Did you know that 97% of all patents never make any money whatsoever? Combine that with the fact that the patent cost alone can set you back upwards of $40,000, that figure can be absolutely crippling to entrepreneurs who don’t have the luxury of a multi-million-dollar corporate safety net.
That said, there are countless strategies that any entrepreneur, yourself included, can use in order to move away from the 97% and join the 3% of profiting patent-holders. While none of these are certain to bring anybody out of the red, they have been shown to help make that red ink at least a little more affordable.
Get Your Intellectual Property Portfolio Valuated
The phrase “patent valuation” simply refers to the act of having an attorney or non-attorney business person look over your patent portfolio with the purpose of determining what kind of value, if any, it holds.
Oftentimes, per the 97% figure above, this practice produces results that entrepreneurs won’t find favorable. However, there’s no way to know whether you’re in the 97% or the 3% without knowing the value of your patent portfolio.
It only takes a few days for most attorneys to valuate your portfolio, but that time can increase or decrease depending on a number of factors, including the following:
- The patent in question’s industry.
- The patent in question’s similarity to other products and market saturation.
- The current state of the economy.
- The presence of any prospective or actual buyers in the attorney’s network.
Essentially, it all comes down to supply and demand. If you’re the only person supplying what millions of people are demanding, then you’re likely to make a large chunk of cash with your intellectual property.
Consult with an Intellectual Property Advisor
When it comes to intellectual property law, you’re not necessarily lost without an advisor like you would be without an attorney. The difference between a patent attorney and a patent advisor is that patent attorneys specialize in law and legal applications, whereas patent advisors tend to specialize in business and economic practices.
By consulting with an intellectual property advisor, you avail yourself to a whole new world of possibilities. Whether you’re looking to increase the revenue from existing monetization strategies or uproot and reboot every shred of your monetization plan, intellectual property advisors can help guide you every step of the way.
Essentially, intellectual property advisors give you the tools and information that you need in order to take your intellectual property monetization plan from theory to practice. As an entrepreneur, your goal is to keep your head in the clouds. As an IP advisor, their goal is to keep your feet on the ground.
Research Patent Brokers
There are hundreds of patent brokers across the surface of the planet and yet, few entrepreneurs are familiar with the phrase “patent broker.” A patent broker is a person who focuses on facilitating transactions between patent-holders and patent-buyers, much in the same way as a real estate broker facilitates transactions between homeowners and homebuyers.
Patent brokers in the United States make up the large majority of interactions that you’re likely to have, although there are undoubtedly quite a few international buyers looking to invest in American capital. In fact, in 2018, the net capital account for the United States was measured at about $3.235 billion. That’s quite a bit of foreign buyers looking for American capital!
It is important to note that patent brokers don’t have to be attorneys. That said, it is important to make sure that you either hire an attorney who is also a patent broker or an attorney and a patent broker.
Hire an Intellectual Property Lawyer
The image of an attorney sitting around, smoking a cigar, and filling out lawsuit paperwork is just as antiquated today as it is fake. Intellectual property lawyers do a lot more than just sit around conducting lawsuits all day. In fact, if you want to monetize your intellectual property, hiring an IP lawyer is practically a necessity.
Not only do intellectual property lawyers have the ability to do everything that non-attorney patent brokers and patent advisors can do, they also have the ability to sue, assist in legal applications, and protect you in a court of law should you ever find yourself on either side of an infringement dispute.
Oftentimes, attorneys will even forgo their claims to any attorneys fees and court costs while footing the entire bill for the lawsuit. This is especially true for attorneys with whom you already have a working relationship, though the specifics vary from attorney to attorney.
Consider Selling Your Patent
Oftentimes, selling your patent can be the most profitable monetization strategy available. While it might be difficult for you to let go of something that took you several months or even a couple years to create, it is important to keep in mind that all entrepreneurs–yourself included–are entitled to the opportunity to make a living.
By selling your patent, either through a patent broker or simply with some help from your attorney, you can potentially recoup all of the costs and fees associated with the patent application process. If you’re lucky, you can even make enough money to turn a profit.
Of course, selling your patent isn’t guaranteed to be a success. In order to maximize the odds of finding a buyer, make sure to use a transaction marketplace with a high level of traffic and a large number of active users.
