Use intellectual property to grow your business

If you own intellectual property (IP) but lack the resources or expertise to bring it to market, you can license it to another business.

A licence allows another business to use your IP to manufacture, distribute or sell products or services. In return, they pay you royalties. These may be a percentage of the income they generate from your IP, or a fixed or variable fee.

You can license different types of intellectual property, including:

• patents
• designs
• trade marks
• copyright

Types of intellectual property licences

There are several different types of IP licences that you can grant:

Non-exclusive licences

You can grant these to as many people and businesses as you like. This can increase your market reach but may be harder to manage. You may also earn lower royalties.

Exclusive licence

This gives one licensee full rights to use your IP. It often results in higher royalties, but you give up control over how your IP is used.

Sole licence

This allows one licensee to use your IP, but you keep the right to use it yourself. It offers more flexibility than an exclusive licence, but returns may be lower.

Choosing the right licensee

Choose licensees carefully to maximise the value of your IP. Look for businesses that:

• have the skills and resources to develop your product
• have strong distribution networks
• have a good reputation and track record

This helps protect your brand and ensures your IP is used effectively.

Agreeing IP licensing terms

Before licensing your IP, agree clear terms with the licensee. These should include:

• how fees and royalties are calculated and paid
• what the licensee is allowed to do (eg manufacture or distribute)
• if sub-contracting is allowed
• the territories covered by the agreement
• how long does the licence last
• how the agreement can be ended
• responsibilities, indemnities and insurance requirements

GOV.UK provides further information on licensing intellectual property.

Legal considerations

Some IP transactions may be subject to regulation. For example, under the UK National Security and Investment Act 2021, certain deals involving IP in sensitive sectors may need government approval. Check if you need to tell the government about your acquisition.