How to license out one of your products

It can enable such firms to focus on their newer lines or best-sellers, while other companies make and sell some of their older or secondary products.

Here, intellectual property expert Julian Nolan lays out some of the factors you have to bear in mind.

Ask Julian Nolan a question

QUESTION
Paul Elliott, UK


" My company makes a number of formerly high volume products, which are now selling only in low numbers. Can we license them out? "

ANSWER
Julian Nolan, intellectual property expert


" As products evolve and reach the mature part of their lifecycle, they can become increasingly disruptive to manufacture.

Reduced volumes and obsolete components are just two of the factors that may soak up resources for products whose strategic importance is fading.

Simply discontinuing these products, however, can be problematic.

There may be dependencies with other products, unmet customer demand and an associated reduction in revenue.

Licensing out the intellectual property associated with your product can provide continuity of supply for your customers, while generating a licence-based income for your business.

One of the first questions to consider is, who could be the licensee?

This means finding a company that you want to work with, which will find the licence of value.

Potential licensees may include companies with products in adjacent markets, existing customers for the product or even one of your competitors.

As well as identifying a licensee, it is also necessary to think about the scope and nature of the agreement and its implications.

Things to consider include:

By proceeding carefully and taking professional advice where necessary, licensing can be a useful tool to divest mature products lines and generate royalty income. "

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