Factors Involved in Selling your Patent - Business Ideas

Patent monetization refers to the activity when a patent owner sells or licenses a patent for a monetary gain.  The patent could have been developed by the patent owner or acquired from a third party. Patent sale and purchase activity is fairly common these days, however, the term ‘Patent monetization’ was coined only in recent years.  Companies view Patent monetization as a route to generate revenue and even fund the prosecution of additional patents.  Individual patent owners look to getting fairly compensated for their inventive contributions.

Patent monetization evolved with the corporation and entrepreneurs recognizing that there is a market for patents that are unused or underutilized.  The type of patents, size of the patent portfolio, and the dollar amount vary from the few thousands to several million (e.g. one of the recent big transactions include Intel’s offer to buy InterDigital’s 1700 patents for about $375 Million).  The buyer’s need to buy such assets also varies from a need to bolster their patent portfolio for litigation purposes, provide coverage for their products, save on years of research and development, to simply buying them as an investment.

Every patent owner looking to monetize their patent asks the question, how do I“Generate revenue from my patent.”  The simple answer is that there is no cookiecutter approach – in fact, some who have used such approaches have been burned or were not able to realize the highest patent valuation.  A savvy and experience patent broker uses a well thought out and crafted approach that aims the patent at the right market segment for the highest impact. (Additional thoughts are presented at www.velocitran.com)

As you may know, Patent monetization and deal making often takes place in unregulated markets and often behind closed doors.  Patent brokers with expertise in patent law, finance, technology, and market landscape make a difference by positioning the patent such that it is attractive to the intended buyers.  Sounds like a simple principle that is used by any good salesman to make a deal right? But this is not the case or as simple when it comes to a patent.  Since these are intellectual assets that are at times purposely written in vague and broad language, a single word in the patent can substantially change its value.  A patent broker who is not just a patent attorney, but someone who has actually both prosecuted a patent before the patent office and litigated them can truly understand the scope of the patent language and have the vision to apply it effectively in a Patent sale for increased valuation.

Patent valuation involves several factors.  To name a few, these factors include claim scope, application to current use, life remaining on the patent, technological area, other alternatives available in the market place, and if the patent forms a fundamental building block for future technology.  Not every patent fetches a big dollar amount.  The value increases depending on how a patent addresses these factors.  Skilled patent broker attorneys can develop creative applications of these factors to enhance value.   Although all are important, one of the more important factors in valuation is the application of the patent claims to existing technology.  For this reason, if a patent portfolio includes pending patents, along with their issued parent patents, and leaves open the possibility for the inventor to shape the claims of the pending patent to read on existing technology, then the portfolio as a whole starts to look very attractive and valuable.  This is especially true in the case where the pending patents have support in the patent to backdate it to the original filing date of its parent, which may be several years before the technology was widely adopted in the market place.  

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