Take a look around your company. It’s likely there are a few trade secrets that are partly responsible for your business success.

Perhaps it’s some proprietary manufacturing process. Or maybe an in-house business tool. Whatever form it takes, that intangible asset may be worth more to your business than you think.

Licensing intellectual property has become a significant source of added revenue for many businesses. The key is to understand what you have and then determine the best ways to leverage those assets successfully.

Evaluating your assets

Our economy continues to put a premium on good ideas, and licensing your company’s own good ideas to others can certainly pay off. Before adopting a licensing strategy, however, there are several matters to consider.

The first is protection. Intellectual property takes many forms and can include product innovations, brands, technology, processes, know-how, and best practices. All can be protected by trademarks, copyrights, utility patents, or design patents. Companies should consult with an intellectual property attorney to determine what must be done to ensure protection.
  
Next, what value do the assets offer to the marketplace, if any? Do the benefits of sharing these assets outweigh the risks? Any intellectual property strategy must support the overall business strategy. Organizations must weigh the advantages of keeping their trade secrets against the benefits of selling them. They must decide which assets to save and protect, and which ones they can license profitably.

If licensing is ultimately the best decision, then it’s time to move on to such matters as how much a license is worth, how to calculate royalties, and whether to participate in exclusivity agreements.

Opportunities and costs

A company that licenses its assets forfeits potential business it could have pursued on its own, at least in theory. For this reason, selling assets that fall outside a company’s core business is easier to justify than selling core technologies or innovations.

Before licensing intellectual property, a company should develop a clear strategy about the opportunities it does and does not intent to pursue. For instance, licensing in a geographic region where an organization has no plans to compete can be a sensible move.

Companies that license their intellectual property are obliged to monitor and manage agreements, which can include annual audits to ensure compliance and quality assurance. In some cases, organizations will need to sign off on product samples, advertising efforts, and the like, in order to minimize potential liability.

New ideas for sale

To complement their licensing revenues, some companies have begun encouraging employees to develop new practices, services, or technologies for the sole purpose of licensing.

While this approach may not be a viable strategy for every company, it does raise an interesting perspective regarding the value of problem-solving. Knowing that any new idea can be valuable -- even those that fall outside the core business -- can act as a catalyst for creativity and innovation.