Streamline Your Licensing Process
Licensing professionals understand just how challenging the licensing process can be. Because it can be so challenging I put together nine questions that are important to answer at each phase of the process before moving forward to the next step.
- Can the idea in question make money?
The overwhelming majority of patents never come to market. Most experts put the number at about two to three percent. At the idea stage it can be challenging to do the proper due diligence to determine whether an idea is commercially viable. Your best bet is to understand the technology landscape to determine where investments are currently being made before the investment is made.
This is exactly the kind of task Innography has optimized. Simple searches can produce IP business landscapes to help you understand who is investing in what technologies.
- What IP do I have, how valuable is it and are there any portfolio gaps?
You must understand what you own before you can license it; unfortunately, you might not know it as well as you need to. Understanding your IP is more than a matter of just keeping it in a list.
Characteristics such as scoring by patent strength, number of times it is cited, and the number of times it has been litigated are just some of the metrics to help prioritize potential value to others. Innography can automatically rate patents by strength and it uses proprietary citation mining to find related opportunities. The software also provides a complete litigation history on every patent.
These are all things you could and should do, but many licensing professionals don’t because they don’t have the time or resources if they don’t have a tool like Innography. It is not a question of time savings, but the insights you get from using that time wisely.
- Do I really know my licensing prospects?
Many licensing professionals think they know their licensing targets, but like their portfolio don’t have a complete understanding of their business. You need to ask questions like what technologies do they have that I might not know about? How litigious are they? How well-positioned are they compared to their competition?
Without answers to questions such as these, you aren’t prepared to develop a successful licensing strategy.
- Do I know about all the potential licensing prospects, and which are the most highly qualified?
Many licensing professionals plan their strategy around the best known companies, because they assume these are the most relevant targets. The problem is that doing so unnecessarily limits your target set.
There are typically hundreds of companies that are potential licensing targets most people either don’t know about or don’t realize that they are targets for a particular technology. Tools like Innography can produce IP landscapes that can reveal previously unknown targets, broadening your pool of candidates and increasing your pipeline for additional revenue.
- Do I have a defined licensing process?
Licensing professionals need to be focused on successfully finding and closing acquisitions and licensing agreements. Re-inventing the process each time is an unnecessary distraction that will limit your success. Your licensing efforts will be more coherent and successful if you can define a single process that you always use every time you need to bring technology in or want to license it out.
- Does my licensing approach emulate the sales process?
Technology licensing is essentially a sales process. While it may not be glamorous to think of it this way, it can bring you greater efficiency in doing so. Sales processes have very structured processes and metrics to move leads into realized licenses. Using automated tools like Salesforce.com and conventional sales metrics can bring stronger revenue potential to your organization.
- Is the licensing practice managed by the correct organization?
Licensing is essentially selling and your practice should therefore be managed by the same organization that manages sales. Out licensing should be managed as a profit center, and in-licensing should be managed in the same way you manage M&A.
You can’t properly align financial objectives and employee objectives if your licensing professionals report into your legal department, as is the case with many companies. Patents are perceived many times, only as legal instruments, when in fact they should be perceived as assets that generate revenue and mitigate financial risk.
- Am I making smart build vs. buy decisions?
Sometimes it’s important to hold your cards close to the vest with regard to your business development strategy. But if you limit your development capability to in-house resources, you are also limiting your ability to accurately forecast market trends and prolonging your time to market.
You need to take advantage of open innovation networks. Although this will require you to reveal aspects of your strategy, it will also help you to guide its development in an intelligent way. In many cases you will also benefit from being able to in license technologies rather than to develop them, which is less expensive and enables you to get to market faster.
- Is my IP reasonably priced?
To have a successful licensing strategy you must understand the reality that the value of your IP might be very different to you than to your potential licensee. There are multiple definitions for value in an IP domain, but finding the motivation for a purchase will help define the market place. Often times a holder will overvalue the patent when there might be a better opportunity to just get the deal done. Understanding the context of value for a potential licensee will help align your respective interests.