Three Ways to Patent Exploitation: Founding, Licensing, Selling
Possession of a patent does not automatically generate income, on the contrary: protection costs annual fees. Ideally, while working on your invention, you have already thought about how you want to exploit it. You have three choices: You use the patent yourself and market your invention within your own company, you make it available to others for a license fee or you sell it completely.
Patent Exploitation in your own Company
Most of them probably plan to exploit it themselves and already have a concrete use in mind when they invent it. They already have an idea of how they want to develop a marketable product from it and who their customers could be. They set up their own business. The patent or utility model initially grants them protection against imitators and a temporary monopoly. Many inventors have gone this way successfully. The effort and costs for the development and the patent application have paid off for them. However, technical expertise alone is not enough to turn an invention into an economically successful company. They also need competences in business administration, marketing, and sales in a team. But you don't have to do everything in your own company: Parts of production or sales can also be outsourced to suitable cooperation partners.
Competition Search and Patent Search - Why You Should Not(Completely) Reinvent the Wheel Read more
Reasons Against own Exploitation
Whether one can exploit one's patent as an entrepreneur depends on many factors. In some cases, the implementation of the measures on their own fails for financial reasons. The individual patent may also not be enough to develop a marketable product that can be marketed economically. And even a good product has a hard time if the competition has large market power and an enormous marketing effort would be necessary to make it known. Perhaps the inventors are also in a phase of life where they simply cannot spend as much time as it would be necessary to start a company. And not everyone feels called to be an entrepreneur.
Sell Patent or License Usage
Even if you do not want to become an entrepreneur yourself, you can exploit your patent - by selling a license for the use or the complete invention including patent protection. However, you should not wait too long with this, because the technical development continues as we all know. Helpful for the sale is if you have thought about the application at an early stage. If the benefit itself is in the patent, this also promotes its usability. However, trade in intellectual property is much more complicated than trade in tangible assets. On the one hand, it is much more difficult to find the right customer. And setting an appropriate price is like trying to predict the future: what is the buyer's benefit from your invention and what profit can he make from it? Without professional help, it is difficult to reach an agreement that satisfies you.
Patent Exploitation: Establishing Contacts
Whether you are planning your own implementation or whether you are thinking of selling your patent: The iENA Inventors' Fair (International Trade Fair for Ideas, Inventions, and New Products) in Nuremberg and the Inventors' Fair in Geneva are good places to make contacts. The trade fairs in your industry can also be helpful in finding out who might be interested in your invention. There are now also online platforms on which you can offer your patent or utility model for sale. Special patent brokers or patent exploiters bring inventors and interested parties together but can also be paid for this service. The path to success for you depends not least on your invention. Is it easy to implement? For whom does it solve a problem - for the end-user or for a manufacturer? How big is this problem? Who also offers solutions?
Finding the Right Target Group for the Patent
Inventors hoping for big money through sales or licensing must realize that companies have by no means just been waiting for them. Trade in intellectual property - patents, utility models, or trademarks - has increased sharply. But large companies prefer to invent themselves and are rarely interested in buying something. Instead, large companies are increasingly exploiting patents from their portfolios themselves. Because the invention that an employee makes during his working hours "belongs" to the company. However, the inventor is entitled to remuneration and is also named in the document. Medium-sized companies often use patent brokers to turn their inventions into money. If your invention has potential, you should not be deterred by the effort. But it is important to find the one who could benefit from your invention. This can be a courageous founder who only lacked the right idea or a company for which your invention means an improvement or addition to its product range.
Grant a License
This is how a license is granted: You allow an interested party to use your patented invention to manufacture and market a product. In return, you can demand either a price per unit or a percentage share of the turnover or profit. This secures your income as long as a company uses your invention and patent protection exists. For a company to be interested in a license, you must convince it of the advantages. This requires good preparation, like the pitch with which a founder tries to convince banks and investors. If you manage to interest a company in your invention, it is important to negotiate an appropriate price during the negotiation. It is helpful to have comparable examples from the industry at hand. Data on this can be found, for example, in judgments on employee inventions. For the negotiations, you should also seek the help of an experienced lawyer so as not to be unpleasantly surprised later by details of the agreement.
Sell a Patent
The company may also want to buy your patent right away. When you sell a patent, you no longer must pay the fees that the protection costs you for 20 years. But they are also giving up the right to do so for good. The price you can charge for this depends strongly on the advantages the interested company has and the countries in which your patent is valid. If you solve a big problem for the company, your chances of a good price are significantly better than with an invention with uncertain marketing prospects. However, the time window for patent exploitation through sale or licensing is limited, as the state of the art develops rapidly.
It is, therefore, necessary to silver an invention before it belongs to the old iron.
Conclusion: Think About Exploitation at an Early Stage
With good reason, the Patent Office demands an industrial benefit for the invention applied for. Inventors should take this to heart from the outset. Anyone who already thinks of later exploitation during the development phase has a better chance of refinancing the work involved and the costs for the patent application. This applies both to the exploitation in an own company and to the granting of a license or the sale of the patent.
Checklist Patent Exploitation:
- Consider later exploitation during development and record in the patent application
- Examine the chances of exploitation in your own company: Financial resources, team skills, prospects for profitability, personal situation
- Exploitation by sale or licensing: Identify target group, work out advantages for them, do not wait too long and do not enter negotiations without a specialist lawyer.