Patents, trademarks, and copyrights are all forms of intellectual property and just like any other property, intellectual property can be bought, sold, inherited, or otherwise transferred.
Inventors, authors, and artists may prefer to focus on creation and leave the work of licensing and monitoring to someone else. Selling intellectual property can be a great way to generate income, but it's also important to consider the consequences of choosing a one-time sale profit over the ongoing profit potential of licensing.
Considering selling your intellectual property? Here's what you need to know about selling the rights to that patent, trademark, or copyright.
Selling a Patent
A patent indicates that the inventor (or patent owner) now has the right to make, use, import, sell, and offer for sale the invention for up to 20 years (the length of time that the patent is valid). Inventors should be aware that the patent itself won't generate an income for the inventor, but licensing or selling the patent rights to another person or company will. Of course, whether it's a new product or a new technology, there's no guarantee that an inventor will get rich off of the invention.
Selling a patent outright can generate a lump sum of money for an inventor, but the downside is that by selling the patent, the rights to any future income are transferred to the new owner of the patent. Inventors must also consider the timing and the type of product. Say the patent is for a new technology, but it hasn't caught on yet. By selling the patent later, once the technology gets established and is at least moderately successful, the inventor can sell the patent for more money than when it was first issued.
Many inventors opt to take the licensing route because in the long run it can be more profitable. Again though, success is not guaranteed because an inventor never knows which product or technology is going to become profitable. In the case of licensing, most inventors grant an exclusive license to a single company to manufacture the product or use the technology. The inventor retains the patent rights and receives royalty checks.
Selling a Trademark
Trademarks, as defined by the USPTO, protect words, names, symbols, sounds, or colors that distinguish goods and services. A trademark can be renewed in perpetuity as long as it is associated with the same goods and services. Unlike patents, trademarks are associated with a product or a business and are not sold outright. Trademark ownership can be transferred along with ownership of the business or product the trademark represents. For example, if you sell your business, you may sell the trademark rights to the logo along with it.
Trademarks may be licensed, but the owner of the trademark is responsible for ensuring that the goods or services carrying the mark meet the standards expected of the mark. If the licensor doesn't monitor the quality of the items carrying the mark, the trademark may be deemed abandoned, and therefore unenforceable.
Selling a Copyright
Copyright protects the rights of authorship of literary, artistic, and musical works that have been tangibly expressed (i.e., written). A US copyright may be sold or transferred as long as the transfer is in writing and signed by the party relinquishing ownership. However, a copyright is rarely sold outright; more often it is transferred as part of a business agreement.
Musicians may assign copyright ownership to a record company in exchange for production and marketing as part of a recording contract. In "work for hire" situations, where someone is paid to produce a specific work, the hiring body (rather than the creator) usually owns the copyright of the produced work. Depending on the agreement, the author may or may not retain authorship, but gives up rights to reprint or reproduce the work, eliminating profit beyond the initial fee paid to produce the work.
Selling a work or a copy of the work usually doesn't transfer copyright. An author or artist retains copyright to a book or painting even if the item itself is sold. The purchaser may sell the specific copy he or she owns, but the author or artist retains the right to reproduce, replicate, and license the work for other uses.
In order to get exposure for their works without giving up ownership rights, authors, photographers, and artists sometimes use what is called a Creative Commons License that allows others to use the works without a fee as long as certain conditions are met.