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6 Things to Consider About Intellectual Property Licensing for NZ startups 

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Intellectual property (IP) is a valuable asset for startups. A startup’s IP represents its core branding and innovations that differentiate them from everyone in the market. Your startup likely has several forms of intellectual property, including trade marks and patents. Further, IP opens up the potential for IP licensing, which can be a strategic move for businesses. IP licenses provide opportunities to monetise a startup’s IP and expand their market reach. This article will take you through six key things to consider about IP licensing for New Zealand startups.

1. Leverage IP for Business Growth 

IP licensing can be a powerful tool for startups to expand their market reach and generate additional revenue. Notably, your startup does not sacrifice its intellectual property rights with this arrangement. Licensing certain IP assets provides your startup with an avenue to enter into mutually beneficial relationships with others. However, this requires startups to continuously evaluate their IP portfolio and search for new licensing opportunities.

2. Assess Licensing Opportunities

Startups should first have a clear understanding of their IP portfolio. An IP portfolio will include a startup’s:

  • patents;
  • trade marks;
  • copyrights; and
  • trade secrets.

Startups can explore licensing opportunities after they have conducted an audit to identify and value their IP assets. Licensing may take a variety of forms, such as:

  • technology licensing;
  • brand licensing; 
  • content licensing; and 
  • software licensing. 

Startups must then look at potential licensees. The licensees available will ultimately depend on the industry landscape at the time. 

Your startup should develop a set of criteria for the type of licensees you want to work with. This may require you setting minimum requirements for:

  • industry experience;
  • financial and legal position; and
  • demonstrated history in IP licensing.
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3. Negotiate Licensing Agreements 

Preparing and negotiating favourable licensing agreements requires careful consideration of the terms and conditions. startups must define the scope of the license, which covers the:

  • geographical boundaries; 
  • duration of the agreement;
  • exclusivity (i.e., whether the license will be granted to any other licensees); and 
  • permissible uses of the licensed IP. 

Further, pricing structures should be carefully negotiated to ensure fair pay for using the IP. This fair pay must be carefully balanced with remaining competitive in the market. 

4. Protecting IP Rights

Licensing IP naturally means startups will be sharing their proprietary assets with third parties. This comes with risks to their IP rights if they are not adequately protected. However, startups can take various measures to help minimise this risk. This includes implementing confidentiality measures to protect private information shared during negotiations. 

Further, startups should ensure that their licensing agreements provide clauses for monitoring and enforcing IP rights. This might include audit rights to monitor the licensee’s use of the IP or termination clauses. 

5. Risk Management

Licensing your startup’s IP comes with risks and liabilities that they must manage. This means that all startups should conduct thorough due diligence on potential licensees. As touched on above, a startup will want to assess the legal and financial position of potential licensees, as well as their market reputation.

Obtaining references can help startups mitigate the risk of entering into agreements with unreliable business partners. startups should also assess the potential impact of licensing on their competitive position and brand reputation. The opportunity must outweigh the risks. 

6. Monitor Usage

Startups must monitor licensee compliance. This helps ensure that the terms of the agreement are being adhered to after the licensing agreements are in place. The best way to do this is by conducting regular audits and providing performance reviews. startups can use these audits as an opportunity to track royalty payments and determine how successful the arrangement is. 

Startups must also remain informed about changes to the relevant laws, regulations and general landscape of licensing agreements. This is because changes to market trends or developments in technology may impact the licensing arrangement. Maintaining clear lines of communication will help your startup to maximise the value of your licensing agreements. 

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Key Takeaways 

IP licensing can be a strategic move for businesses. This is because IP licenses provide startups with opportunities to monetise their IP and expand their market reach. It is strongly recommended that startups work with an experienced legal professional to navigate licensing relationships.

If you need help understanding how your startup can enter into IP licensing agreements, contact our experienced startup lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.  

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Emily Young

Emily Young

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