5 Ways to Profit from Your Patents
A Patent is an intellectual property that guarantees exclusive rights of usage to the inventor. It excludes others from using or commercializing the invention for a limited period. The sole control over their invention opens up profitable avenues for patent owners.
The road to obtaining a patent isn’t easy or economical. There are multiple costs incurred on the actual invention, and it usually involves an appreciable amount of time too. Once the invention is ready, the patent filing process in itself is a legal complexity. It is important to note here that despite all the resource investment, not all patent applications get approved.
So, if one has obtained a patent, they have already spent precious time and money securing it and can hope to now gain from their invention through patent commercialization. However, simply owning a patent does not guarantee earnings for the inventor. Below we discuss 5 ways that can help you learn how to make money from patents:
Table of Contents
Top 5 Patent Commercialization Strategies:
1. Converting Invention into Product
The fact that your patent was granted a patent proves the uniqueness of your technology in the market. The best way to leverage it would be to turn it into an actual product that consumers can use. To ensure that this is a good decision for your invention, consider the following points:
- What will be the product?
- Does a need for it exist in the market?
- How will you manufacture it?
These are some considerations before one decides to create a product. If self-manufacturing sounds like a gamble, then another option can be to outsource this step to a company with the machinery required for production.
2. Licensing the Patent
If the idea of being involved in the manufacturing and marketing of products is not feasible then the next best step would be to consider patent licensing and commercialization. Licensing a patent does not take away the ownership of the patent from the holder. It simply entails a transfer of rights of usage to a third party based on mutually agreeable terms and conditions and for a limited period of time. The licensing fee is determined by a common practice called ‘benchmarking’, wherein the patent technology is compared to prevalent as well as old technologies. This helps in evaluating the royalty or license fee.
The Licensor grants exclusive or non-exclusive rights to the licensee. If the license is exclusive, then only one party holds exclusive rights to use the patents to manufacture the product.
3. Detecting Infringement
If a product in the market uses the technology protected by your patent, then it is considered a case of infringement. Patents guarantee monopolistic rights over innovation, and violation of this clause means that the infringer has to pay hefty damages to the patent owner. Infringement lawsuits may be settled in court or outside depending on the parties involved. This is one of the commonly used methods of patent commercialization.
Following are the types of patent infringements:
When the offender buys, sells, or uses the exact technology without a license.
When the purchase or importing of a part may lead to the creation of a patented item.
If a device or process literally meets every limitation of a patent then literal infringement is implied.
If a party that holds the knowledge of the patent uses their influence to encourage others to create the patent, then it suggests an induced infringement.
Sometimes a product may not copy the exact patent but delivers similar results. In such cases too sometimes infringement is ruled.
4. Pooling Patents
Patent pools are mutual agreements between 2 or more companies who are dependent on each other’s tech to produce the final product. Once a patent pool is formed, the licensing of patents is done collectively by the involved parties for financial gains. This helps create wider coverage in terms of both customers as well as markets.
For patent pools to be successful and profitable for the businesses involved, it is essential that all terms and conditions be formalized and adhered to. Such pools rest on the foundation of a sound legal framework and solid mutual understanding between the parties.
5. Selling the Patent
Selling a patent is the quickest patent commercialization strategy. Inventors who wish to focus on other R&D projects are usually keen to sell their patents and pursue the development of new processes and innovations for new patent licensing and commercialization. The patent owner receives a one-time compensation fee on selling off the patent.
Finding the right business to sell the patent is key to maximizing your profits. To ensure that you negotiate the best deal, explore the following avenues:
- Your patent may have blocked many other similar applications from being filed. Run a search to investigate these failed applications and approach the businesses that applied. They are most likely to be interested in buying your patent.
- Identify the businesses that are trying to enter the market related to your patent. They may be keen to buy a novel technology to gain a competitive edge.
- Locating businesses that are infringing on your patent also makes for a good plan. One can present such businesses with the option of buying the patent or else they might have to face complex litigation charges for infringement.
- Finding companies that may benefit from patent technology. The unique innovation of the patent may be presented to these companies with an emphasis on how it is likely to solve their problem.
As is clear from the above discussion, a patent owner has multiple ways to benefit monetarily from his invention. Each method is accompanied by its own advantages and disadvantages, depending on the requirement of the patent holder. The underlying goal is to make a profit from the invention. Therefore, one must adopt a strategy that helps in maximising commercial gains.