Congratulations! obtaining patent protection is not easy. It takes patience, hard work, and money. It’s a great feeling to find out that your application was approved. You have a big grin on you face. It’s official. You are an inventor with a patent in hand. Now comes the next leg of the journey where you enjoy the fruits of patent commercialization.
According to a Forbes report, about half of all patent inventions in America are never commercially exploited. It can take years for many of the most important inventions to reach market. As a patent attorney who has done numerous patent monetization work for inventors and founders, I would like to provide you with possible roadmaps to profit from your invention.
Steps to Patent Commercialization
What are your plans for commercializing the patent you have created? A patent won’t give you the key to the treasure chest. A patent won’t necessarily guarantee commercial success or financial benefits. You will need to do some additional work before you can start making money off that piece of paper that was sealed by the patent office.
There are several pathways to monetizing a patent, including:
- Licensing: One of the most common ways to monetize a patent is to license it to others. This can involve licensing the patent to a single company or to multiple companies for a fee or a percentage of revenue.
- Selling the patent: Another way to monetize a patent is to sell it to another company or individual. This can be done through a one-time sale or through an exclusive or non-exclusive license.
- Enforcing the patent: If a company or individual is using the patented technology without a license, the patent holder can enforce their patent rights through legal action. This can include filing a lawsuit for patent infringement, which can result in monetary damages.
- Creating a startup company: If the patent is for a new product or service, the patent holder can use the patent as a foundation to create a startup company. This can involve developing and selling the product or service themselves, or licensing the patent to others for a fee or a percentage of revenue.
- Creating a joint venture: Another way to monetize a patent is to create a joint venture with another company. This can involve sharing the patent and the associated costs and risks in developing the technology and commercializing the product or service.
- Adding value to existing company: In some cases, the patent can be used to enhance the value of an existing company. For example, the patent could be used to improve an existing product or service, or to create a new revenue stream.
It’s worth noting that each of these pathways to monetizing a patent has its own set of benefits and drawbacks, and the best strategy will depend on the specific circumstances and the patent holder’s goals. An experienced patent attorney can help you evaluate the different options and choose the best strategy for monetizing your patent.
The successful manufacturing and launch a new product requires three stages: pre-manufacture, market launch and mass production . Pre-marketing stage requires an intelligent assessment of market potential, validation of commercial opportunity, and trialing the manufacturing process. Manufacturing efforts would be made easier by a patent being granted.
After making a few successful manufacturing attempts, the company can launch the product on the market and promote it. If everything goes well, then they can move forward with mass production. It is a long and difficult road to innovation success. There are many unknowns, high costs, and risks. Patent laws and systems ease the burden on inventors and allow them to choose innovation as their profession and makes it possible for patent owners to be involved in the fight against infringers.
Ways to Commercialize Patents
Patents are an intellectual property right. In addition to their commercial value when they are used to exclude others from a market it is possible to license or assign a patent for revenue generation to third parties. A patent can also be used as collateral for a loan or mortgage.
We will briefly examine each of these potential ways for patent commercialization.
1. Patent licensing
In essence, a license is an agreement between the patent owner and a third party that allows the third party access to the invention protected under the patent. A third party pays a sum of money called royalty back to the owner for the license. There are many ways to determine the royalty.
The most common form of license is the sole license. This license allows a party to make money while still owning a patent. In exchange for the payment of a royalty, the third party acquires the right and privilege to exploit the patent-protected invention. This right can be restricted to a particular territory or area of use, depending on the terms of license. It may also carry additional obligations for either party such as the obligation enforce the patent and to pay renewal fees.
The additional benefit of licensing is that it allows access to markets not accessible to the patentee, which can generate a revenue stream otherwise unobtainable. This could be true if there is a regulatory hurdle to the market, or if the licensee has built goodwill in territory where the patent owner is not well-known.
2. Selling the patent
There are several ways to find buyers of patents, including:
- Patent Brokers: Patent brokers specialize in buying and selling patents, and they can be a good resource for finding buyers. They typically have extensive networks of companies and investors who are interested in purchasing patents.
- Patent Auction Houses: Patent auction houses, such as ICAP Ocean Tomo, Ocean Tomo, and ICBC, specialize in organizing patent sales and auctions. These auction houses can be a good resource for finding buyers for your patent.
- Patent Law Firms: Patent law firms may have clients who are interested in purchasing patents and may also have experience in brokering patent sales. They can be a good resource for finding potential buyers.
- Online Marketplaces: There are several online marketplaces that facilitate the buying and selling of patents, such as PatSnap, Ocean Tomo Bid-Ask, and ICBC Auction. These marketplaces can be a good resource for finding buyers for your patent.
