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How to make money from the patent?

Sept. 23, 2020



For many people, an invention and its very process is sooner a sort of a creative, philosophical and worldview concept than a utilitarian one. However, more and more inventors are seeking to monetize their patents, that is, to make profits from the use or sale of some subject matter of intellectual property. Many scientists, and not only scientists, dream of creating a genius invention, patenting it, and then living a lavish lifestyle making profits from it. But it is not so easy with the monetization of the patents.

 

At first, let us find out what is the difference between the concepts of a “patent holder” and a “patent author.” The first one is the owner of the right to intellectual property, and he may dispose of the patent at his discretion, including, for example, he may sell or donate his patent. But the second one does not have such rights, despite the fact that the author of the patent is the citizen, whose creative work has created the corresponding result of the intellectual activity. Ideally, both the author and the patent holder should be the same person, but in practice this is not the case. As an example, it is possible to indicate to the scientific institutions and organizations, where the subject matters of intellectual property are created by the employees of these organizations according to a business assignment. In this case, the organization will be the patent holder, and the employees will be only the authors. And the only thing that the latter can count on is the author’s remuneration by receiving a fixed amount of the monetary remuneration or an interest upon the sales or the profits from the product or service created under the patent.

 

And now that we have clarified the difference between the concepts – the “patent holder” and the “author,” let us move on to the most interesting thing, let us talk about the ways the patent holder can use to gain profits from the patent.

 

So, you have registered the right to intellectual property and received a protection certificate in the form of a patent. After that, you may sell the patent with the whole invented technology – this is the first and, in my opinion, the easiest way to make money from the patent, because this is a legal, simple and understandable “sales and purchase” mechanism. The only thing you will have to do is to find an interested buyer. But if you use this variant of gaining profits from the patent, you can sell it too cheap. Thus, for example, Tim Berners Lee, the Internet inventor, did not want to be engaged in the risky business and he transferred the rights to the development of the World Wide Web to computer giants and received the largest fee for his idea – 1 million euro. At the same time, Tim Berners could have become a billionaire, but he preferred a teaching position at one of the USA Universities.

 

Another variant of the monetization of the patents is to grant a license to use your technology. The patent holder may grant both a simple (non-exclusive) license and an exclusive license. The difference between them is that the first one gives a licensor a possibility to retain the right to grant the licenses to other persons, and the second one does not give the licensor the possibility to retain such right and to use the “own” subject matter within the limits established for the right granted to a licensee to the use of this subject matter, unless otherwise is stipulated by an agreement. As you can see, the license may be bought by several companies, or even by one, but in this case, it will have to pay a lot of money to create a monopoly at the market. In any case, the patent holder will first have to find the buyers of the license.

 

Another way is the commercialization of the patent by creating a product based on this patent. However, this path is not suitable for everyone due to the lack of the possibilities to invest in a startup, as well as due to employment, restrictions at the main job, psychological peculiarities and all the rest. After the launch of the manufacture of your patented invention and the increase of the volume of sales, you will be able to “make” your name, and thus to attract others to the creation of the similar products.

 

This situation prompts us another way of making money from the patents – judicial proceedings. Yes, exactly the judicial proceedings on the illegal use of your subject matters of intellectual property. You can initiate immediately the judicial proceedings with the violators of the patent and claim for damages. For example, someone else starts manufacturing the products without obtaining permission and without purchasing the license. In this case, the patent holder applies to the court, and, as a rule, the court makes a decision on the recovery of damages. Sometimes, it may come about recovering quite a large amount of damages calculated in millions of roubles, and sometimes, even tens of millions.

 

There is also another way to make money from the patent – patent trolling. Although this way is not very noble, but sometimes, it is profitable. In this case, one is advised patenting everything, and as much as possible. And those, who will start releasing something similar at the market, will have either to buy the patent or to purchase the license to use your technology. The snag is that is that you will have at least to anticipate the direction in which the particular market is moving to make this scheme working.

 

In addition, one should not forget that the patent is an intangible asset, and it can be evaluated and placed on the company’s balance sheet. And if it is especially important for your company to look more expensive before entering the stock exchange or when communicating with creditors and investors, then this variant will be very advantageous. You can also use the patent as a marketing tool and declare that you have not just the “product X,” but the innovative “product X,” which is created by the best scientists of the world based on the latest patented technology.

 

At the end of this topic, I would like to add that the most important stage for the implementation of the above ways of the monetization of intellectual property is the competent execution of an application for a patent, which will have maximum legal protection. Therefore, one should take into account all the rules and nuances even at the stage of composing and executing the application, and then in the future, you will be able to gain income not only working for “the Man” or being engaged in business, but also promoting the own inventions and ideas at the market.

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Author of article

Kristina Zaytseva

Kristina Zaytseva

Assistant to Patent Attorney