Make Money With Your Intellectual Property – Small Business Lawyer Toronto
According to Statistics Canada Surveys on Financing and Growth of Small and Medium Enterprises, Businesses that manage their intellectual Property are: four times more likely to export, sixty four percent more likely to be high growth and thirty two percent more likely to seek financing.
Intellectual property (“IP“) is when expressions of intellectual or creative pursuits are treated in legal and social spheres as property, with all its resulting implications (e.g., ownership, use, economic transactions, etc.), see here. Some examples of intellectual property are:
- inventions, such as products and processes
- the original visual features of a product
- literary, artistic, dramatic and musical creations
- expressed words, sounds or designs used to distinguish your goods or services
- names and images used in commerce
How does a business profit from these intellectual property assets? A business can:
- Profit from selling or licensing their IP assets
- Protect their trade secrets from being disclosed
- Stop others from making, using, and selling their invention
- Protect and build their brand
- Increase the value of their business in the eyes of potential buyers and investors when their IP is managed; as well as incentivize investors to fund businesses with owned IP.
There are several types of intellectual property rights, let’s go through the definitions first:
Canadian patents give inventors exclusive rights to their inventions for up to 20 years. A patent applies to any new and useful invention or any new and useful improvement to an existing invention. Patents provide a time-limited, legally protected, exclusive right to prevent others from making, using and selling your invention in Canada. Having a patent therefore allows you to take action against other people who use, make or sell your invention without permission.
Industrial design refers to the original visual features of a product, such as shape, configuration, pattern and/or ornament. Registering your industrial design provides a time-limited, legally protected, exclusive right to prevent others from making or selling articles that copy your registered design in Canada. A novel design is considered to be valuable IP. Unless you register your design, you can’t make a legal claim of ownership. By registering your design, you gain the legal right to prevent others from making, importing, renting or selling an article that uses your design for up to 15 years.
A registered trademark is a way of protecting your corporate or brand identity. Everything that sets your business apart—its name, product and service names, slogans, logos, taglines, modes of packaging, moving images, holograms, colours, scents, tastes, textures and even sounds—produces a brand image that your customers come to know.
By registering your trademark, you gain the exclusive right to use the mark across Canada for 10 years. Registration is renewable every 10 years after that.
Trademarks that are not registered still offer some protection but can be challenging to enforce. Registering your trademark will help you protect your brand from imitation and misuse.
Having a registered trademark can boost investor confidence, and become a revenue source through licensing or franchising. A company name could be more known than its product.
A trademark is a unique combination of letters, words, sounds or designs as well as other non-traditional signs such as scent, taste and texture, used to distinguish your company’s goods or services from others in the marketplace. Over time a trademark also comes to stand for your company’s reputation and goodwill.
Copyright applies to a wide range of original works such as literary, dramatic, musical or artistic works, performances and sound recordings. It provides a time-limited, exclusive right to produce, reproduce, perform or publish the work or any substantial part of it. An original work is automatically protected by copyright the moment you express it, however, registering your copyright provides greater certainty to enforce your copyright in Canada. The general term of copyright protection in Canada is life of the author plus 50 years.
A trade secret is a form of IP that derives its value from secrecy – it loses its value when revealed, independently created, or reverse-engineered. It can be described as a secret formula or process, has commercial value for your business, gives your business an advantage over competitors who do not know it, and may be known only to a few people in your business. Examples include recipes, formulas, patterns, programs, sales methods, client lists, and strategies.
Trade secrets cannot be registered in Canada, but can potentially last forever provided it remains a secret.
Once the secret is out, its value for your business is lost. Your business can actively protect its trade secrets by using confidentiality agreements (which we can draft for you at our firm to provide the utmost protection, book an appointment here), lock and key, encryption, etc.
Now that we have gotten the definitions out of the way, let’s talk about how YOU can make money with your intellectual property. Here are a few options:
Licensing your IP
Before licensing or profiting from your IP, make sure to register it or at least check whether it is already taken. Search the Canadian Trademarks Database to find out, click here. Licensing gives someone the right to use your patented invention or copyright material.
You can license your IP so that other businesses have the right to exploit it in a particular region where you agree not to compete. Alternatively, you can grant a sole or exclusive licence, which allows you to exploit your IP in the same region as the licensee, but you cannot grant further licenses to any other businesses in the market.
To help increase the royalties that you receive, it is recommended to add in the licensing agreement a minimum sales clause, in addition to termination clauses, which we would take care of when you draft your agreements with our law firm (book an appointment with us here).
Selling your IP
Sell your IP if you are a designer or design IPs as a business. If you are drawing up an IP agreement to license, franchise or sell, you must seek legal advice. Our law firm ensures that you are protected when we review and draft such agreements for you. Book an appointment with our law firm here.
Negotiate a royalty
You can also negotiate a royalty if a client uses your copyrighted material to generate sales. This is a legitimate fee for the continuing use of your intellectual property by a profit-making enterprise.
You can create passive income by subcontracting with other professionals to help create the intellectual property you sell. Be sure to have both parties sign off on an agreement that allows you to either license or purchase their work outright for inclusion in your content. For example, if you want to create an online course module but are terrible at design, outsource that function and create an agreement that gives you ownership of the design. Outsourcing some of these functions can vastly increase the total volume of work you can handle, and the income you make will be compensation for your administration and quality control efforts.
There are plenty of opportunities to grow your side hustle by way of intellectual property once you start thinking creatively. An excellent way to start is by joining an affiliate program related to your main area of expertise. These programs allow you to collect a commission for any sales that come through the affiliate links. By associating your own intellectual property with related affiliate programs, you not only bank extra cash but also get the halo effect of being linked to other companies. Always ensure that your contracts are drafted with us. We not only review them and explain the consequences that you would be facing through each clause, but also add clauses or negotiate those that will put you on the safe side. We have your back. Sell your IP if you are a designer or design IPs as a business. If you are drawing up an IP agreement to license, franchise or sell, you must seek legal advice. Our law firm ensures that you are protected when we review and draft such agreements for you. Book an appointment with our law firm here.