- Direct Outreach: You can reach out to companies directly that may be interested in your patent. This can be done by identifying companies that are in the same field or use similar technology as the patent, and contacting them directly to inquire about their interest in purchasing the patent.
- Networking: Attend industry events, conferences, and trade shows to network with other patent holders, inventors, and potential buyers. This can be a good way to find potential buyers, and to learn more about the patent buying and selling process.
It’s worth noting that finding buyers for a patent can be a complex and time-consuming process, and that not all patents will have buyers. Therefore, it is recommended to work with an experienced patent attorney or patent broker who can help you navigate the process and find the right buyers for your patent.
Assignment refers to a transaction in which the patent’s ownership is transferred from the owner to another person in exchange for money. This means that the patent and its rights are sold to make money. One party may sell a patent because they don’t feel it is relevant to their business activities, or because of something that happened to them. In some cases, a third party may offer so much money that the patent owner cannot refuse.
A patent sale can generate income in any case. One party may buy a patent to protect their invention and to make it ineligible for other parties.
3. Enforcing the patent
Another way to monetize patents is to enforce your patent rights. The cost of patent litigation can be high (between $2-4M), so you may need to find patent litigation funding firms or work with contingency law firms if you lack the funding.
Patent litigation funding is a form of financing that allows a patent holder to pursue legal action to enforce their patent rights without having to bear the high costs of litigation themselves. Patent litigation funders provide financial support to patent holders in exchange for a share of any potential award or settlement.
Patent holders can secure funding from litigation funders for different types of patent enforcement actions, including lawsuits, licensing negotiations, and other forms of dispute resolution. The funding can be used to cover the costs of legal representation, expert witnesses, and other expenses associated with the patent enforcement process.
Patent litigation funding is becoming more common as it allows patent holders to pursue their rights even if they lack the financial resources to do so. Moreover, it aligns the interests of the patent holder and the funder, as the funder only profits if the patent holder wins the case.
Contingent patent enforcement refers to a type of legal representation in which a law firm agrees to represent a patent owner or a patent buyer in enforcing their patent rights, but only receives payment if the case is successful. This allows patent buyers to pursue enforcement without incurring significant up-front legal costs. Contingent fee arrangements can be beneficial for patent buyers, as it aligns the financial interests of the law firm with those of the client. This ensures that the law firm will work diligently to achieve a successful outcome for the patent buyer or the patent owner.
4. Creating a startup company
Launching a startup company based on an issued patent can be a viable way to commercialize new technology and bring innovative products or services to the market. In fact, this is how university startups are done. A patent provides the startup with a legally-protected monopoly on the invention, which can be used to generate revenue through licensing or by manufacturing and selling products or services based on the invention.
However, starting a company based on an issued patent is not an easy task, it requires a lot of effort and resources in terms of time, money and expertise. Here are some key steps that a startup company might take when launching from an issued patent:
- Develop a business plan: The startup should create a plan for how it will commercialize the patented technology and generate revenue. This may include identifying target markets, developing marketing strategies, and outlining the costs associated with manufacturing and distributing products or services based on the invention.
- Secure funding: The startup will likely need to secure funding to cover the costs of developing and launching its products or services. This can be done through venture capital, angel investing, crowdfunding, or other forms of financing.
- Build a team: The startup will need to assemble a team of experts to help it develop and launch its products or services. This may include engineers, designers, marketers, and other professionals with relevant skills and experience.
- Develop and test the product/service: The startup will need to develop and test prototypes of its products or services based on the patented technology. This may involve working with suppliers, manufacturers, and other partners to ensure that the products or services meet the needs of the target market.
- Launch the product/service: Once the startup has developed and tested its products or services, it can launch them to the market. This may involve marketing and advertising campaigns, as well as efforts to establish partnerships and distribution channels to reach customers.
One way to fund the startup is to borrow money with the patent assets as security for the loan. This may be used to allow a company expand or to invest into new products or innovations. Patents can be used as intellectual property rights. The monetary value of a license is tied to the product and is therefore relatively stable and does not depend on volatile factors like goodwill. There are three types of securities: a mortgage, fixed charge, and floating charge. Each has its own advantages and disadvantages. Many patent owners don’t prefer to take a security interest in a patent. If the owner defaults on the loan, the patent could be lost.
Overall, launching a startup based on an issued patent can be challenging, but it can also be a rewarding way to bring new and innovative products or services to the market.
5. form joint ventures with the patent
Creating a joint venture (JV) with patents can be a way for companies to collaborate and share resources to commercialize new technology and bring innovative products or services to the market. In a JV, two or more companies come together to form a separate entity that is jointly owned and operated.
