2016-11-25
Patenting an invention is a good first step in profiting from an invention. However, simply owning a patent does not mean that an inventor or owner will profit from that invention. In order to profit from a patent, an inventor or owner may choose to start a business to market and sell the invention or may sell or license the patent rights to another entity. There are several ways in which you can yield profits from a patent.
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1.Initiating your own venture
Many inventors prefer to create revenue from their inventions by starting their own business to market and sell their invention. A patent provides its owner with 20 years of exclusive rights to make, use and sell the invention. This 20 year period starts from the filing date of the application. By marketing and selling their own inventions, the inventor takes all of the risk and receives all of the rewards associated with the invention.
2.Prototypes
Prototypes of the invention can be used to lure in potential investors. A prototype or a design model may not be as attractive as the final product, but should be able to demonstrate that it can achieve the desired results. This may help investors understand the concept and functionality of the invention. An illustrative prototype might be enough to convince them to buy the patent idea. Having investors in a company may take some of the financial burden off of the patent owner.
3.Licensing
Licensing you patent is one of the most common ways of earning profits. A license is a written contract allowing the licensee (the holder of the license) to exploit the invention. The licensee is authorized by the patent owner to make, use and sell the invention in exchange for a fee and/or royalty. The license may be exclusive where the owner agrees to license with only one party, or non- exclusive which includes licensing to several parties. The license can be for the whole duration of the patent or for a specific period. This option may lead to long term revenue flow.
In certain cases, the inventor may trade licenses with other companies so that both can benefit from their respective inventions. This is called Cross-Licensing. When companies both benefit from using each other’s inventions, they may agree to swap licenses of their respective inventions.
4.Selling a Patent
Selling the ownership of your patent can result in a lump sum payment. By doing so, a patent owner gives up his rights to the invention. By selling their patent, the owner may profit from their patent but have no control over the future of the invention. A patent may be sold at any time during its lifetime.
5.Employed to Invent
Generally, an employee is required to assign all rights of the invention to his employer if he invents it during the course of employment. However, most companies may provide financial rewards for patents to the employee. Under the ‘employed to invent’ doctrine, the employer may still retain all rights to an invention even if the inventor is not subject to an assignment clause. But, there are circumstances where the inventor can retain ownership rights while the employer gets the right to use the invention without any payment. Having an employment agreement that sets out invention ownership can prevent any questions as to who the rightful owner of an invention is.
Monetizing patents can be a stressful activity. Choosing the best course of action for you and your invention can be tricky. The assistance of patent agents and lawyers who understand patents can be beneficial in determining the best course of action for you.
