Developing and making money with your IP doesn’t mean you have to go it alone. You can use licensing to get the resources you need without the added cost through a joint venture. Some examples of how to use JV’s include joint development of a new technology or formula from scratch, or to make and sell a product acquired by a license agreement.
Both large and small companies can use JV licensing agreements. For smaller companies, a JV strategy is a good option to leverage each other’s resources, such as manufacturing capabilities or distribution channels. If development capital is needed, a smaller company could form a JV with a larger company, and give them rights to future revenues, or to use the IP in different markets.
In the case of large companies, the partnering strategy focuses on co-marketing or cross–promoting each other’s brands (or products).
The goal of this partnering strategy is to acquire more customers or gain certain efficiencies, such as promotional costs. Examples include major airline alliances honoring each other’s frequent flier programs, or fast food chains promoting the latest kids movie and offering a free toy with a kid’s meal purchase.
When considering a joint venture, give careful thought to the type of partner you are looking for and what resources each of you will give. In a joint development JV, IP ownership must be clearly defined. For example, if both partners include IP, then the agreement should specify that each partner retains ownership of their preëxisting intellectual property. If the IP is developed jointly, then its important to specify how the IP will be allocated to each partner. When commercializing an acquired IP, be sure to detail how the profits and costs for production, sales and distribution are divided.
JV licensing is a flexible strategy that is used in many ways. It can be tailored to your specific needs, whether it’s developing a new technology (R&D), acquiring rights to an IP, sharing or combining complementary IP, or expanding your business into foreign markets.