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When selling your business, depending on the nature of the sale, you can sell your business’ assets to interested buyers. As a part of this process, you will reference your business plan and evaluate your assets to determine their worth and asking price. Some of these assets will include your intellectual property, the ideas and works that your business needs to function. Depending on the nature of your intellectual property assets, you can find buyers interested in proven branding to show your business’ success. However, there are a few things you need to note when transferring your IP during a business sale. Therefore, this article will provide five tips for this process.

1. Know What Your Business’ IP Is

While this seems like a simple concept, it may be challenging to identify what IP you do and do not own if your business deals with varied and broad IP assets. Therefore, it is important that you determine what IP your business owns and has created. Some potential examples of your business’ IP include:

  • business name;
  • business logo;
  • processes unique to your business;
  • product designs and packaging;
  • invention specifications;
  • software; or
  • trade secrets, such as your marketing strategies.

Depending on the industry you trade in, the IP you own can vary greatly. If you have not registered important IP that you intend to sell, this may complicate the sale process.

For example, you can reassure buyers of your trade mark’s value if you can provide documentation of its registration and legal protection.

The kind of IP rights you register for will depend on the nature of your IP, and some IP rights (such as copyright) are automatic. Therefore, you need to sufficiently identify what IP your business owns to determine its worth and avoid future complications in the sale.

2. Determine How You Will Transfer Your IP

You can sell your IP as a part of your overall business sale, but you need to ensure you do so in the way that suits your situation. Depending on the nature of your IP assets, there are two potential ways you can do this, through:

  • assignment; or
  • licensing.

When you assign your IP rights to another person, you transfer ownership and the benefits of those rights to that person. Licencing operates differently, where you still own the IP, but you allow other people to use it or trade under it in return for a royalty or fee. Which process you choose will depend on your intentions and unique situation, and both have specific requirements to function legally.

For example, if you are selling your smaller business to restructure as part of a larger corporate structure, you may licence your IP rights to still retain ownership.

3. Take Care With Your Existing Licence Arrangements

When you sell your IP assets as part of a business, if you have existing licensees, you should notify them of this change where necessary. Some licence agreements have restrictions around:

  • who can use them;
  • how many licence users there can be at a time; and
  • what you can do as the licence owner.

Therefore, depending on your structuring around IP usage, you need to update any licence agreements or conditions as necessary as well. Notably, if you are transferring the licence ownership to a new owner, you may need the consent of various parties or contract changes.

4. Address Your Moral Rights When You Transfer

Moral rights are a part of copyright, which is an inherent IP right that protects original works, such as music or your business’ written content. Moral rights grant certain things for the creator of these works, such as the right:

  • for people to recognise them as the creator;
  • to not be falsely attributed as the author of a work; and
  • to object to derogatory treatment of your work that can harm your reputation.

These rights exist regardless of who owns the copyrighted work, and you will have legal options available to you if you wish to enforce them. However, some contracts may require that you waive these rights, which means that you agree not to enforce them against that party. If you want to avoid or negotiate these clauses, ensure that an experienced IP lawyer looks over contracts relating to your IP rights in a business sale.

5. Determine any Employee IP

When employees create IP for their job while working for you, in many cases, your business would be the owner of that IP. However, before you transfer your IP during a business sale, you should sort out any employee-created IP that may cause confusion around IP ownership. Especially if you have any ongoing disputes related to this area, buyers may not want to purchase a business with such problems.

Key Takeaways

Your business’ IP assets are a valuable tool in a business sale, as they can be a source of great worth for buyers. Leading from this, you can get a higher price for IP that brings value to the business’ brand. If you would like more information or help with transferring your IP during a business sale, contact LegalVision’s IP lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is intellectual property?

Intellectual property can refer to various ideas or works at your business that bring value to your brand. IP rights can include trade marks, designs, patents, or copyright.

Can you transfer intellectual property?

You can transfer intellectual property, but how you do so will depend on how much control or ownership you want to retain. Assignment transfers IP ownership and its benefits to another person, while a licence allows another person to use your IP while usually paying you a fee.

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