it. You’re building the value of your IP by proving that customers or businesses want to use it, and they will pay for it. You’re demonstrating its value by selling it for a price, and there’s demand for your IP.
Value is what creates a marketable IP that’s ready for licensing. The more marketable your intellectual property is, the more you’ll attract potential licensing opportunities. And the better your licensing opportunities, the more likely you’ll succeed in closing a licensing deal that generates revenue.
Let me give you an example. Let’s say you’ve got a new product that you’ve invented. Your first step is to invest the time and money to create and build the product and test it in the market. The goal is to establish or prove that customers will buy it. It doesn’t need to be a large-scale test. Online is an excellent way to do a test market.
Here’s a tip. If your IP is new and untested, you can use it as an incentive and offer lower financial terms for them to take the development risk on your IP.
For example, you approach a potential licensing partner and ask them if they’d be interested in your IP. Since it’s not tested in the market, you negotiate the deal in a two-stage process. The first stage is testing to determine if your product will sell. The second stage is an option to get a full exclusive license if the market test succeeds.
An option to license is an excellent strategy if your IP still needs to be developed and test marketed. You can often negotiate the deal for no money upfront since the IP requires time and money to test. If the IP proves to be marketable, then you can convert the option into an exclusive license based on the terms you negotiated for the option.
Making your IP “marketable” means proving its value – meaning customers will buy it. If it still needs to be tested, consider offering no-money upfront terms in return for taking the development risk. Remember, the more you can prove your IP value to a potential licensing partner, the more interested they’ll be in licensing it.