Most businesses sit on intellectual property without ever asking what it’s actually worth. A distinctive product name, a piece of software, a manufacturing process, a set of designs, these are assets in the same way as premises or equipment, yet they’re routinely left to gather dust rather than put to work. Given the right structure, IP can generate revenue long after the original idea has been developed, tested and brought to market.

Start with an audit

Before any of that is possible, you need to know what you own. An IP audit sounds like a formality, but it’s often the point at which businesses discover rights they didn’t realise they held. This might mean identifying unregistered trade marks that should be formally registered with the UK Intellectual Property Office, confirming ownership of code written by a contractor rather than an employee, or checking that design rights actually belong to the company and not to an individual director personally. Ownership disputes are far easier to resolve before money starts changing hands than after. You can read more about IP audits here: https://www.berrysmith.com/news/intellectual-property-audits-for-smes-ipo-offers-new-funding-scheme/

Licensing: the most common route

Licensing is usually the first option businesses consider, and for good reason. It allows you to retain ownership of the underlying IP while granting someone else permission to use it, in exchange for royalties or a fee. A licence can be exclusive, limiting use to a single licensee, or non-exclusive, allowing several parties to use the same IP simultaneously. The right choice depends heavily on how the market for that particular asset works.

The details matter enormously here. Territory, duration, sub-licensing rights, quality control provisions, and what happens if the licensee is acquired or becomes insolvent all need to be addressed in the agreement itself. A poorly drafted licence can end up costing a business more in disputes than it ever earned in royalties.

Franchising and assignment

For businesses with a proven, replicable model, franchising extends the licensing concept into a full commercial relationship. It’s a heavily regulated area in practice, even without a specific franchising statute in England and Wales, because the contracts touch on trade marks, confidential information, competition law and consumer protection all at once.

Assignment, by contrast, is an outright sale. You transfer ownership of the IP entirely, usually for a lump sum rather than ongoing royalties. This suits businesses that want to realise value immediately, or that no longer see a particular piece of IP as core to their strategy. Once assigned, you lose all rights to exploit that IP yourself, so it’s not a decision to take lightly, particularly for founders who may want to use similar ideas again in future ventures.

IP as a business asset

Increasingly, investors, purchasers and commercial partners look closely at a company’s intellectual property. A well-managed IP portfolio can increase business value, strengthen negotiating positions and provide confidence during investment or acquisition discussions.

Businesses that identify, protect and commercialise their IP effectively are often better placed to expand into new markets, develop strategic collaborations and create additional revenue streams.

Getting the structure right

Whichever route suits your business, the commercial terms only work if the underlying legal position is sound. That means clear title to the IP, agreements that anticipate disputes rather than just describing the happy path, and registrations kept up to date across every jurisdiction where the IP is actually used.

If you’re sitting on IP you haven’t yet found a way to monetise, or you’re negotiating a licence or sale and want the terms properly tested, our IP team can talk you through the options and the risks specific to your situation. Please do not hesitate to contact us at commercial@berrysmith.com or on 029 2034 5511.