Licensing

How Does One Benefit From Intellectual Property Protection?

In short, by licensing it. When an individual purchases a piece of property, for example a 4 bedroom home, the owner can lease, or license, each of the rooms out to prospective tenants. The tenants pay the owner rent on a monthly basis for the use of the rooms. However, the amount of rent that the owner can collect is a function of how many rooms are available in the home. Moreover, the owner probably could not share a room with one of the tenants.

Similarly, the owner of a piece of intellectual property, such as a patent, can give a license to other “tenants” to make, use, or sell the patented invention. However, the owner of the patent is not limited by the number of “rooms in the home.” In fact, the owner can license the rights to the patent exclusively, or share them with as many individuals or corporations as he or she wishes. Unlike the home example, the value of the patent can increase in value the more it is licensed.

Since the arrival of the information age and the emergence of a global economy, the value placed in protecting intellectual property rights such as patents, trademarks and copyrights has increased at an explosive rate. Intellectual property, unlike real property or tangible goods, is infinitely divisible in nature. A patent, for example, may be licensed for use with numerous business entities. Each time an intellectual property right is licensed, the value of the property increases. Licensing an intellectual property right maximizes incoming royalties without impairing the subject matter’s underlying value. For example, the value of the copyrights for software produced by Microsoft has generated billions of dollars in revenues.

Aggressive and creative licensing strategies produce abundant royalties from protected technology. For instance, computer software if properly licensed, can reap a tremendous profit for the author. Consequently, a license agreement must anticipate and encourage positive, long-term licensing relationships between the author and potential marketing and distribution businesses. It is imperative that the software author’s attorney negotiate fair and reasonable license provisions to resolve potential conflicts.

In summary, the value of intellectual property protection is rapidly increasing as the global economic marketplace continues to expand. Many individuals, corporations and even celebrities who previously had little interest in exploiting their intellectual property rights are now benefitting immensely from protection of their intellectual property.

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