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Buying/Selling Ideas: Things to Know About Intellectual Property Transactions

November 27, 2023
Dr. Afnizanfaizal Abdullah, General Manager of Technology Commercialisation
5 mins read

Intellectual property (IP) encompasses various types of assets such as patents, trademarks, copyrights, and trade secrets. Innovators and business owners can protect their work by acquiring an IP.  Besides legal security, acquiring an IP can be a source of financial gain, particularly in intellectual property transactions. Individuals and companies can licence or sell their IP rights to generate revenue. This is particularly important for artists, authors, and inventors looking to profit from their creations.

Businesses often collaborate with others, whether domestically or internationally, through intellectual property transactions. Joint ventures, licensing agreements, and technology transfers facilitate innovation and market expansion. By sharing or licensing IP, companies can access new markets and technologies. This is often through licensing agreements, which allow them to take their products or services into new territories, or franchises, which can provide a means for growth within the country or region.

In Malaysia, Grab's ride-sharing and food delivery operations merged with Uber in 2018. Grab, a Southeast Asian tech company, had developed a robust platform for ride-sharing and food delivery services, and Uber saw the value in this innovation. This strategic transaction allowed Grab to solidify its position in the region's transportation and food delivery sector, and showcased the significance of innovative ideas in shaping the competitive landscape of the ride-sharing industry in Malaysia and Southeast Asia.

Benefits of buying and selling ideas

Buying and selling ideas can be mutually beneficial. The breakdown below outlines the various benefits buyers and sellers can experience upon purchasing or selling an IP:

Benefits for Buyers

Access to Innovation and New Technologies: Enables buyers to tap into innovations that they might not have developed internally. 

Increased Competitiveness: Help buyers differentiate themselves in the market. They can implement unique features or solutions, which can set them apart from competitors.

Faster Time-to-Market: Helps businesses to significantly reduce the time it takes to bring new products or services to market. 

Benefits for Sellers

Monetisation of IP: Allows the seller to monetise their IP or innovations. This can generate revenue that can be reinvested.

Access to a Broader Market: Selling your idea offers a direct financial benefit and the opportunity for swift market entry, allowing you to monetize your innovation without shouldering the costs.

Focus on Core Competencies: Allows businesses to concentrate on their core competencies, freeing up resources and time for primary business activities.

Factors to consider before buying or selling ideas

When contemplating the purchase or sale of ideas, three crucial factors demand careful consideration.

1. Intellectual Property Protection: What IP Does the Idea Have?

  • Assess the Type of IP: Understand what types of IP are associated with the idea. This can include patents, trademarks, copyrights, trade secrets, or a combination of these.
  • Ownership and Rights: Determine who holds the IP rights and whether there are any existing agreements, licences, or restrictions in place.
  • Due Diligence: Conduct thorough due diligence to verify the validity and enforceability of the IP. Ensure it is not encumbered by prior legal issues or challenges.

2. Valuation of Ideas: Determining the Idea’s Worth

  • Market Potential: Evaluate the idea's market potential by conducting market research and assessing the demand for the concept. Consider the size of the target market and growth prospects.
  • Competitive Analysis: Analyse the competitive landscape to understand how the idea compares to existing or potential competitors. Assess the unique selling points.
  • Financial Projections: Develop financial models and projections to estimate the idea's potential revenue and profitability.
  • Expert Opinions: Seek input from industry experts or consultants who can provide an unbiased evaluation of the idea's value.

3. Legal and Contractual Considerations

  • Negotiating Fair Terms and Conditions: Ensure that the terms of the transaction are equitable for both parties. Negotiate aspects such as the purchase price, payment terms, and any ongoing royalties or profit-sharing agreements.
  • Non-Disclosure Agreements (NDAs): Implement NDAs to protect the confidentiality of the idea during negotiations and due diligence. Customise the NDA to suit your specific situation, consult legal counsel for review and refinement, and share it at the start of discussions. Be sure that all involved parties understand the NDA's importance, require their signatures, and maintain secure document storage. Regularly review and update the NDA, monitor compliance, and educate all parties to prevent accidental breaches and take legal action if necessary. 
  • Licensing Terms: If the transaction involves licensing IP, establish clear and comprehensive licensing terms, including usage rights, exclusivity, and territorial restrictions.
  • Legal Counsel: Engage legal professionals experienced in IP transactions to review contracts and ensure compliance with relevant laws and regulations.

How to Buy and Sell Ideas

Whether you’re looking to buy or sell your intellectual property, MRANTI’s MATCH platform provides an ecosystem for innovation and cooperation. For Tech Seekers, MATCH provides you with a platform to pinpoint fitting solutions and partners, whilst providing a safe space for Tech Providers to collaborate with said entrepreneurs and thinkers. Within this digital marketplace, MATCH cultivates connections, expedites tech-focused partnerships, and equips individuals and entities to maintain a leading edge in the local and global marketplace.

If you’re looking to create something groundbreaking,  but have not had the opportunity to meet the decision-makers in the industry, hop on to our MATCH platform to start today!