Can Intellectual Property Be Sold?
Feb. 28, 2023
Intellectual property (IP) refers to “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce,” according to the World Intellectual Property Organization (WIPO).
The owners of these creations are protected by law through their trademark, copyright, or patent registration, meaning others cannot use them without the owner’s consent. Owners generally rely on their IP for business or other profitable purposes, but there may come a time when they want to sell it. They may wish to recoup the investment they’ve made or avoid the costs of maintaining their IP.
Of course, you as the owner can sell your IP if there’s a market for it, but remember that once you sell it, you lose all rights to it. Licensing is another option whereby you can keep ownership and control over your IP. A sale is final unless you sell just a partial interest, which may not apply to all types of IP.
If you are looking to sell or license your intellectual property in or around the San Francisco Bay Area and need to explore the ramifications and considerations, contact the Law Offices of David H. Schwartz, INC.
Attorney David H. Schwartz will help you analyze the legal implications and the best route to take for a sale. Likewise, if you have an offer on the table, he will help you explore whether the deal makes sense or advise you that you should keep looking. He will also present you with the option of licensing your IP.
The Law Offices of David H. Schwartz, INC proudly serves clients throughout the Greater San Francisco Bay Area, including San Jose, San Mateo, Santa Clara, Oakland, and throughout Alameda County.
Valuing Your Intellectual Property
If you are in the market to sell your intellectual property, the question then becomes what it’s worth. You want to make sure you don’t get cheated in the process by undervaluing what you’re marketing. There are three general methods of valuing intellectual property:
MARKET-BASED ESTIMATES: This is based on comparing what you’re selling to what similar products are worth on the open market. This can be tricky when it comes to some types of intellectual property, however.
COST-BASED ESTIMATES: This method attempts to value the IP by weighing the cost to create it or the cost to replace it. Again, this can be tricky with some IP.
PAST AND FUTURE ECONOMIC ESTIMATES: This is probably the most reliable. It takes into account current economic benefits from the IP and weighs future benefits as well.
Selling vs. Licensing Your Intellectual Property
A sale will give you immediate benefits provided it’s a lump-sum transaction. Even a payment plan provides a cash infusion. If you’re in a position where you no longer need your intellectual property, or you simply cannot continue to maintain it, a sale may be the right choice, but remember, a sale is final. You would no longer have rights to your IP.
A licensing arrangement, on the other hand, allows you to retain control of your IP while giving others the right to use it for a royalty or other set financial arrangement. The Walt Disney Company, for instance, licenses the use of its characters’ images around the world rather than undergoing the expense and headache of operating its own manufacturing sites.
Factors to Consider When Selling
Depending on what type of IP you’re marketing, the transaction may be a bit different:
SELLING A COPYRIGHT: The transaction must be done in writing through the creation of a Copyright Assignment agreement. Though you don’t have to register your creation with the U.S. Copyright Office to be protected, it helps if you do when it comes to sales. Absent official copyright registration, the buyer may question whether you’re the actual owner.
SELLING A TRADEMARK: Full trademarks – meaning your trademark has been registered and is being actively used in commerce – can be sold. Intent-to-use trademarks cannot generally be sold in order to prevent speculators from trademarking anything and everything in case a market develops for it.
PATENTS: Patented products or designs can be sold, but most patent holders prefer the licensing route.
Confer With an Experienced Attorney
If you’re the holder of a trademark, patent, or copyright who is considering whether to sell or license your intellectual property, you should speak with an experienced attorney to examine all of your options before deciding on your move. In the Greater San Francisco Bay Area, contact the Law Offices of David H. Schwartz, INC with all your questions and concerns about intellectual property.