Licensing your intellectual property is one of the most effective ways to commercialise your ideas, expand your market reach, and generate revenue – all while retaining ownership.
This guide explains how to license intellectual property, the different licence types and how to structure terms, conditions, and fees to protect your rights.
What is licensing intellectual property?
Licensing intellectual property occurs when the owner (licensor) grants another party (the licensee) permission to use, manufacture or sell products or services incorporating that IP under agreed terms.
A licence agreement sets out the rights, obligations, and fees. It’s a way to monetise your intellectual property while maintaining ownership and control – an essential step in commercialising IP.
Types of intellectual property licences
The main types of licences are:
- Exclusive licence – gives one licensee the sole right to commercialise the IP. Even the licensor cannot use it during the term.
- Non-exclusive licence – allows the licensor to grant multiple licences to different licensees simultaneously.
- Sole licence – lets both the licensee and licensor use the IP, combining elements of exclusivity and flexibility.
Choosing the right structure depends on your commercial goals, industry, and risk tolerance.
Common limitations and conditions
Intellectual property licences can include restrictions that limit how, where, and when the IP may be used. Common examples include:
- Exploitation restrictions – limit the specific ways the IP can be used.
- Field restrictions – confine the licence to a particular industry or application.
- Territory restrictions – define the geographic area for use.
- Time restrictions – specify the duration or renewal terms.
Additional conditions may cover:
- Accounting and audit requirements;
- Sub-licensing permissions;
- Assignment or transfer rights;
- Performance obligations; and
- Confidential information.
Tailoring these restrictions helps protect your IP while maintaining flexibility for future licensing opportunities.
For tailored advice on preparing, negotiating, and executing licence agreements, see our IP Licensing page.
Licence fees and payment structures
Licensing intellectual property enables owners to design fee structures that reflect the value of their IP.
Common approaches include:
- Royalties on sales – based on a percentage of each sale.
- Royalties for process use – tied to use of a patent, method, or technology.
- Lump-sum fees – upfront or milestone payments that often recover development and commercialisation costs.
A well-structured licence ensures both profitability and compliance while rewarding innovation.
Why license your intellectual property?
Licensing allows you to monetise your intellectual property without relinquishing ownership. Key benefits include:
- Generating recurring income streams from existing assets;
- Expanding into new markets and territories;
- Sharing commercialisation risk with trusted licensees; and
- Strengthening your brand visibility and reputation.
When drafted strategically, an IP licence becomes a scalable, revenue-generating business tool.
For further information on how we can support you with brand protection, registration, and enforcement, visit our Intellectual Property page.
Frequently Asked Questions
What’s the difference between licensing and assigning IP?
Licensing grants another party permission to use your IP under certain conditions while you retain ownership. Assignment permanently transfers ownership to another party.
If you’re instead looking to sell or assign ownership of your intellectual property, visit our IP Transfer page.
Can I issue an exclusive licence for a limited time?
Yes – you can grant an exclusive licence for a fixed term so that rights revert to you once the licence expires.
Do IP licences need to be registered?
Licences for trademarks, patents, or designs can be recorded with IP Australia to strengthen enforceability and public notice.
Can I license intellectual property internationally?
Yes – provided your IP rights are registered in each target jurisdiction or protected under international frameworks such as the Madrid Protocol.
If you plan to license or use your brand overseas, check out our International Trademark Registration page for strategies to protect your mark globally.