In February 2026 NatWest announced a £1.35 million loan to a Manchester retailer, secured against the company’s own software and registered trademarks. The bank has lent more than £27 million against intellectual property since January 2024. That security is the sort of paperwork many founders file away until a renewal reminder lands. The retailer’s rights were treated as what they legally are property.
Property can earn. Registered rights can be licensed for royalties, sold, borrowed against and, for patents, used to cut a corporation tax bill. This article walks through each route, and the unglamorous formalities that decide whether any of them is open to you.
Three kinds of licence
Suppose your company owns a UK patent for a self-cleaning water filter, sold under a registered trademark, and a manufacturer asks to make the filter under licence. A licence is paid-for permission: you keep ownership and grant the manufacturer the right to do what would otherwise infringe the patent. The first question is what kind of permission.
A non-exclusive licence lets you say yes to this manufacturer, and to two more next year, while you carry on making filters; nobody has the market to themselves, and pricing reflects that. A sole licence narrows the field: the manufacturer becomes your only licensee, but you stay in the market too. “Sole” is a practice term the legislation does not define, so the contract must spell out what is promised. An exclusive licence goes furthest: under the Patents Act 1977 it gives the licensee rights to the exclusion of all other persons, including you, the owner. The licensee gets the whole market, and pays for it.
How the money flows is the second question. The recognised structures are lump sums, paid upfront or in stages; running royalties, per unit sold or as a percentage of revenue, gross or net, sometimes capped; milestone payments; and combinations, such as an upfront sum credited against future royalties. Exclusive licensors often want a minimum royalty guarantee, so a licensee who shelves the product cannot hold the market and pay nothing. No benchmark rate is worth quoting: what is fair turns on the sector and each side’s alternatives.
Rights are also territorial. A UK patent or trademark stops at the border, so licensing the filter into Germany presupposes German rights. For trademarks, our guide to filing abroad through the Madrid Protocol explains the usual route.
Selling outright
A licence is a lease; an assignment is a sale. Assign the filter patent and it stops being yours: future royalties, and the right to sue infringers, pass to the buyer. Businesses assign IP on a pivot, or because cash now beats royalties later. The deals can be surgical: a trademark can be sold with or without the business’s goodwill (the trading reputation attached to it), and copyright can be assigned in slices, by type of right or by period. The choice is commercial. A licence keeps the asset and produces recurring revenue; an assignment converts it into a payment, once.
Paperwork that makes deals possible
Every deal above stands on formalities, and UK law is strict about two. The first is writing. A patent assignment is void unless it is in writing and signed by or on behalf of the assignor, the party transferring the right. The same rule covers assignments of trademarks, copyright and registered designs, and trademark licences. A deal agreed on a call transfers nothing until it is signed.
The second is registration. Assignments, licences and security interests over registered rights are recorded at the UK Intellectual Property Office (UKIPO): form TM16 for a trademark transaction, £60 as at July 2026, and Patents Form 21 for a patent one. Skipping this has two consequences. An unregistered transaction can be trumped. Under the Trade Marks Act 1994 it is ineffective against someone who later acquires a conflicting interest without knowing of it, and patent law takes the same approach. And where the right is infringed before the transaction is registered, the court will generally refuse the new owner or exclusive licensee their legal costs unless registration was applied for within six months. You can win and still carry your own bill. The fix is one form and a diary entry.
Patent Box: the 10% rate
There is a tax route as well. Under the Patent Box, a company can elect to pay a reduced 10% rate of corporation tax on profits earned from its patented inventions (the rate as at July 2026). The company must own the patent or hold an exclusive licence to it. The patent must have been granted by the UKIPO, the European Patent Office or certain European national offices; and the company or its group must have contributed significantly to creating or developing the invention or a product incorporating it. Two details catch companies out. The relief has to be elected into; it is not automatic. And a licensee qualifies only through a genuinely exclusive licence, one excluding everyone, the licensor included, across at least a whole national territory. The licence type you granted, or took, can be a tax question too.
Borrowing against your IP
Then there is debt. The NatWest scheme behind the Manchester loan is aimed at high-growth businesses, with the IP valued by a specialist firm and taken as collateral where conventional security falls short; the bar at launch was 20% year-on-year turnover growth over three consecutive years, or £50,000 of equity or grant investment in the previous two. The idea is spreading: in October 2025 Royal Bank of Scotland announced plans for loans of £250,000 to £10 million to Scottish high-growth businesses in 2026, after a 2023 change in Scots law allowed security over IP rights there. Early days, but the message is concrete, registered rights with a clean paper trail are assets a lender can value.
Fundraising, exits and the chain of title
For many founders, the first money their IP produces arrives in a funding round or an acquisition, where the rights are priced as part of the company. The pricing runs through due diligence, the legal checks before a deal, and those run through the chain of title: can the company show, in writing, that it owns everything it relies on? The classic gap is the contractor. Copyright in code or designs from an independent contractor does not move to the company automatically. Paying the invoice is not the same as owning the copyright, and without a signed assignment the contractor still holds it. Such gaps tend to surface late, with a deal on the table. Due diligence readiness is the sum of the habits above, and hard to manufacture in the week a term sheet lands. Our guide to building an IP portfolio on a startup budget starts there, getting assignments right from day one.
The groundwork comes first
None of these routes appears on demand. Patent Box relief needs a granted patent, applied for long before the profits it shelters. A licensing programme needs rights registered where the licensee operates. A lender needs something on a register to value; the Manchester retailer could offer trademarks as security because it had registered them. Turning IP into revenue mostly means taking protection decisions early enough that when a licensee, lender or acquirer asks what you own, the answer is short and documented.
If you hold patents, trademarks or designs and want a realistic view of what they could earn, ScalaxIP can help you take stock. Get in touch.
Disclaimer: This article is provided for general information only and does not constitute legal advice. For advice on your specific circumstances, please contact ScalaxIP at admin@scalaxip.com
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