5 Patent Monetization Mistakes That Could Cost You A Fortune
Patent monetization has emerged as a promising way for many businesses to generate a significant amount of revenue. However, there is no single, guaranteed strategy, and determining exactly which path to take when attempting to monetize any one given patent is never clear-cut.
When it comes to patent valuation and efforts to monetize your intellectual property, there are plenty of possible mistakes to make along the way. If you want to get the most value for your patent, try to avoid the following five mistakes.
- Not performing an IP valuation, or not acting on it at all.
If you do not know what your patent is worth, how are you going to monetize it appropriately?
The IP valuation process requires an in-depth understanding of the market, industry that directly affects the value of your patent – as well as related industries. One of the first steps in patent valuation is assessing the necessity of the patent’s underlying invention to products and services in the market. For instance, is the claimed features core to your industry and widely used to generate revenue? Or, is the subject matter of your patent a minor function that is easily designed around to solve the same market demand?
Is your patent a transformative invention or an incremental invention?
In any case, to assess your patent’s worth, you want to also examine the state of the art at the time of invention, if possible. This means determining how your patent may be different from or innovative over other similar, contemporary patents.
- Not having the right patent monetization strategy.
Once you have conducted a patent valuation and understand the strength of your patent, the next step is to extract the value and get that patent generating revenue.
Patent monetization generally happens in one of three ways:
- Patent licensing: In return for a negotiated royalty, patent owners allow a potential infringer to develop, manufacture and/or market the claimed invention.
- Patent litigation: When patent owners cannot strike a royalty deal, or want to enforce their right to exclude a competitor from infringing behavior, owners may bring a patent infringement lawsuit and ask the court for monetary damages.
- Patent acquisitions: Sometimes patent owners find a suitable buyer who offers the right price, at the right time and in the right situation. A potential partner may want to share the risk of licensing and litigation, or a buyer may even offer you a license to continue using the invention.
These options are far more intricate and complex than they first appear on their faces and are often part of the same strategy.
For instance, licensing negotiations could break down and a lawsuit may be initiated to bring the parties back to the table, or a multi-year lawsuit could end in settlement of a non-exclusive license and a hefty annual royalty.
When making goals, you must remember that all strategies require at least some investment and a fair amount of patience.
Do you want to try to recover your investment via licensing your patent, attempt to secure a competitive advantage by excluding a competitor or begin to build recognition as an innovative leader by developing a larger portfolio? The end goal for your patent monetization effort helps determine your strategy, but a solid patent monetization strategy should be able to adapt.
- Not thoroughly analyzing the market and industry.
Patents are often very complex, and IP valuation is an extremely detailed process that requires the input of both lawyers and expert advisers with specific technical knowledge.
Market-based patent analysis takes into consideration similar market transactions of comparable patents. This process may also evaluate utility and technological specificity, along with the market perception of the patent.
Look at your potential competitors and determine if your technology is being applied. Also, consider other industries where your patent may have crossover appeal. You do not want to leave any stone unturned!
- Not choosing the right targets for patent monetization.
It is not uncommon for businesses to have difficulty identifying companies to approach about monetizing their patents. Depending on the technology of your patent, there could be hundreds or thousands of companies to consider. Identifying the right companies for patent monetization is complex and time-consuming.
Some patent monetization strategies start with citation analysis to discover what companies own patents and patent applications that cite your patent. This may not always be good for your specific monetization needs. The theory behind citation analysis is that a more-highly cited patent would cover technology that is core to the market. Citation analysis could potentially yield a list of companies who own patents that cite your patent and may be supplemented with corresponding products and services that infringe your patent.
However, reliance on citation analysis may also be misleading because the citations refer to a patent’s specification and not necessarily the claimed subject matter. Patents can be cited for a number of reasons during the application process and there are no simple ways to determine which features were referenced or which owners are practicing any or all of the cited features. Unfortunately, citation analysis is not capable of producing “magic lists” that identify and rank potential targets, without human intervention.
Therefore, choosing the right targets to approach for licensing discussions or potential lawsuits should be based on an intimate understanding of the subject matter claimed in your patent. Because claims are the only enforceable part of the patent, choosing potential targets for a patent monetization strategy can only prosper with claims-based analysis combined with expertise in the industry and in-depth knowledge of the market. It is wise to use caution when considering any lists of targets produced by software alone.
- Not having an experienced IP consulting firm to package all of this together.
Patent monetization is a complicated landscape to navigate on your own. For instance, IP valuation, revenue strategies, patent litigation support, and buyer identification are all practiced in an intricate world of patent codes, laws and worldwide databases. Not to mention, the various technologies can be difficult to grasp, sometimes, as well.
Partnering with an experienced IP consulting firm with on-hand experts is vitally important for getting the right advice on how to effectively maneuver all of your patent monetization efforts.
Conducting a successful patent monetization process requires the proper knowledge and experience in the area of your intellectual property. Without deep-detailed information about the companies and patents being offered on the market, you have no framework for moving forward in a strategic and meaningful way.
Making critical mistakes in how you go about patent monetization could end up costing your business a lot of time and money.
Ready to learn more how to enhance your patent monetization efforts and jumpstart significant revenue generation for your business? Contact the Patent Miners at TechPats today.