When creating a JV with patents, companies can combine their resources and expertise to develop and commercialize new products or services based on the patented technology. Here are some key steps that companies might take when creating a JV with patents:
- Identify a common interest: The companies should identify a shared interest in commercializing a specific patent or group of patents.
- Negotiate terms: The companies should negotiate the terms of the JV, including the ownership and control of the patents, the distribution of profits, and the management and governance of the JV.
- Establish the JV: The companies should establish the JV as a separate legal entity, such as a corporation or a limited liability company (LLC).
- Develop a business plan: The JV should create a plan for how it will commercialize the patented technology and generate revenue.
- Secure funding: The JV will likely need to secure funding to cover the costs of developing and launching its products or services.
- Build a team: The JV will need to assemble a team of experts to help it develop and launch its products or services.
- Develop and test the product/service: The JV will need to develop and test prototypes of its products or services based on the patented technology.
- Launch the product/service: Once the JV has developed and tested its products or services, it can launch them to the market.
Overall, creating a JV with patents can be a way for companies to collaborate and share resources to commercialize new technology and bring innovative products or services to the market. However, it is important for the companies to consider the potential legal, financial and management risks before entering into a JV.
6. add value to an existing company
Using a patent to add value to an existing company can be done in several ways. Here are a few examples:
- Licensing: The company can license the patent to other companies, allowing them to use the patented technology in exchange for a fee or royalty. This can be a way for the company to generate revenue without having to invest in manufacturing or distribution.
- Developing new products or services: The company can use the patented technology to develop new products or services, which can be sold to customers or licensed to other companies. This can help the company expand its product or service offerings and increase revenue.
- Competitive advantage: The patent can also be used to protect the company’s existing products or services from competitors, giving the company a competitive advantage in the market.
- Cross-licensing: The company can use the patent to negotiate cross-licensing agreements with other companies, allowing the company access to other patents in exchange for licensing its own patents.
- Increase the company’s valuation: Having a patent portfolio can increase the perceived value of a company, making it more attractive to investors and potential acquirers.
- Legal protection: The patent can also be used to protect the company from patent infringement lawsuits, allowing the company to operate without fear of costly legal disputes.
It’s important to note that using a patent to add value to an existing company requires a strategic approach and a thorough understanding of the market and the patent landscape. A company should take into account the costs and benefits of different options before implementing a strategy.
Other ways to Promote the patent
For patent commercialization create a list of potential manufacturers and users for your invention. You can find contact information for thousands upon thousands of companies in the Thomas Register. It is available online and in libraries. You can also use the Yellow Pages or Internet to find information.
If you do not have a patent, it is advisable to ask the company for a non-disclosure contract before discussing your idea. Most companies won’t sign such an agreement, as their R&D department may already be working on similar ideas. Here are ways you can get to interested parties;
Spread the word
To attract potential patent buyers, you can buy space in trade publications or inventors’ magazines for product announcements. Patent Trade Office publishes a gazette in which inventors can advertise their products at a cost of $25.
Participate in trade and invention shows to meet companies or individuals who are interested in your product.
Finance your invention by soliciting partners from venture capitalist to provide capital required to launch the product and finance your invention.
Many companies have websites on the Internet that allow inventors to advertise their patents for purchase. While some sites are free, others charge a fee for selling patents. The United Inventors Association website has information on untrue invention schemes.
Brokers and Submission Companies
A contingent fee broker will market and pay for your invention to manufacturers. Payments are usually in the form of royalty payments or a cut of the sale. A broker should never be paid in advance. Reputable agents won’t charge you for selling your invention. Avoid invention submission companies. These companies have a long list of inventors who have paid thousands to them and left with nothing but a broken heart and empty pockets. Numerous of these companies have been accused by federal and state Attorney Generals. Check the Better Business Bureau or United Inventors Association before you hire any broker or company to market your invention.
You can turn a patent into a cash-maker with good research and a viable invention.
Now Get the professional guidance on patent Commercialization
Our legal professionals guide inventors in securing their IP assets correctly.
We focus on researching and studying patent commercialization. That will make it easier for inventors to enter the market and compete fairly with established entrepreneurs and businesses.
We have extensive knowledge and experience in patent protection, and intellectual property filing. While protecting the clients, we ensure they have an easy path toward success.
We will always provide the best patent attorney to assist you in negotiations with prospective investors.
Our passion and commitment to IP asset protection have helped many inventors to start businesses effortlessly with the support of wealthy partners and investors. We strive to ensure more enterprises are birthed, innovations are known, and more inventors are rewarded for their creativity and efforts.
For more information, get in touch with us on PatentPC.