If you own a patent and are considering selling or licensing it, whether or not to hire a professional patent broker is a decision you will have to make. Although most brokers work on a contingency fee, some will also charge an upfront fee to cover their costs if the patent does not get sold or licensed.
You also should realize that not all patents get sold or licensed. Typical success rates are 25-35%. Good patent brokers can increase this success rate, based on their experience in the area and the contacts they have at patent buying companies.
If you want to try and sell or license your patent by yourself, you will have to wait until the patent issues, because most companies will not review patent opportunities until there is an actually issued patent.
You then can submit your patent through a company’s patent submission portal or try to find someone at the company whose job is to review outside patent opportunities. Both of these techniques don’t always provide results.
Most good patent brokers earn their fees because they know these internal patent reviewing people personally or can find out easily through their contacts. A patent broker also brings knowledge of how to create a marketing package for a patent, how to make sure the right companies review the patent, how to price the patent, and how to negotiate a patent purchase or license contract.
Some items to consider:
- Are they experienced? Who are some of the companies they have completed agreements with?
- Ask for an example of a marketing package
- Make sure you get to review the marketing package on your patent and the companies it will go to.
- Ask for references at the appropriate time but be prepared that most deals are confidential and the broker may not be able to give references.
- Make sure you understand the most brokers do not provide legal services and you may need to get a lawyer to review your final contacts. The broker can help negotiate the contract and minimize the amount of time an attorney needs to spend on it thus saving you money.
Know the difference in licensing your patent and selling your patent rights
Selling your patent is like selling your car, typically a one-time fee and an assignment of title. A license is where you grant rights to use your patent in producing a product, typically in exchange for some up-front fee and a running royalty. Today a lot of companies would rather buy a patent and pay a reasonable sum rather than pay an ongoing royalty.
This is due to several reasons such as the company may or may not want to produce the product and only want the patent for offensive purposes. Another is that the resulting product may have several patent technologies and stacking a lot of royalties on top of each other would make the product uneconomical.
Selling a patent can result in the shortest time to money. Licensing can make more money if the royalty-bearing product is wildly successful. A big “If”.
One other way to monetize your patent is to allow another entity to enforce it against infringing companies. This can be very lucrative if it is successful, but again there are a lot of “ifs and pitfalls” in this monetization technique. A good Patent broker can help you sort out the pros and cons of all these techniques; again earning their fee.