Intellectual Property and Economic Policy: Part III
Intellectual Property is Still Property
Intellectual property, like real property, can be bought, sold, licensed, exchanged, or given away like other forms of property. Proficient management of intellectual property rights becomes profitable if strategic techniques are utilized. The owner of intellectual property rights has the right to prevent the unauthorized use or sale of that property. As a result, it may strategic to assign or license these rights to exploit business profits.
There are essentially two ways to convey intellectual property rights: through assignment or license. In relation to real property, assignments and licenses are the functional equivalent of a "sale" and "lease", respectively.
Assignments
Law allows a transfer or sale of intellectual property rights, which may be partial or entire interests in the intellectual property. An assignment of a patent, for example, is a transfer of sufficient rights so that the recipient has title to the patent. The assignee, when the rights are assigned to him or her, becomes the owner of the rights and has the same rights that the original owner. A business may never want to use a certain intellectual property rights (i.e. uncommon marketplace, little capital). However, that business may strategically exploit the intellectual property right through an assignment. Once the business transfers the rights to a third party, all rights are then reserved with the third party and exhausted within the assignor.
Licensing
A license is written authorization to use owned intellectual property rights. Typically, a business will make arrangements to license its intellectual property rights, authorizing a third party to use those rights in exchange for valuable consideration. However, unlike assignments, the owner retains the ownership of those rights, and can contract for a running rate of payments.
The license allows another to use an intellectual property right within a defined time, context, market line, or territory. A license may be exclusive or non-exclusive, and run longer or shorter than the duration of the intellectual property protection, prescribed by law.
Licensing provides a means for an owner of intellectual property to exploit markets which may not otherwise have been available. As a contractual agreement, the terms of the agreement can be tailored to recoup part of the expenditure incurred during development while also tailored to maintain a running stream of revenue from future profits. Although there is always uncertainties in the marketplace, a license may have a larger upside than a single assignment of rights.
