How to monetize your patents

 

Ultimately, you want to make money from your patents. As we discussed in our patent services page, the patent rights allow you to exclude others from practicing your patented invention. On the basis of the exclusive rights, you can profit from your patents.

 

Generally speaking, there are four ways to monetize patents:

 

  • Commercialization of patents;

  • Transferring of patents;

  • Licensing of patents; and

  • Securitization of patents.

Commercialization of patents

 

Because the exclusive patent rights, you can practice your patented invention to product a product or provide a service for sale. 

 

If the product or service provides special advantages and/or is technically advanced, is well protected by your patents, and the demand for the product or service is inelastic, you may charge a higher price compared to competing products, thus increasing your profit margin. This way, you may quickly recoup your research and development costs and make significant profits.

 

However, if your product or service is not particularly technically advanced, is for a competitive market, the demand is elastic, and your patent is easy to be avoided, you may consider charging a lower price to expand your market share.

 

You can use the time before your competitors catch up to your product to develop other innovative product so that your competitors will still be left behind even if they catch up with your current product.

 

Transferring of patents

 

If you do not have the capacity to commercialize your patents, you may consider transferring your patent to others for a negotiated price. Alternatively, you can use your patent rights to work with other parties to commercialize your invention. For example, you may receive a share in a joint venture in exchange for your invention.

 

Licensing of patents

 

Another way to monetize your patents when you do not have the capacity to commercialize them is to license your patents. You can receive a negotiated fee from another party for practicing your patented invention while maintaining control of your patents.

 

You can also license your patents to your competitors in exchange for a license to use their patents (cross-licensing), which allows you to produce a broader range of products without the risk of infringing the patents of your competitors.

 

Securitization of patents

 

A new trend is to use your patents as a collateral to secure financing so that you can start, expand, or grow your business. However, there usually need to be reasonably predictable cash flows, or exclusive future receivables.

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