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. Now comes the hard part on 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 your country.
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.
Steps to Patent Commercialization
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.
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.
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.
A security on a patent
A security on a Patent uses a patent to secure a 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.
How to sell or license your invention
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.
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