If you do not want to, or cannot, exploit your intellectual property (IP) yourself, you can sell it to someone else. This means that you get paid for the IP you have spent time and money developing. The buyer is then free to exploit the intellectual property that they have bought in whatever way they choose.
Valuing your IP for sale
Intangible assets, such patents, trade marks, copyright and design, often give businesses their competitive advantage. However, because they have no physical characteristics, their value can be difficult to determine.
There are a number of ways to value IP, including estimating:
- how much other parties may be willing to pay for comparable assets
- what levels of future earnings could be expected from the asset
- what costs you may incur if constructing or acquiring a new asset
See more on the different methods of business asset valuation.
You can also find specific guidance on valuing your intellectual property.
IP sale agreements
Typically, an outright IP sale price is fixed. However, sometimes the sale agreement may contain a clause that triggers bonus payments (eg if certain sales targets are reached within a given timeframe).
The sale agreement may also specify that the IP is only being sold in relation to a specific geographic territory. For example, you could sell the right to exploit your IP in the USA but retain the right to exploit it in the rest of the world.
You can sell your IP to anyone you choose. However, you should advise the Intellectual Property Office if you sell a patent, registered design or trade mark.
Advantages and disadvantages of selling your IP
The advantage of selling your IP (rather than licensing it or trying to exploit it yourself) is that you get a guaranteed payment.
However, the disadvantage is that the maximum return on the investment you made in developing the IP is capped at the sale price, plus any bonus triggered by the sale agreement.