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Monetizing Your Patents Ten Techniques for Turning Patents into Profits
© Source: Knowledgebase at www.astecs.org Why Monetization is Not Easy Establishing channels to sell products is expensive & takes years. Selling licenses requires a sales team & effort. Infringement is often difficult to detect. Infringers are often difficult to find. Enforcing patents requires armies of lawyers & legal fees.
© Source: Knowledgebase at www.astecs.org Top Ten Techniques 1. Sale of Products 2. Sale of Patents 3. Patent Sale with License Back 4. Selling Patent with Revenue Share 5. Selling Enforcement Rights Only 6. "Friendly" Licensing 7. "Threatening" Licensing 8. "Semi-Threatening" Licensing 9. VC Investment with Strings 10. IP-Backed Loans
© Source: Knowledgebase at www.astecs.org What is a Patent? The right to exclude, not right to use. You Do not Have the Rights to Use your own patented invention. As Elements of your invention may infringe other patents.
© Source: Knowledgebase at www.astecs.org Monetization: Selling Products "Our products are unique as they are backed by our patents". Advantages Product differentiation. Disadvantages Restricted by your sales channels. What’s Involved Establish complete product sales operation. Good Candidates Large corp. with sales channels
© Source: Knowledgebase at www.astecs.org Sale of Patents "We'll buy your patents outright". Advantages Relatively quick & high returns. Disadvantages Give up future potential. What’s Involved Listing & marketing. Good Candidates Patent holders lacking products or sales channels.
© Source: Knowledgebase at www.astecs.org What Patents Sell For Patent invalidated or expired Known infringers $0 $10k-30k $30k-100k Patent Acquisition Value in US$ $100k-$0.5m $0.5-1m $1m+ A B C D E Not litigated No licensees No broad claims Not litigated Broad claims Large market Several competing buyers Fortune 500 infringers F Litigated & won Pending (unissued) patent applications: value is triggered when patent is approved. Value is contingent on approval. Industry-standard
© Source: Knowledgebase at www.astecs.org Patent Sale with License Back "We'll buy your patents and give you a license to continue selling your products that use them". Advantages Cash now without giving up product line. Disadvantages May enable competitors. What’s Involved Listing & marketing patent. Good Candidates Product companies without army of lawyers.
© Source: Knowledgebase at www.astecs.org Selling Patent with Revenue Share "We'll buy your patents and share any subsequent licensing revenue with you". Advantages Cash today & cash tomorrow. Disadvantages Lower up-front payment. Can be complicated. What’s Involved Sale with revenue sharing agreement. Good Candidates Operating companies divesting of infringed patents.
© Source: Knowledgebase at www.astecs.org Selling Enforcement Rights Only "We'll enforce the patents for you. We pay the costs and split the proceeds with you". Advantages Revenue without “selling”. Disadvantages May be joined in infringement suits. What’s Involved Exclusive license with right to enforce, right to join & indemnification. Good Candidates Research labs & universities.
© Source: Knowledgebase at www.astecs.org "Friendly" Licensing "Would you like to license our patents?“ Advantages Reputation as being “nice”. Disadvantages Ineffective. May trigger declaratory judgment suits. What’s Involved Searching for licensees. Often exclusive rights sold. Good Candidates Corporate strategic licensing groups. Academic OTL’s.
© Source: Knowledgebase at www.astecs.org "Threatening" Licensing "If you don't license we'll sue you for infringement!" Advantages Grabs attention. Can be very effective. Disadvantages Led by lawyers. Adversarial. Costly. What’s Involved Finding infringers. Filing lawsuits. Negotiating. Good Candidates Corporations with huge legal teams. Those with little to lose.
© Source: Knowledgebase at www.astecs.org "Semi Threatening" Licensing "Would you like to license our patents? We do plan to enforce them.“ Advantages Can be effective. Disadvantages Can confuse the licensee. Can trigger declaratory judgment suits. What’s Involved Identifying infringers & carefully approaching them. Good Candidates Patent holder with legal resources to pose threat.
© Source: Knowledgebase at www.astecs.org VC Investment with Strings "We'll invest in your company if we can partner with you to enforce your patents". Advantages Preferential investment terms (to VC). Disadvantages May upset your competitors. What’s Involved Finding investor, negotiating terms. Good Candidates Startups with infringed patents.
© Source: Knowledgebase at www.astecs.org IP Backed Loans "We can use your patents as collateral for a loan/credit line". Advantages Source of debt-capital. Disadvantages Encumbers patents. What’s Involved Find lender. Valuation. Loan with security. Good Candidates Corporations with good credit rating. Not for small companies.
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