Making Licensing Tangible – What Makes Technology Licensable?
Not every technology can, or should, be licensed. But when licensing is on the table, one key question always comes up: Is this technology actually licensable?
In this article I go through what traits can make technology licensable in the first place. It’s not just about how good your invention is. It’s about how complete, protected, usable, and relevant it is—for someone else.
1. Readiness, Usability and Value
Licensable technology typically needs to meet three criteria:
Technology readiness: It must be ready to use, further develop, or build upon. What “ready” means depends on the industry and application. Sometimes a working prototype is enough for licensing; other times, it must be near plug-and-play.
Usability: Technology should exist in a format that others can make use of. Ideas on a whiteboard aren’t licensable. Usable formats include specifications, testing methods, software, configuration files, prototypes, manuals, databases and even training materials. Usable format can also be a patent, which includes description of a solution to technical problem.
Value to the licensee: The technology must enable better, cheaper, faster, or more competitive solutions for the licensee. If it doesn’t solve a real problem or create a measurable advantage, it won’t be worth paying for.
Even when all the technical criteria are met, licensees still need a reason to adopt. Strong technologies become licensable, for example, when they help shorten time-to-market, reduce internal development risks, enable premium pricing, or unlock new use cases. This kind of value proposition makes your technology often stronger than specifications alone.
2. IP Protection: The Foundation of Licensing
Without IP protection, licensing has little legal backbone. Why pay if the same thing can be copied, developed or used for free?
Different IP rights protect different things:
Patents protect inventions: technical solutions to technical problems.
Copyright protects original creative expressions, like code or documentation.
Trade secrets protect confidential know-how or business-critical information.
These forms of protection work best together, especially in technology licensing. A patent tells the world what the core idea is, but it also makes it public. A trade secret keeps the specifics confidential but offers no protection if someone else independently develops the same solution.
That’s why licensing of technology works best when supported by a patent portfolio, with trade secrets and other technology assets licensed alongside. Even trademarks and branding elements may be part of the package if they create commercial value.
Bundling matters. A strong licensing package might include a mix of patents, software libraries, data sets, configuration parameters, testing tools, trade secrets, and know-how. The more complete and usable the bundle, the easier it is for the licensee to adopt, and the more tangible the value becomes.
Also: having a patent makes licensing your non-core technology easier. It provides a concrete, legal right that a licensee can evaluate. In contrast, trying to license unprotected software, tools, or internal know-how, especially if it’s no longer in use, can be a much harder sell.
3. Documentation and Transferability
Even well-protected and mature technology can fail in licensing if it’s poorly documented. Licensing requires clear instructions, usability materials, and sometimes even training. Without these, transferring the technology is difficult and the risk for the licensee becomes too high.
It’s not just about how the technology works. It’s also about how the rights and obligations like confidentiality, use limitations, support expectations are structured. These should be thoroughly considered early in the process.
One essential element is ensuring the technology is free of third-party dependencies or rights issues. If the solution contains open-source code, licensed data, or background technology components from others, the licensor must have the right to sublicense, or the licensee may walk away. Freedom-to-operate isn’t just a problem for product developers; it’s just as relevant to licensors.
4. Technical Strength ≠ Market Fit
A technology can be brilliant and still not licensable.
Markets evolve. Competing technologies emerge. Sometimes a technically stronger solution loses out to one with better branding, more partners, or wider ecosystem support. In some industries, one winner dominates. In others, multiple solutions can coexist.
Licensing only works if there’s a market need and if your technology is a good fit for it.
5. Why Licensing Fails
Even if the technology to be licensed would be the most advanced and technically brilliant solution, patented and all that, it might not ever become a licensing success. Licensing is a complex business, and there are many non-technical factors that have a high impact on the outcome. The most common reasons a licensable technology never gets licensed:
No market need, or the technology doesn't fit the need.
Poor execution, particularly in go-to-market and licensing process.
Lack of financing or patience, especially in early-stage ventures.
Confusing business model, for instance, offering licensing when the market expects to buy components or services.
Markets often need time to adapt to a licensing model. Changing how customers think takes long-term effort. Licensing is typically a business with a long sale cycle, and time-to-money may be longer than expected. It is a business for patient people.
6. What to Do with Non-Core Technology
Non-core technologies that are not in active use in the current business or company may hide unused business value. However, not all unused technology should be licensed. The key is to understand whether there’s a market for it.
Are similar technologies being used in the field?
Are potential licensees using your patent or approach?
If it’s not in use, why not? Is it due to lack of awareness, lack of need, or maybe lack of internal development by others?
Technology and market landscaping help answer these questions. Without clear market interest, even good technology may not justify a licensing push.
Sometimes licensing is not just about maximizing value, it’s about saving it. For technologies that no longer align with a company’s strategy, licensing can become a bridge to exit, signaling value and creating revenue ahead of a divestment or wind-down. Even a modest licensing deal can improve the asset value of an IP portfolio before a sale of the portfolio or a business line. Finding licensees or buyers for portfolios you don’t need is not an easy task. How to create value with your non-core portfolios is a topic I will be returning in a separate article.
7. Business Model Matters, but Doesn’t Dictate
If your company already licenses technology, it’s easier to assess new opportunities.
If not, the business model doesn’t automatically rule licensing out, but it should be examined. For instance, if your current product includes IP you want to license separately, you’ll need to manage overlaps. If licensing would require enforcing patents against existing customers, that could backfire.
Compatibility with your core business must be considered before you go to market.
8. Build with Licensing in Mind, Even If It’s a Backup
For product- and service-based companies, licensing may never become the primary model. But it should still be a strategic option.
Smart IP teams build portfolios that protect current offerings and support licensing in case the business context changes. If no such foresight exists, the portfolio might lack the value structure required for licensing, even if the business one day needs it.
Design Your Business with Future in Mind
A licensable technology isn’t just technically sound. It’s ready, usable, valuable, documented and protected.
Whether licensing is your core business or a future option, designing your technology and IP strategy with licensing in mind is what makes it tangible and ultimately, viable.
