Q15, Q16 & Q17: Licensing IP to Others
Updated: Feb 7, 2022
One of the ways intellectual property assets create value is in the ability to license the right to use the intellectual property to others. This can be for a fee or not. Either way, the owner’s stock of reputational or expertise capital grows simply by having a valuable asset that creates value and utility for others. The owner also generates revenue when there is a fee associated with licensing the asset.
The respondents were asked if the organization licenses any of its IP to other external users. Eighteen answered the question and one skipped it.
Nine (9): Do license organizational intellectual property to other users.
Nine (9): Do not license organizational intellectual property to other users.
The nine respondents indicating yes were then asked some follow-up questions to understand the nature of the licensing.
Of the nine that license their intellectual property:
Three (3): Always charges licensing fees to other users.
One (1): Never charges licensing fees to other users.
Five (5): Charge for licenses only sometimes.
The nine were also asked about what type of organizations they license to. They were asked to select all that applied.
The respondents shared:
Nine (9): All of the organizations that license to other users license to nonprofits.
Four (4): Will license to for-profits companies.
Six (6): Will license to government agencies.
One (1): Will license to all three types of organizations.
Reviewing how these replies overlap, there’s an interesting breakdown for the organizations that only sometimes charge a licensing fee. Three of the five “sometimes charging” organizations only license to for-profit and nonprofit organizations. One of the five “sometimes charging” will license to nonprofits and government agencies only. This suggests that nonprofit organizations potentially differentiate fees based on customer, the perception of the ability to pay, the particular asset being licensed, or some other strategic objective, such as aligned mission or purpose.
Diving Deeper into Nuance: Internal Controls Support Strategic Goals
In questions 13 and 14, nonprofits indicated who was responsible for day-to-day decision making about the use of intellectual property. All of the respondents knew who was responsible, but only 3 responding organizations said that this authority is captured in a written policy.
Of the nine organizations that license their IP to others, only 1 has a written policy for day-to-day decision making about the IP. Five developed some of their IP with funder resources and two share ownership rights with funders, and none of these seven organizations have a day-to-day authority policy.
In the short-term, perhaps this is working without any issue. However, over time, the risk becomes larger to the organization. Staff change or shift roles and perhaps control over decision-making weakens through knowledge loss and a valuable asset is less protected and managed over time. Licensing to others means making sure they use the IP in accordance with the terms of the license. An unmanaged asset can lose its reputational or expertise value if it’s no longer important enough to be actively managed because internally there was no documentation for responsibility.
Setting aside policy for policy’s sake, let’s think about how internal controls and processes are important to larger strategic objectives. The work of management is to create and adjust internal systems (operations, workflow and time management, budgets, etc.) to support specific strategic goals that enable the organization to get closer to achieving their mission (the ultimate strategic objective). There’s not need to create operational hurdles for the sake of them, but there is a need to consider HOW an organization is fulfilling its strategic goals and what is needed internally to ensure success over the long-term. That includes thinking about control and management, especially at the fiduciary level, of all of the organization’s assets. Not just it’s financial assets.
You can skip to the summary of all of the responses in the Social Entrepreneurs and Intellectual Property Management paper. Or, read through each of the blog posts tagged as Intellectual Property Data V1.0 for a more recent analysis of the data.