Selling intellectual property - good idea?

purplefields

I've been recently approached by someone looking to buy the IP for computer code that I've written. This code is central to my business.

I've done some research into this to see if it's a good idea, or what the consequences might be.

The person buying the IP says I can still use the code, but from what I'm reading they will be the new owners of it.

Would this be a problem if I were to ever sell my business? - Is there anything else I should be concerned about?

Any insight would be much appreciated.

helimachoptor

purplefields wrote: »

I've been recently approached by someone looking to buy the IP for computer code that I've written. This code is central to my business.

I've done some research into this to see if it's a good idea, or what the consequences might be.

The person buying the IP says I can still use the code, but from what I'm reading they will be the new owners of it.

Would this be a problem if I were to ever sell my business? - Is there anything else I should be concerned about?

Any insight would be much appreciated.

they could license it to you for a crazy amount or nominal amount.
But if they buy the IP and allow you to use it you become their competitor.

I would assume if they did let you use it, that would lapse if you sold your company so the value of the company would lessen.

purplefields

I had not considered that them them letting my company use the code could lapse if I were to sell the company to what would be their competition.

This would effectively make my company worthless, as this software is central to my business.

antoinolachtnai

This is what you need to consider.

Maybe they would licence the software from you?

Maybe they will buy the whole business from you?

Maybe you can sell to them then develop new software (this would depend on the wording of the agreement).

All this said, the problem is that these people could turn out to be messers. i.e., they say they are interested in paying you for your asset, but in reality they just use their interest as an excuse to poke around at your development to see how it works under the umbrella of 'due diligence'.

What you need to do is license the software to them. Thats why you created the IP, not so someone could license it back to you!! They are taking the piss out of you...

purplefields

Thanks everyone who responded. Much appreciated.
I've given it some more thought and I've decided against proceeding.

antoinolachtnai wrote: »

they say they are interested in paying you for your asset, but in reality they just use their interest as an excuse to poke around at your development to see how it works under the umbrella of 'due diligence'.

This is certainly a possibility I had not considered.

PickYourName

purplefields wrote: »

I've been recently approached by someone looking to buy the IP for computer code that I've written. This code is central to my business.

If that's the case, offer to sell them the business (if that's what you want, obviously)

purplefields wrote: »

I've done some research into this to see if it's a good idea, or what the consequences might be.

This may sound obvious, but if you sell something, you no longer own it and you have no rights to it.

purplefields wrote: »

The person buying the IP says I can still use the code, but from what I'm reading they will be the new owners of it.

If they say you can still use it, you'd need to see that promise in a legally binding license agreement. This will set out the terms of what you can and can't do with it.

purplefields wrote: »

Would this be a problem if I were to ever sell my business? - Is there anything else I should be concerned about?

Short answer: yes. You no longer own what you have indicated is the primary asset of the company. All you have are the rights set out in the licensing agreement you have with the person you sold it to. Meanwhile, as they own it, they can do what they like, unless they're constrained by the same license agreement. For example, they could start selling at a knock-down price to drive you out of business. Even if you trust them not to, nobody is going to buy your company with that possibility present.

purplefields wrote: »

Any insight would be much appreciated.

One final thought: why not offer to license it to them? It gets you revenue, but you'd need to be careful with the terms of the license agreement.

ironclaw

I'd be pretty wary of anyone that came out of the woodwork to offer to buy my software (I'm also a developer). Are they an existing and trusted client? Do they have a reasonable brand and legal presence?

Stolen IP is very common and as the cost to develop get lower, the need to buy or license is somewhat diminished for any company with even moderate development knowledge. In other words, the gap between buy or build is, for the most part, pretty narrow (Depending on the sector, revenues etc)

As others have said, I'd definitely license it at a recurring cost on a non-compete basis. I certainly wouldn't sell it outright unless the amount offered was too high to pass up.