Consider Buying More Intellectual Property
Monetizing your existing intellectual property isn’t the only way to gain money from monopolies. In fact, studies have shown that diversifying your assets can reduce risk while increasing reward. So, if you’re sitting firm with one or maybe two patents to your name, consider branching out and purchasing patents in different industries, copyrights, trademarks, etcetera.
When finding an intellectual property marketplace, make sure to look for one with a large number of active users and an intuitive user interface. There’s always the option of hiring a broker, as well, if you’d rather not have to worry about negotiating on your own behalf or any of the rest of the hassle.
Of course, you have to make sure that the intellectual property that you’re looking to purchase has been valuated by your attorney or broker beforehand. Otherwise, you might end up purchasing a pretty-looking but worthless hunk of junk for tens of thousands of dollars.
Research Bridge Financing Options
When we say to research bridge financing, we’re not talking about taking out a bridge loan, which is a short-term loan designed to provide finances to a company while that company waits to secure more long-term financing options. Instead, we’re talking about a form of venture investing in intellectual property.
This monetization strategy functions by offering a loan to a company that puts up its intellectual property as collateral for that loan. Of course, the specifics vary from agreement to agreement, but the general gist of this form of financing relationship is that it enables venture capitalists to invest in intellectual property without actually having to buy it.
On the flip side, this practice also enables startups to easily secure bridge funding by putting up their high-value intellectual property as collateral rather than relying on credit or some other form of guarantee.
Look Into Intellectual Property Venture Investment
Speaking of venture investment opportunities, when it comes to intellectual property, there are quite a wide array of options from which to choose. Whether you’re looking for a more traditional loan opportunity to further expand the production practices that your patents are supporting.
The most common form of venture investment is done through a form of convertible stock; however, there are options for you to put your intellectual property up as collateral in order to secure loans, investments, or even business partnerships. The opportunities are limited only by what your business has to offer and what your prospective investors are willing to give.
For the most part, venture investment strategies can be put to the best use by startups and newer businesses looking for high-risk financial assistance. For larger firms, you might want to consider other options.
Consider Licensing Your Intellectual Property
By licensing your intellectual property, you remain the primary owner but other people become legally allowed to use your patents, copyrights, etcetera. For example, if you hold a patent on a motorcycle engine design but don’t have the factory capital to produce any of those engines, you might find it most profitable to license the design for production by somebody who does.
Typically, licensing a patent does not bring in as much gross revenue in the short-term as a total sale of the intellectual property. However, they have the potential to lead to significant financial gain in the medium and long terms, particularly if you can come to an agreement with a producer that enables you to license the intellectual property to multiple clients.
Maximizing your total level of market control without giving up your government-granted monopoly is one of the best (not to mention most common) methods of monetizing intellectual property.
Practice IP Partnership
Another great monetization strategy is to form intellectual property partnerships with other entrepreneurs and investors. This is another form of venture investing and can be quite a high-risk option for investors, but the potential for improved return on investment over–for example–securities speaks for itself.
IP partnership involves forging a working relationship with an early-stage business in order to enable that business to better build on its intellectual property portfolio. The ways in which this is done tend to fall into one of only a handful of potential practices.
One of the more common methods is to buy “shares” in a company’s intellectual property and another is to forge a more traditional business partnership while helping the new company find additional funding options and break into new markets. For entrepreneurs with high-value patents and low current capital, this practice can be a real life-saver.
Help New Companies with Intellectual Property Development
In a similar fashion to IP partnerships, intellectual property development serves as a great way for a business to monetize its patents, copyrights, trademarks, and trade secrets without having to sell or license them. For the most part, the phrase “intellectual property development” simply refers to any practice or consultation that boosts the profitability of an intellectual property.
This sort of investmenting is typically done through a patent brokerage firm or well-connected attorney and can be negotiated from just about anywhere. It tends to involve a partnership or contract that enables the early-phase business to source new intellectual property, continue staffing operations, or break into new markets.
From the perspective of the patent-holder, this practice can enable quick and reliable funding options that you can use to rapidly expand the real-world applications of your patents in a highly-profitable way.
