How To Sell Trade Secrets Through Licensing Deals To Companies

Intellectual property is one of the most important forms of capital in business. Often times, people think of patents, trademarks and copyrights to protect intellectual property. However, these types all required some form of registration or filing. On the other hand, trade secrets are ways, methods or strategies used by an enterprise to gain a competitive advantage. Many online business models run on trade secrets. As a business owner, you might be able increase your sales by licensing out your processes to other companies. Here is a guide on how to sell your trade secrets successfully.

Define Your Trade Secret

Before selling a trade secret, it should be something worthwhile. A trade secret includes a formula, technique or pattern used in business. Since it gives a business an advantage over its competitors, the trade secret you choose to sell should be something the competitors do no know how to do. Make sure you pick something that is valuable to other companies. Of course, they should not know how to execute the process already themselves. Once you have a clear idea of the right process, you can choose that process for a trade secret license deal.

Find Potential Companies To Sell

In order to get a licensing deal, a list of potential buyers is required. In order to create a list, think about the companies that could potentially buy your company outright. These might be your competitors in distant regions, major corporations or well funded start ups. Of course, companies in the same industry like Salesforce compeitors are most likely to be able to leverage a trade secret licensing partnership. This way, your potential licensing buyer list has the capital required to pay royalties now and in the future.

Prepare A Trade Secrets License

Next, it is time to prepare a draft trade secret licensing agreement. Remember, trade secrets are not registered. Cautiously, you must be able to describe the trade secret without disclosing the entire process. A common example is the Coca-Cola recipe. You know what the secret contains. But, you don’t know what it is. If you disclose the trade secret without a non-disclosure or license agreement in place, it may be difficult to protect your trade secret. The license agreement usually includes the right for the licensee to receive the trade secret itself, offering protection to the IP property.

Negotiate Licensing Terms

With a prepared agreement, it’s time to sell your trade secret to companies. When pitching them on the sale, be flexible in your negotiations. Some companies might request a hybrid license that works with an associated patent. Others might want exclusive rights to the trade secrets along with future improvements. Depending on your licensing sale goals, you can structure royalties or payments in the short term as well as the long term. Certainly, the negotiation process is a key part to finding the right trade secrets licensing partners.

Maintain Trade Secret Confidentiality

Finally, when closing a trade secrets license deal, make confidentiality a top priority. If possible, include clauses in the agreement to maintain confidentiality after the transferring of rights. This will require the licensee to adhere to strict confidentiality practices, labeling associated items and data storage solutions as confidential. And, they must take reasonable steps to protect the commercial or financial information from other third parties. Based on the nature of the trade secret, the long term confidentiality could hold significant value for all parties.

These steps will allow you to sell company trade secrets to other business. Be sure to choose a process that is valuable to other enterprises. Then, create a licensing agreement that protects a trade secret. Finally, present and sell trade secrets with confidentiality. If done diligently, you could significantly increase the sales of your business with licensing deals on processes you already know how to do.

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