A patent gives the owner the right to benefit from his innovation. Thus, to take full advantage of the patent it is not enough to claim rights over it but also to monetise the same. Patent monetisation has developed as an effective method for organisations to create more income. There are various ways to monetize a patent selling, licensing, enforcement, and patent pooling.
Example of a company that has taken great advantage from the patent monetisation is IBM. They are focused on licensing their patent to earn tremendous amounts of money. In 2019 alone, IBM was estimated to have earned US$367 million in revenue on patent licensing activities.
THINGS TO FOCUS ON BEFORE PATENT MONETIZATION
There are certain factors to keep in mind before planning to monetize patents:
Research the Technology Landscape – It is important to study the patent landscape and to understand the inventions by the competitors and its influence on the innovation cycle that helps in assessing correctly the worth of the owner’s patent, there are a few things to keep in mind are nature of the invention, competitor analysis etc. This process helps in getting the best value for the patent.
Choosing the Right Strategy– There are various ways to monetize a patent and it is essential to choose the strategy, which will be more beneficial for the proprietor be it selling or licensing. It helps in maximising the profits of the owner.
Collaborating with the right firm– Patent monetisation involves many technical and non-technical aspects. Thus, partnering with the right firm can help in maximising the benefits. The right firm will have a good understanding and experience in monetizing patents.
Holistic Approach – While selecting the patents for monetisation the owner should adopt an approach considering the IP portfolio as a whole. It is important thereby to keep the portfolio robust and up to-date.
WAYS TO MONETIZE THE PATENTS
- Patent Licensing – It is the assignment of responsibility to a third party by the patent holder to let him make, use and sell the innovation solely for a certain amount of pre-chosen royalties.
- Patent Enforcement– A patent holder can enforce the patent after it has been granted. The process of implementing a patent is time taking and costly, thus a settlement is often sought with the infringer. If the infringement persists then the owner can approach the court and get criminal and civil remedies. It is not a direct way to monetise on the patents but is a way to stop infringement by the third parties.
- Patent pooling- It means pooling patents from different license holders, and licensors and alleviating certain exchange fees. This helps in gaining an advantage from an incorporated model which is supportive of bundling.
- Patent Selling and Brokerage- Herein, selling of the patent by the patent holder to a third person and thereby giving him the privileges of possession to the purchaser.
- IP Bank- The bank offers a substitute monetisation course for an organization’s underutilized IP that goes through none of the lawful and reputational chances connected with attestation permitting or “privateering” utilizing a re-appropriated NPE licensor.
LICENSING
As we know, Patent Licensing is a grant for some consideration of exclusive rights related to a particular patent or technology. Patent licensing agreements involve certain terms and conditions based on which can be divided into two categories-
Exclusive Licenses– in this the patent owner transfers all the rights like the right to sub-license, filing suit for infringement related to the patent only keeping the title of the patent with himself. Non-Exclusive License – in this the patent owner cannot be sued by the Licensor for patent infringement .This Licensing involves giving license to more than one company, which means that one licensee may exploit the innovation, but along with them, others who have been given the license for the same Patent may be entitled to equal exploitation.
BENEFITS OF LICENSING
- There is a continuous payment of royalties when a patent is licensed. The licensor receives a regular payment for a pre-defined time from the licensee. Thus it is a reliable source of income.
- Licensing a patent is beneficial to the Licensor as it helps him to generate additional revenue as well as increase the Licensor’s market reach by penetrating those markets, which the licensor cannot alone.
- Licensee benefits as it reduces the cost of operation by saving the cost of R&D. It as well saves time of re-investment of the product. Further, the partnership of the patent owner and licensee helps in combining their expertise and expanding their business.
DISADVANTAGES OF LICENSING
- Theft by third parties: The Licensor has no control over its intellectual property. As well he is prone to intellectual property theft by the third parties who may ride on the patent reputation of the licensor.
- Risk of Licensee’s Ability: The Patent holder relies on the licensee’s abilities & efficiency to efficiently commercialise the Patent product. The risk of poor quality management & strategy of which they lose their control, either completely or partially, on their own invention.
- Trouble in Determining Licensee: It takes lots of time & effort to find out the suitable licensee for the innovation. It is vital to obtain a potential licensee and have a structured agreement in order to have the greatest possibilities of success.
CONCLUSION
Patent monetization is a reliable source of revenue generation. The whole process of monetization is value for money for the applicants. Monetization requires creating profitable scenarios and choosing the best strategies for the company’s business whether is it selling or licensing. It is advisable to hire attorneys for ensuring a smooth and profitable transacting process. The experts can help in deciding the type of monetisation best suited for the company using specific tools and analysis techniques. They as well oversee the legal requirements and offer company-specific solutions to make patent monetisation successful. Licensing can be mutually beneficial to both the licensor and the licensee. Though licensing can as well increase potential competition and risks for both parties, thus it is important to consider potential opportunities.
