Patent monetization is largest business model of successful people and IP asset owners. Patents are profitable research and development asset, and patent monetization can be incredibly lucrative if performed well. Patent monetization is not easy; there must be a plan so that the patents earn maximum return. The post talks about patent monetization plans and other positive things which can make your intellectual property more powerful.
What is Patent Monetization?
Patent monetization is realization of revenues for a patented invention or technology. Patent monetization can either be in the form of ranging from license to sell-out or enforcement activity of patents. The aim is to harvest 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 prerogative of inventors or business owners who never license but look forward to monetize their innovation. Monetization of the patent is the strategy where businesses get exposed at how they use leverage their portfolio of patents, issue out nothing whatsoever but zeros, and hawk out patents for bucks.
Monetization of patent strategies
Licensing agreements
Return on highest value patent is by way of licensing. Under license, the owner of the patent (licensor) grants right to the other entity or the company (licensee) to make use of the patented invention of him or her for some other agreed value object on the basis of royalties. Two types of licensing are seen common:
Exclusive License: Licensor is entitled patent rights only by exclusive license and patent owner obligates never to lease out to any third party. It provides greater percentage of royalty and greater sum of money to licensor.
Non-Exclusive License: Patent is licensed by the patent owner under non-exclusive license to various business companies without restricting the licensees. The model creates perpetual streams of revenues from various licensees.
It is patented in such a manner that the owner of the patent enjoys passive revenues without revealing such colossal business discoveries and transactions. The owners of the patent can purchase intellectual property rights and gain revenues from other people’s utilization of technology through the license.
Patent Sales
Selling patents is also a source of revenue. Here, the owner gives up all the rights to the buyer in exchange for a huge amount of money. Selling patents can be highly profitable if the owner does not wish to pursue the process of licensing and enforcement.
But patent selling is giving up ownership of invention and future royalty, if any. Price would be fixed by the buyer depending on value of the patent and applications and negotiating power of the buyer. Companies will buy patents to resell or keep individual collections, hence a good way of monetization.
Litigation and Enforcement
Their patent profits may be restored by proprietors here through the enforcement of statutory right under patent law of infringement in the form of a suit. Or money damages for copying infringement in money damages may be received or awarded by the patent owner if so it happens that there is any infringing patent of any business concern or party.
Enforcement of the patent is time and money consuming but has terrible economic return on enforcement of the patent. Owners of successful patents in industrial sectors like technology, pharmaceuticals, and electrical appliances are able to receive terrible settlements or licensing agreements when enforcing.
Patent Pools and Aggregation
Patent pools are traditional agreements between a group of patent owners to place their intellectual contribution at the disposal of third parties on equal terms. Patent surpluses in extremely patent-saturated markets, e.g., telephony with many patents for building cellular phones, is typical.
Bundling of patents is stacking up the patents with a hope to harvest their value in bulk. Patent bundling converts the patents into licensable and sellable package for the future at less transaction cost and improved bargaining leverage.
Strategic Partnerships and Joint Ventures
It is applied in terms of joint ventures where the two firms invest in infrastructure such that they commodity a product with patented technology. Owners of patents are not under commoditization pressure because they buy partners’ infrastructure and their knowledge base through the strategic alliance mechanism.
Key Things to Remember for Patent Monetization
Patent Quality: Patent worth is typically defined in terms of novelty, marketability, and inventiveness. Enforceable, legally drafted and valid claims that are well defined will make patents most valuable. Maintain a healthy, living patent portfolio.
Market Potential: Patents with a medical need or with broad industry applications will have more licensees or purchasers. The uses and applications the patented technology can have should be considered.
Cost and Risk: Some monetization streams like litigation are expensive and risky. It would typically be a matter of whether reward potential is in proportion to 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 creation is an effective method of transforming intellectual property into a reserve of valuable assets with the ability to create revenues. Patent holders possess the ability to maximize their money agents using patent offering, litigation, or licensing. This, however, needs to be achieved based on the combination of requirements such as quality size of patents, market demand for the same, and available funds. Either a venture capitalist enterprise or an individual producer, revenues from their intellectual assets can be earned in various ways, and sound judgment will bring the business firm or the producer to the attainment of the objective of long-term success and value maximization.
