Patent monetization is biggest business model of successful entrepreneurs and IP asset owners. Patents are worth R&D asset, and patent monetization can be very profitable if executed effectively. Patent monetization is not a cakewalk; there has to be a strategy so that the patents yield maximum. The post discusses patent monetization strategies and other useful stuff which can render your intellectual property more efficient.
What is Patent Monetization?
Patent monetization refers to realization of revenues for a patented invention or technology. Patent monetization can be in the form of ranging from license to sell-out or patent enforcement activity. The aim is to reap the intellectual property as monetary capital that generates revenues in the form of direct sale, royalty stream, or payment through litigation.
Monetization of the patent is the privilege of inventors or businesspersons who never license but seek to monetize their innovation. Monetization of the patent is the mechanism through which corporations get practice at how to have fun with the leverage of their portfolio of patents, distribute nothing whatsoever but zeros, and peddle out patents for dollars.
Monetization of patent strategies
Licensing agreements
Return on highest value patent is by means of licensing. Under license, the licensor (owner of patent) makes right available for use by other party or the organization (licensee) towards the patented invention of him/her on behalf of another value object agreed upon based on royalties. Two forms of licensing are there common:
a. Exclusive Licenses
b. Non-exclusive Licenses
Exclusive License: Patent rights are conferred solely by exclusive license to patent owner and licensor. Patent owner assures never to rent out to any third party. It gives higher percentage of royalty and higher amount of money to licensor.
Non-Exclusive License: Patent is licensed by patent owner under non-exclusive license to multiple business firms without limiting the licensees. The model generates eternal streams of revenues from different licensees.
It is patented to the level the owner of the patent realizes passive incomes without exposing such enormous business breakthroughs and transactions. Intellectual properties are sold by the owners of patents, in which they attain revenues based on other individuals’ use of technology through licenses.
Patent Sales
Patent selling is another source of income. In this case, the owner transfers all rights to the buyer for a large sum of money. Patent selling can be highly profitable if the owner is not willing to go through the process of enforcement and licensing.
But selling patent implies surrendering ownership of invention and future royalty, if any. Price will be determined by buyer based on value of the patent and applications and negotiating power of the buyer. Companies will purchase patents to resell or keep individual collections, thus a good method of monetization.
Litigation and Enforcement
Their profits of their patents can be regained by owners here by enforcing statutory right under patent law of infringement by a suit. Or money damages against copying infringement in money damages can be granted or regained by the owner of the patent if it so occurs that there is any infringing patent of any business firm or party.
Enforcement of the patent is costly and time-consuming but has horrible economic return on enforcement of the patent. Owners of successful patents in industrial areas such as technology, drugs, and electrical appliances can get horrible settlements or licensing agreements on enforcement.
Patent Pools and Aggregation
Patent pools are conventional agreements between a group of patent holders putting their intellectual contribution at the third parties’ disposal on identical terms. Surpluses within very patent-dense markets, such as telephony with hundreds of patents used to make cellular phones, are common.
Patent bundling is gathering the patents with an expectation of reaping their value in bulk. Patent bundling transforms the patents into sellable and licensable package for the future at reduced transaction cost and enhanced bargaining power.
Strategic Partnerships and Joint Ventures
It is used in the joint ventures where the two companies invest in infrastructure such that they commodity a product with patented technology. Patent owners are not exposed to commoditization pressure since they purchase partners’ infrastructure and their knowledge base through the strategic alliance mechanism.
Key Things to Remember for Patent Monetization
Patent Quality: Patent value is generally measured in terms of inventiveness, novelty, and marketability. Well-defined, enforceable, legally written and valid claims will render patents most valuable. Keep a healthy, living portfolio of patents.
Market Potential: Patents with a medical requirement or with wide industry uses will have more purchasers or licensees. Consider the uses and applications the patented technology can be used for.
Cost and Risk: Some monetization streams like litigation are expensive and risky. It would typically be a matter of whether reward potential is commensurate with cost and risk to reputation.
Patent Valuation: Patent valuation is complex and can be estimated in terms of market value, licensing agreement, and relative position. Patent valuation specialists can provide a reasonable estimate of your patent value.
Patent development is an ideal choice to convert intellectual property into a portfolio of value assets with the possibility of generating revenues. Patent owners can benefit from the possibility of maximizing their money agents through patent offering, litigation, or licensing. This, however, has to be realized depending on the mix of needs like quality size of patents, demand for the same in the market, and available funds. A venture capital company or an individual producer, there will be a number of alternatives in which one can earn their incomes on their intellectual properties, and good sense will lead the company business or producer to the end of getting the goal of sustainable success and maximization of values.