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Legal Vehicles for the Commercialization of Intellectual Property Rights

This article explains how the owner may commercialize their intellectual property rights by sale or assignment or by entering into various contractual relationships like licensing.IPR play a fundamental role as the legal vehicles through which either the transfer of knowledge or the contractual relationship is carried out. Alternatively, knowledge can be exploited internally, in which case the function of intellectual property rights is to block clone competition.

Commercialization can be defined as the process of converting invention or creating into a commercially viable product, service or process. Additional commercialization may require research and development, product development, clinical trials or the development of techniques to expand production before bringing search result to market.

In relation to intellectual property (IP), the term can be defined more specifically as an IP transfer process to the market in the light of future earnings and business growth.

Legal Vehicles

There are two chief legal vehicles by which owner may commercialize their intellectual property:
·to sale or assign the IP,
·to license the IP


An assignment is a direct sale of IP in which owner can transfer their property to another entity normally through a global advance payment. If IP rights are sold, the IP is legally assigned to the new owners. This is because the legal rights of IP are issued country by country. If assigned, the merchandising vehicle that benefits the seller (the "transferor") is a sales agreement and the process of commercialization the assignment is complete. The lump sum payment of an assignment must be considered as a purchase price. Owner must factor:
# All costs, including direct and indirect costs of research and development, materials, any outsourcing and the cost of protecting the IP
# A gain component
# The potential market value of the technology or IP.
Although this commercialization vehicle can achieve a quick and simple exit, it is generally less profitable than either of the alternatives because the allocation does not reduce the commercialization risk for the transferee.


A common means of commercialization is the licensing of intellectual property rights in lieu of their sale through one or more licensing agreements. This means that the owner has granted permission to another entity that uses IP under the agreed terms and conditions. If the owner does not have the resources or experience to develop and market the product or service, the license can be an effective strategy.
In general, the licensee (the owner of the intellectual property) asks each licensee to pay a percentage of their past due sales to the licensee at regular intervals. These payments are called "property rights." Many variables can be negotiated for each license agreement, which includes:
If the rights are limited to that licensee or not exclusive or exclusive
• If the secondary license is authorized by the licensee
• What "territory" (like any country / country) applies?
• What limitations (if any) exist in the areas of application (i.e., uses) of intellectual property?
• What restrictions (if any) exist on methods of exploitation (commercialization, manufacturing, R & D?)
• What are the applicable time limits (maturity conditions)?
• What amounts payable (if any) should be paid by the licensee
• What is the royalty rate and what are the conditions for granting other concessions?
• What is the performance (for example, development milestones and minimum sales?

A mutual license is the issuance of a license through which two or more entities acquire their own intellectual property rights over the other entity.

Through the use of this vehicle, the licensee acquires a rapid expansion in the business with a minimum capital expenditure. However, the licensee's ability to use intellectual property is decreasing.

Advantages and disadvantages of IP license and IP assignment

The difference in the result between the exclusive IP license and the IP assignment may be a good one, in the end it will depend on the content of the documents that handles the supposed transfer of IP. Factors that can affect the analysis include If the right to sleep is blocked, the right to take advantage of intellectual property in Later or under certain circumstances.


·Return Immediate return of cash flow: payments for assignments it usually takes the form of a one-time payment only, contrary to a license agreement.
·There is no more responsibility for the IP title management, including the payment of fees or supervision of infractions
·Low exploitation License agreements can be Enable owner IP to continue using its property (For example, in a single case or Non-exclusive licenses).
·Complete restoration with license Control of your property
·The licensee can access new markets where he did not experience or means of entry.
·Loss of control over the intellectual property right. A use by the transferor shall be an infringement once the assignment is in force, except if certain uses are provided for in the agreement.
·It can be unattractive without have trained employees or the established business decant network.
·License agreements often establish long-term business relationships, which can put the owner at risk of lower royalties in the case of a new technology that enters the market, for example.
·The licensee can become competitor.
·In license agreements, royalties are commonly the preferred form of payment that adds a layer of uncertainty to future income.

Other vehicles of IP commercialization

The license usage license extends to a significantly different marketing vehicle. In the concession agreement, one party (the concessionaire) grants one or more franchises the right to use their own brand or trade name, as well as the use of their business systems and processes (which may also include intellectual property). These rights are used by franchisees to provide goods or services to the agreed specifications controlled by the concessionaire. In return, concessionaires pay royalties and often pay fees and contribute to marketing costs.

The concessionaire will be able to rapidly expand its business with a minimum of capital expenditure. Based on the initial success of the concessionaire, the concessionaires obtain instant recognition of the brand and establish commercial operations and products.

Franchise agreements tend to be more complex than licensing agreements, in part because the concessionaire must ensure that franchisees consistently provide high-quality products and services so as not to discredit the brand. Thus, many countries have specific regulations for excellence.

Mergers and Acquisitions (Mergers and Acquisitions)

"M & As" is a pair of legal transactions at the company level that are similar to each other in the way they produce a commercial entity that is desirable to serve as a marketing vehicle.
The merger is a legal merger of two commercial entities into one. Acquisition occurs when an entity acquires another property. Both transactions result in the consolidation of assets and liabilities in a single entity, and the distinction between mergers and acquisitions can be commercial.

For example, if you are an inventor, you can retain ownership of intellectual property as an asset in a small, non-functioning company that you own and use only for prototype and illustrative purposes. After that, look for your company or be merged by a larger organization or with a larger organization with the money needed to market the intellectual property.

Acquisitions (instead of mergers) occur when your company is much smaller than the other or when the transaction is imposed on your company.

Joint Venture (JV)

A JV is a legal agreement similar to merging into the desired result of providing an appropriate marketing vehicle. However, unlike the merger, the JV does not change the ownership of the participating entities.
A JV is an agreement between two or more entities to cooperate in a specific project with a limited period of time, such as the commercialization of intellectual property that can be shared or not shared. The joint venture is separate from other business interests of the participants. The participants can have an individual work structure.

If you are involved in a joint venture, you are generally responsible for your own costs, which are incurred individually. (By contrast, a legal partnership is a commercial structure that generally requires partners in Australia to be jointly responsible for costs and costs, and informal participants are often called partners, using the common illegal meaning).

The common use of JV is to partner with a local company to enter an external market and benefit from an existing distribution network. Some countries impose restrictions on the entry of foreigners into their markets, which mean that the JV with a local entity is the only means of access.

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