Because IP monetization covers a wide range of business and legal activities, it is important to provide some examples.
Broadly, there are four categories of IP monetization:
1. The most straightforward is to get others — through negotiation or litigation — to pay (the IP owner) money for the right to practice or use your IP in exchange for cold, hard cash.
2. Release your untapped and/or unrecognized value. This can happen by creating incentives for your employees to develop new and better ideas; discovering new and valuable aspects of things you already do or have; using your IP as collateral for a loan, financing or other investment vehicle; and/or finding ways where your IP can be used as a proxy for valuation of your organization’s intangible assets — for example, in connection with an M&A or a spin-out.
3. The third type of monetization is closely related to the first. It includes a license to third parties for your IP, but it also includes situations in which you provide the third party, or the third party provides you, something else of value. Examples include:
a. broad-cross licenses that provide two parties patent peace;
b. technology transfers: you also provide access to your trade secrets and know-how — allowing the licensee to create, do, or process something they could not have done on their own; and
c. entering into business arrangements — like a supply or purchase agreement — along with an IP license.
4. The fourth type of monetization is more long term. It involves creating and enforcing well-thought-out IP policies and procedures, and expending the necessary resources to create a defensive — yet flexible — portfolio of IP assets. It is true that this will not typically yield a sizeable return quickly. So why is this IP monetization? Because IP validity — whether patents or trade secrets — is strongly dependent on getting there first, developing a quality portfolio early in a company’s career is the strongest indicator that the company will be able to successfully monetize their IP later using any of the prior three methods.
I hope this has been an enlightening and useful explanation of IP monetization.