Design rights are among the most undervalued intellectual property (IP) assets for generating revenue. Unlike patents, they’re relatively quick and cost-effective to secure, yet they unlock multiple possibilities for income – from direct product sales to licensing deals. In many circumstances they are an excellent investment for a business, as outlined below.
If you need a primer on what design rights are, please see our articles on unregistered and registered design rights here: What are registered / unregistered design rights? – IP Basics – Wilson Gunn
In this article, we focus on registered design rights, which provide stronger protection and greater income potential than unregistered rights. UK and EU registered designs must be applied for and registered but once obtained provide protection for up to 25 years, which strengthens their value as long-term business assets.
Often the most profitable use of a registered design right is direct commercialisation: making and selling the product yourself.
As you own a registered design right covering your product, third parties are deterred from copying your product. This means that you should have less competition and will be more successful in selling the product.
As your business grows, the value of the design right itself also grows as it protects a larger income stream. This can enable further investment into your business as well as increasing the other sources of income from the design as mentioned below.
Of course, this approach requires an appropriate amount of initial capital, ongoing operational expense and strong market access, which can be difficult for certain businesses. As such, many businesses also explore alternative monetisation strategies as mentioned below.
If you discover that a third party is copying your product or producing a product that is very similar to it, enforcement becomes a strategic consideration.
Registered design rights provide the owner rights to prevent others from making, importing, selling, keeping or using products which incorporate the protected design.
Typically, enforcement of a registered design right might involve negotiation with the infringer, filing take down requests with online marketplaces, entering mediation or filing court infringement actions. The timing and selection of the different actions you can take is something that should be carefully considered to ensure that you stand the best chance of a positive result.
Successful enforcement can generate financial returns in two ways. First, through financial compensation for the infringement by way of damages or account of profits (i.e., the infringer’s gains from the copying). Second, enforcement negotiations can be a good way to secure a more lucrative licensing agreement or an advantageous settlement price.
Of course, enforcement requires demonstrating clear infringement, but, where a design has been copied, that can be quite simple, amounting to a simple visual inspection of whether the infringement and the registered design look the same – as such, copycat infringers often find there is less to argue about than for example in a patent dispute. Consequently, early engagement with an IP specialist is essential to assess viability and select the most appropriate approach in view of your commercial aims.
Another way you can make money is by licensing someone else to make and sell products to your design.
A licence allows you to retain ownership of the rights and then receive income for allowing a third party to use the design. This approach appeals to businesses that want passive income without manufacturing responsibilities, as the licensee handles production, distribution, and marketing while you benefit from the design’s value.
The licence will be negotiated and can include various additional terms and conditions to ensure a smooth ongoing relationship between the two parties. Examples of some common terms include:
For instance, a furniture designer might license their design to manufacturers in different geographic regions, each paying a royalty on sales. This allows the designer to monetise the same design across multiple markets without operational involvement.
We also have a specific article on licensing here: 5 things to know about licensing your IP – IP Insights – Wilson Gunn.
In the UK, EU and many other countries, a registered design will cover any product that looks like the design, even if the design was only originally intended to be used in relation to a specific product.
This opens the opportunity to license the registered design only in relation to a specific set of products which are not made by your business. This allows you to focus on your core product line up while a licensee pays you in return for using the design on other products outside your industry.
Licensing the design in relation to ornamental or toy versions of a product is one popular example of licensing in relation to other products. For example, toy vehicles and miniature vehicular designs, or toy versions of furniture and other household goods that might be sold for use in a doll house or play kitchen set.
Another example is licensing of product designs for use in virtual environments such as in video game and virtual reality applications.
Selling your registered design rights can be a very attractive option in several circumstances. This is particularly attractive if you’ve received acquisition interest, face capital constraints, or want to reallocate resources to new products.
Assuming you have built up a profitable business underneath the protection of a registered design right, then the sale of the right and potentially the associated business can be very lucrative.
The trade-off is that the buyer will then obtain all benefits of the registered design rights from you. This usually means you will not continue making or selling products covered by the protected design. However, for businesses seeking immediate capital or a clean exit, this can be the optimal strategy.
We have outlined above five of the main ways in which money can be generated from registered design rights. The key is selecting the right strategy based on your commercial goals, risk tolerance, and operational capacity.
In order to ensure your registered design rights provide the most value for your business, it is crucial that applications have been carefully filed to ensure they will deliver your business’s commercial aims.
If you have a new product design, our team can help you build a protection strategy that maximises return. Please speak to us before any public disclosure of the product so that we can ensure the appropriate design protection strategy is in place.