What ​​​​​is Licensing and How can I Benefit?

​In essence, licensing means one company giving the right to another company to manufacture or publish its product for a specific payment. However, this website is predominantly concerned with licensing copyright.  Patents for physical products is an entirely different aspect of licensing that can be complex, expensive and time consuming.

The context of licensing here is to​:

(1)  Help you license assets that you already own the rights to.  

(2)  Develop your technical knowledge and expertise into products that could be sold and licensed.

​You might think licensing sounds complicated or you really don't have anything to license.  However, when you consider the following examples, potential products from personal and business knowledge are all around you. 

For example:

​A solicitor develops a series of bespoke contracts and forms needed to sell a business.  He could put those in a package and license it to other business owners who want to sell their business to save on legal costs.

​A restaurant owner develops a series of tasty and healthy gluten free recipes.  They might be able to license the recipes to gluten free suppliers whose products are included in the recipes.

​A business consultant has a unique way of cutting his client's distribution costs by up to 50%.  He could develop it into a course and license it to other business consultants who don't operate in his area.

​A training company creates a successful sales course for a specific product or service.  They could license that course to other companies who would like to train their staff in the same niche.

The point is, things you do in your own business could be potential licensing opportunities!

Benefits of licensing

Shаrіng соѕtѕ аnd rіѕk:  Whеn you lісеnѕе thе rіght tо create, publish аnd ѕеll рrоduсtѕ thе lісеnѕоr rесеіvеѕ payment and sometimes royalties frоm that lісеnѕеe but dоеѕ nоt hаvе thе rіѕk оr соѕt оf creating оr ѕеllіng thе рrоduсtѕ for them.  On thе other hand, thе lісеnѕее hаѕ thе rіght tо uѕе the intellectual property wіthоut thе еxреnѕе оf rеѕеаrсh аnd dеvеlоріng thе рrоduсt in the first place.

Rеvеnuе gеnеrаtіоn:  Lісеnѕіng саn brоаdеn thе rеасh оf intellectual property іntо dіffеrеnt mаrkеtѕ.  An оwnеr оf (IP) mау lісеnѕе аnоthеr buѕіnеѕѕ tо ѕеll in tеrrіtоrіеѕ thаt thе оwnеr саn't соvеr.

Rеduсіng соѕtѕ:  A buѕіnеѕѕ might 'buу-іn' and license (IP) from another company tо rеduсе іtѕ rеѕеаrсh аnd dеvеlорmеnt соѕtѕ.

Sаvіng tіmе:  A buѕіnеѕѕ mау gеt іtѕ рrоduсtѕ оr ѕеrvісеѕ tо mаrkеt more ԛuісklу bу асԛuіrіng a lісеnѕе to uѕе еxіѕtіng (IP) saving themselves product development time.

Aссеѕѕіng еxреrtіѕе:  Bу buуіng a lісеnѕе, a business mау tар іntо еxреrtіѕе thаt іt dоеѕn't hаvе іn-hоuѕе.

Obtаіnіng соmреtіtіvе аdvаntаgе:  Bу асԛuіrіng a lісеnѕе to uѕе аnоthеr companies (IP), a business might obtain аn аdvаntаgе оvеr іtѕ competitors.

Cоllаbоrаtіоn:  The licensor and licensee mау want tо wоrk tоgеthеr tо dеvеlор new рrоduсtѕ аnd ѕеrvісеѕ

​Licensing is a Global Trading Opportunity

​Licensing is an internationally recognised way of doing business.  This gives you a potential global reach and a powerful way to leverage the intellectual  property in your business.   Don't forget licensing works both ways.  You can either be a licensor, licensing out your product to others or the licensee, buying a license to benefit from a product the licensor has created.  Either way, the licensing concept can be implemented in most major countries around the world.

​Using the internet, email and phone gives you the ability to set up a licensing deal anywhere without having to travel.  As such, you have a serious import or export opportunity to license in the knowledge or expertise you need to grow your business or license out your own product based expertise to an international marketplace.

Of course not every product developed from your intellectual property is going to be a commercial or licensing success.  However, if you can prove your product does what it's meant to do with satisfied clients and has a successful sales record then your chances of finding someone to license your product are greatly increased.

How Can   My Business Start Licensing?

​Obviously, you can only license products that you own the rights and copyright to.  If you already own the rights to certain digital assets like multimedia, training material, software or published content that's great.  If you don't but have technical knowledge or experience in your area of expertise, that needs to be developed into a product.  So the first thing to do is list what products you already have in your business​ that you own the rights to and could be licensed.

​Then consider the following:

  • Are you going to offer an exclusive license to just one licensee or a non exclusive license to more than one licen​​​​​see?
  • Are you going to license your product just in your country or internationally?
  • ​Can your product be licensed in different business niches?
  • ​What presentation materials do you have to present your licensing opportunity to potential licensees?
  • ​Who are your potential licensees and is your product going to be a good match for their customers? 

​Don't let the above list put you off but they are all important considerations when looking to license your products.  Having said that, It's better to find out early if your product isn't a good fit for licensing before wasting time and money on a licensing project that didn't work out.  Also, it's very important to take advice from a legal professional who specialises in intellectual property.  They will help you assess your ​licensing opportunities, advise you on negotiations and protect you and your intellectual property in future contracts.

The positive side of licensing is that you don't need to have the money, marketing, client lists and distribution systems.  You license your products out to those companies who already have those things in place.  You can still sell the product yourself if you want to but if not, why re-invent the marketing wheel?  There are companies out there who can get your product out to market far more quickly and easily than you can!  Let them be responsible for re-production, marketing and sales.  In exchange, you get paid a licensing fee or a percentage of sales in royalties.

So far we have talked about products you already own and have the rights to but the vast majority of your knowledge and expertise will be tied up as intellectual property in multiple items and formats.   This is potentially very valuable (IP) and needs to be collated and protected before you consider developing products for licensing.  On the Intellectual Property page you will find out how to do this and how assess the potential commercialisation of your (IP) .