Patent monetization is largest business model of successful business people and IP asset owners. Patents are high-value research and development asset, and patent monetization can be highly lucrative if done properly. Patent monetization is not straightforward; there must be a strategy so that the patents yield maximum return. The post discusses various patent monetization strategies and other useful things which can make your intellectual property more effective.
What is Patent Monetization?
Patent monetization is realization of revenues for a patented technology or invention. Patent monetization may be either in the nature of ranging from license to sell-out or enforcement activity of patents. The target is to capture the intellectual property as monetary capital that yields revenues in the way of direct sale, royalty stream, or payment through litigation.
Patent monetization is for innovators or business entities that never license but desire to monetize their innovation. Patent monetization is the process by which corporations develop expertise at leveraging the potency of their collection of patents, spend absolutely zero dollars, and sell out patents for dollars.
Patent monetization strategies
Licensing agreements
Return on highest value patent is through licensing. Under license, the patent owner (licensor) provides right to the other party or the organization (licensee) to utilize the patented invention of him or her for another mutually agreed value object on the basis of royalties. Two forms of licensing are found prevalent:
Exclusive License: Owner of patent grants only patent rights of licensor by exclusive license and owner of patent guarantees that it will never lease to any other party. It pays more percentage of royalty and more amount of money to licensor.
Non-Exclusive License: In non-exclusive license, the patent is sold by patent owner to different business firms without limiting the licensees. The model generates perpetual streams of revenues from many licensees.
It is patented in a way that the patent owner receives passive revenues without divulging such enormous business findings and deals. Patent owners can buy intellectual property rights and receive revenues from the use of technology by other individuals through licensing.
Patent Sales
Patent selling is also a source of revenue. In this situation, the owner forfeits all rights to the buyer for an enormous sum of money. Patent selling can be extremely lucrative if the owner is not willing to go through the process of licensing and enforcement.
But patent selling is forgoing ownership of invention and future royalty, if any. Price would be determined by the buyer based on value of the patent and applications and negotiating power of the buyer. Companies will purchase patents to resell or hold individual collections, thus a good method of monetization.
Litigation and Enforcement
Owners here may be able to recover their revenues from their patents by invoking statutory right under patent law of infringement through a suit. An injunction for or money damages against copying infringement as money damages may be obtained or awarded by the patent owner if it so occurs there is any infringing patent of any business organization or party.
Enforcement of the patent is lengthy and costly but has horrible economic payback on enforcement of the patent. The owners of successful patents in industry sectors such as technology, medicines, and electrical devices can attain horrible settlements or licensing arrangements upon enforcement.
Patent Pools and Aggregation
Patent pools are classic arrangements between a group of owners of patents to put their intellectual contribution at the disposal of third parties on a parity basis. Patent surpluses in heavily patent-saturated sectors, e.g., telephony with numerous patents for constructing cellular phones, is common.
Patent bundling is piling up the patents anticipating to reap their value in bulk. Patent bundling transforms the patents into licensable and sellable package for the future at lower cost of transaction and better bargaining leverage.
Strategic Partnerships and Joint Ventures
It is used as joint ventures where the two companies invest in infrastructure so that they commodity a product with patented technology. Patent holders do not face commoditization pressure as they acquire partners’ infrastructure and their knowledge base through the strategic alliance mechanism.
Key Things to Remember for Patent Monetization
Patent Quality: Patent value is usually communicated in terms of being new, marketable, and inventive. Enforceable, legally written and valid claims that are clearly defined will render patents most valuable. Have a healthy, living patent portfolio.
Market Potential: Patents including a medical necessity or with general industry uses will have more customers or licensees. The applications and uses the patented technology might have should be taken into consideration.
Cost and Risk: Certain monetization channels such as litigation are costly and risky. It would generally be a question of whether reward potential is equal to cost and reputational risk.
Patent Valuation: Patent valuation is complicated and can be approximated in market value, licensing agreement, and relative position. Patent valuation experts can give an equitable estimate of your patent value.
Patent formation is a successful approach to monetize intellectual property into a valuable stock of asset which yields revenue. Patent owners may optimize their agents of money through patent offering, litigation, or licensing. This, however, must be acquired depending on the make-up of needs like patents’ quality size, demand for the market, as well as money at hand. Either a business enterprise or a lone creator, there are a number of ways through which revenues may be earned from their intellectual properties, and judicious judgment will lead the business enterprise or the creator to the achievement of the goal of continued success and maximization of value.