Obtain IP Analyses Anytime Your Portfolio Changes
Having your intellectual property analysed is less of a monetization strategy and more of a don’t-go-bankrupt strategy. Intellectual property analysis takes on a variety of shapes and sizes and covers most things in the realm of commercial viability and law.
Whenever your intellectual property portfolio changes, so too does its ability to generate revenue, unless your new additions cause absolutely no net change in monetization, in which case why buy them in the first place? In order to keep on top of your monetization practices, you need to ensure that your portfolio is analyzed anytime anything is added, altered, or removed from it.
Doing so enables you to keep reliable records that your brokers and/or attorneys can then use in litigation, to expand your portfolio even further, or to increase profitability of your existing patents.
Secure Anti-Counterfeiting Protections
In today’s digital age, it is easier than ever before to steal technology in the form of infringement on patents, copyrights, trademarks, or trade secrets. In 2015, the Federal Reserve published a report estimating that more than half of all technology owned by Chinese businesses was stolen from foreign companies.
Fortunately, China seems to be taking steps to crack down on companies that sell counterfeit intellectual property and otherwise violate international monopoly treaties. However, counterfeiting remains a multi-billion-dollar loss every year for the global economy, which further highlights the need for strong anti-counterfeiting protections.
Fortunately, within the confines of the United States, this is much less of a problem because the United States government can be used to stamp out any unwelcome competition, provided of course that you’ve already secured your attorney.
Conduct Frequent and In-Depth Intellectual Property Audits
Although the name can be intimidating and the process can be time-consuming, intellectual property audits are actually a vital part of the operations of any business.
The main purpose of IP audits is to expose any risks and highlight any opportunities present in the company’s intellectual property portfolio. Of course, that’s not all that these audits do. They also enable IP-owners to find uses for unused intellectual property, correct failures in legal registrations, and design monetization plans for the acquisition of new intellectual property.
It is important to conduct an intellectual property audit at least once a year in order to ensure that no money is slipping through the cracks. The last thing you want is to hit a competitor with an infringement lawsuit only to find out that your registration was improperly filed.
Look Into “PCT Nationalization”
PCT nationalization refers to the Patent Cooperation Treaty, which refers to an international treaty to respect intellectual property legislation. The Patent Cooperation Treaty has been signed by the governments of more than 150 different countries, making it possible to expand into one of those markets without risking the uncontrolled loss of your intellectual property.
Branching out into an international market is virtually impossible without a lawyer at your disposal and becomes exponentially easier after hiring a patent broker with an existing international presence.
By spreading into other nations, you increase the size of the people with access to your intellectual property, enabling you to more easily sell, license, loan, or do pretty much anything else to monetize your intellectual property.
Remember to File Working Statements
This monetization strategy is only important if you plan to break into the Indian market, which happens to have one of the largest populations on the face of the planet. It’s typically a great idea to do so, but the patent laws in India can be a little tricky. For one thing, you are required to file “working statements” each year in order to maintain your patents.
In order to maintain the government-granted monopoly on your intellectual property in India, you have to file a document stating to what extent your intellectual property has been put into use in the Indian market. If you fail to file such a document, you could face a wide variety of legal pushback from the country’s government.
However, if you do correctly file that working statement, you can increase the odds of maintaining a national monopoly over the country and further monetizing your intellectual property.
Seek Additional Training
When it comes to patent monetization strategies, you can never have too much information. In order to ensure that you can get the most out of your intellectual property, you need to make it a personal goal to know everything there is to know about your intellectual property portfolio. A single error and you could wind up like Whitserve.
There are also a few things that you could learn to make it easier to work with an attorney in order to facilitate a better working relationship and better patent monetization as a result. By knowing exactly how to convey your goals to an attorney or a patent broker, you can ensure that your monetization strategies will be tailored exactly to how you want them.
Now that you have this large list of patent monetization strategies at your disposal, all that’s left to do is head over to Bold Patents and tell us which one you think will work best for you. If none of the above seem to match what you’re looking to accomplish, then don’t stress. There are countless other monetization strategies from which to choose.
Legal Note: This blog article does not constitute as legal advice. Although the article was written by a licensed USPTO patent attorney there are many factors and complexities that come into patenting an idea. We recommend you consult a lawyer if you want legal advice for your particular situation. No attorney-client or confidential relationship exists by simply reading and applying the steps stated in this blog article.