Different forms of intellectual property can provide competitive advantages for organizations. Trademarks can help create a strong brand that attracts consumers and help a company stand out from the competition.
Copyrighted materials can play an important role in marketing or can produce revenue for an organization. Patents can protect the ability to manufacture unique products. Typical intellectual property protections grant organizations sole control over registered ideas or creative works.
However, businesses often negotiate licensing agreements with outside entities that grant the other party access to protected intellectual property. Why do companies license their intellectual property instead of monopolizing it?
To monetize the intellectual property
Simply using copyrighted works to market a company or producing patented products does not necessarily optimize a company’s revenue. One company’s efforts may not be enough to meet consumer demand.
Many other organizations could theoretically use the same intellectual property without necessarily damaging the owner organization’s market share. Licensing patents, trademarks and copyrighted works to other companies can provide a secondary stream of income that can be very lucrative for an organization with valuable intellectual property.
To limit infringement
Other companies may go to great lengths to attempt to reverse engineer a product or to tap into the enthusiasm around a certain product or creative work. The company that owns the intellectual property could then spend months trying to enforce its rights. Identifying parties likely to violate intellectual property protections and negotiating licensing arrangements with them can prevent those parties from infringing on intellectual property protections.
Negotiating thorough licensing agreements can be beneficial for organizations with valuable intellectual property. Business leaders often need to explore a variety of different solutions that protect and monetize the organization’s intellectual property holdings.