Patent monetization is the conversion of intellectual property (IP) into a good asset. Patents are wonderful inventions, and patent monetization can give inventors, companies, or institutions a fairly good return on investment. Selling, licensing, or commercializing patents can do that. They all enable the patent owners to leverage their intellectual property and harvest its maximum potential. This article selects different streams of patent monetization and how companies and entrepreneurs can leverage the same to derive maximum value. Overview of Patent Monetization
Patent monetization is simply the process of earning money from an innovation patented.
It may involve waiving title in the patent, franchising away the use right for some level of payment in the form of royalties or productizing the patented product for the absence of distribution in the marketplace. Patent monetization suits an individual with excellent patents without possession or intending to form a company on them. Instead of letting their intellectual property go to waste, the owners can make use of it to earn their money. 1. Patent Selling Sale of patent is the simplest method of capitalization. In this, the owner of patent sells all his right over his brain to a third party. The rights granted can range from the whole one that covers the patent from the manufacturing and sale right of the invention to owning the right in its use and licensing.
Full sale of the patent to the buyer is better for most owners of patents because it provides the ready cash to transfer the IP.
It is a convenient option especially where the patent owner does not have the money required to push the invention to product or service commercialization.
The patent is also another highly suitable option in the event that the owner no longer wishes to be identified with the technology but wishes to benefit financially from the invention.
There are two methods of selling patents:
Direct Sale: The owner of the patent identifies a buyer and negotiates the price. This can be selling to a private company, another firm, or an industry giant to accumulate its IP assets. Patent Brokers: Patent brokers can negotiate on behalf of patent owners and identify a buyer for them, fairly pricing.
Online Marketplaces: Online marketplaces such as IP marketplaces provide the opportunity for patent owners to sell their patents and interact with prospective buyers worldwide.
2. Patent Licensing
Another most popular form of monetization is patent licensing whereby the patent owners are able to hold their patents with periodic returns. Patent owners permit a third party use, manufacturing, or sales authorization of the invention for an agreed fee payment, primarily in the form of royalties. Patent licensing is much favored when it comes to owners getting returns without losing their claim of a patent.
There are two broad types of patent licenses:
Exclusive License: Ex-clusive rights are provided to the licensee to use the patent, i.e., no other person—not even the patent owner—can use the technology in that specific area or sector.
Non-Exclusive License: Multiple licensees can use the patent, and the patent owner can earn royalties from multiple different parties.
Patent license contracts can be tailored to both parties. Licensing can be paid in one lump sum or ongoing royalties on sales or use. The terms of the agreement, such as term and geographical extent of the license, are negotiable and variable.
Licensing is most suited to such businesses that do not have the capability to sell a product independently but would still want to earn money from their IP. Licensing is also most suited for patent holders who want to earn passive incomes without necessarily letting go of their patent.
3. Patent Commercialization
Commercialization of an invention that is patented is making the patented invention accessible to the market. Commercialization is typically the most challenging type of monetization since it involves taking the patented concept to a product or service for sale. Commercialization may be in manufacturing, selling and distributing the patented product oneself or with assistance from established players in the industry.
Commercialization typically includes:
Product Development: Aligning the prototype development and preparing to mass-produce it. That would include coordinating with designers, engineers, and manufacturers.
Market Analysis: Conducting market research to determine the target market, demand from consumers, and competition.
Strategic Partnerships: Strategic alliances with successful operating existing companies that are already operating the desired business to market the product, leveraging the existing distribution channel, and to enter other assets.
Commercialization, lucrative as it is, is not inexpensive but carries an enormous price tag in terms of money, time, and resources. But bravo, commercialization can bring very high volumes of sales and moderate returns on investment.
4. Patent Procurement
The other way patents are commodified is buying patents by corporations, mainly diversification or getting into the race. Patent buying is a practice of purchasing patents from other businesses or inventors with the motive of diversifying an existing IP portfolio or experimenting in new businesses. Patent buying enables corporations to purchase established technology without conducting research and development.
By acquiring worthwhile patents, businesses can incorporate them into their product or sell them to other third parties. Acquiring patents can be a working economic system where businesses are exposed to new technology and stimulate innovation without manufacturing them.
Patent Monetization is a very efficient way of reaping intellectual property value and generating new cash flows. Yet, the approach used - commercialization, licensing, or selling, there are some advantages of each of them. Inventors or entities with such valuable patents will need to determine how to monetize depending on resources, objectives, and degree of involvement.
By the patent sales channels, patent licensing channels, and patent commercialization channels, patent owners can strategically monetize their IP as a revenue-generating mechanism, an innovational driver, and market size determinant. Patent monetization is not only one of the ways to attain revenue from intellectual property but also one of the largest strides for inventors and companies in a bid to harvest returns on their intellectual endeavors.