How To Market Your Patents For Maximum Profit

Information may not be reliable

Inventors and patent holders alike spend considerable time, effort, and financial resources developing and acquiring patents. Whether an individual inventor, a Fortune 500 company, or anyone in between, your patent portfolio could be valuable. 

While there are several ways to monetize a patent (outright sale, licensing, litigation, etc.), the process for divestment typically involves three critical stages: (1) preparing the patent for market; (2) identifying potential buyers; (3) marketing the patent, and (4) negotiating the sale.

 Preparing For Sale 

The first step in preparing a patent for sale is determining the fair market value of that patent. At this stage, it is important to ask, “How is this patent marketable?” In order to make that determination, examine where the patent fits within applicable technologies because the key driver of patent value is infringement.

Also known as “evidence of use,” infringement occurs when a product or service uses the patented innovation outlined in one of the claims. By definition, a patent is a right to exclude, so a patent’s primary value comes from the patent holder’s right to exclude others from using the claimed invention. Therefore, if a product or service is found to infringe on a patent, the value of that patent increases and puts the patent holder in a stronger position for negotiations. 

Since so much of a patent’s value is tied to evidence of use, the first essential step in any marketing strategy is to research and construct claim charts against major market participants. A claim chart is a visual illustration that explains how a product or service is, or is not, infringing on a patent. The purpose of a claim chart is to detail existing infringement, identify which claim elements are being infringed upon, and showcase how crucial the infringed innovations are to the existing product or service. Without infringement (and necessarily claim charts), a portfolio is very unlikely to sell. 

While claim charts are often used as litigation tools, the utilization of claim charts does not mean that a sale should take on an aggressive or combative nature. However, to properly value any patent portfolio, it needs to be determined who is using the patents, and for what purpose. The segments where infringement is most valuable usually occur in expansive technological fields; for example, 5G, cloud computing, autonomous vehicles, and connected homes and cities. 

Choosing the right companies to chart is important, and often requires knowing the market, including what types of buyers may be interested in acquiring. Spend some time researching any applicable market areas, the key competitors of each, and the primary products those companies provide to get a clearer sense of what is in demand, and where possible infringement may occur.

 Identifying Potential Buyers

There are many buyers engaged in the patent marketplace from a variety of industries and backgrounds, each with its own interest in purchasing patents. Therefore, it is important to understand the motivations behind a buyer’s interest in order to target a particular buyer with any given patent portfolio. Identifying any of these buyers simply involves matching the patented technology with the products or services offered by a business. 

Some buyers are primarily interested in a patent’s ability to provide freedom to operate within a technological area or acquiring patents related to their business operations. On the other hand, with patent infringement litigation increasing, both in terms of frequency and cost, some companies purchase patents as a litigation tactic to avoid infringement claims on existing or future products that may utilize the patented technology. There are also a rising number of patent aggregators, licensing companies, and patent consortiums, each with their own defined defensive or offensive patent licensing interests. 

Finally, though the United States continues to be the epicenter of patent value worldwide, foreign patents in key jurisdictions, such as Germany and China, have been increasing in value in recent years. Whether in anticipation of future market growth, to take advantage of existing market conditions (e.g. 5G development in Europe), or to capitalize on legal rulings that are more favorable to patent owners, forward thinking patent acquirers explore patent value beyond U.S. assets.

 Marketing the Patent

After the market has been researched, potential buyers identified, and relevant claim charts prepared, a more accurate valuation of the patent begins to emerge. Having a clear sense of patent value is important prior to marketing a patent portfolio and allows for a more successful marketing campaign.

 A key aspect of marketing patent portfolios are the sales materials, such as confidential and/or non-confidential offer presentations, claim charts, and press releases. Typically, a Patent Broker is engaged at this stage to develop a specific sales strategy and facilitate contact with buyers who have been identified as targets for the patent portfolio. A Patent Broker is also a good option for direct sales and marketing due to their in-depth knowledge of the patent market, including any recent transactions in the relevant field.

 A brokerage firm with an experienced in-house marketing team can also help increase the value of your portfolio by producing targeted marketing and sales materials, and even creating a list of potential buyers by matching patents to the specific or prospective needs of the buyer. Whether via a Broker or not, once contact with a buyer has been established, the transaction moves into its final stage: negotiation. 

Negotiation  

 The patent marketing and transaction process concludes with the negotiation stage, where the culmination of the research and marketing activities may provide a strong return on investment for the patent holder. Negotiation can happen in a variety of forms, depending on the patent and/or the buyer’s motivations for purchasing, but often involve one or more of the following:

·         Outlining the current market and where the patent fits across applicable fields;

·         Showcasing evidence of infringement;

·         Highlighting the strengths of the portfolio, often positioned around the potential buyer’s interests in purchasing;

·         Highlighting where and how the patent or portfolio is unique and therefore an asset; and

·         Utilizing multiple interested parties or other aspects of competition in the field as leverage.

Working with a Patent Broker can enhance the bargaining position and obtain a greater return on the sale, often times by utilizing an accurate valuation for the patent derived from potential infringement and market conditions. 

By strategizing based on the elements and approaches outlined here, a good broker can differentiate a patent portfolio from others, use targeted marketing for a select group of buyers, and leverage the interest of buyers into a greater return. 

Conclusion 

Knowledge is power. To obtain the greatest return on a patent portfolio, it is important to first identify the strengths and weaknesses of the patents, any potential infringement, and possible interested parties, as these could prove extremely valuable during the final transaction. Using this information, a patent holder can develop efficient and effective marketing strategies and successfully pair their patents with specific buyers, ultimately increasing their return on investment.

 The core team of patent consultants at Vitek IP, LLC have analyzed over 20,000 patents, while managing hundreds of buy-side and sell-side transactions for some of the world’s largest companies. Vitek’s founders have over five decades of experience in IP and tech, and have developed sophisticated patent sales and patent acquisitions strategies for some of the world’s largest companies. Vitek’s patent consultancy, brokerage group, and research organization provide clients exceptional guidance navigating the patent landscape. For more information, visit www.vitek-ip.com.