5 ways to make money from your patents

How can you make money from a granted patent?

Once a patent has been granted, an inventor or patent owner may find themselves asking the question of how they can make money from their patent. Here we present 5 ways you can make money from your new legal asset.

1. Manufacture and sell your invention

The simplest way to make money from a granted patent is to commercialise your invention. This would be effectively achieved by forming a company, manufacturing your product, marketing your product within the inventive field of application and selling your patented product.

By being able to prevent others from using your idea, you will be able to set your own prices without needing to undersell competitors (as commercial rivals would be unable to make or sell your invention). This may provide you with the financial and competitive edge required to become a market leader within the field of your invention, enabling financial reward even after the patent rights have expired.

A product which is labelled as patent protected, or even patent pending improves product marketability as customers would recognise that the product involves new, inventive and exclusive technology, making it more desirable over competing brands.

It should be noted, however, that other aspects of your product may be protected by other parties’ existing patent rights, and proper legal consultation is recommended before manufacturing and commercialising your invention.

2. Licence your patent rights

A second way to secure financial reward from your patent is to licence your patent rights.

A patent licencing agreement is a legal contract between the patent owner (the licensor) and a legal entity (the licensee) which wishes to commercialise some or all of the subject matter which is protected by the owner’s patent. A patent licencing agreement typically allows the licensee to utilise some or all of the protected features of the patent in exchange for various forms of financial compensation including a fixed one-off payment, payments per unit manufactured or a percentage of royalties as non-limiting examples.

A licence may be granted exclusively to a single licensee, or shared between a number of licensees. A licence may also be limited to a specific country or territory. If your business has no intention of expanding production or sales overseas in the near future, patent rights may have additional value in the form of licensing to an overseas non-competitor.

Our article 5 things to know about licensing your IP provides further information on this topic.

3. Sell your patent right

It may be the case that you lack the resources to manufacture and commercialise your patented invention. Alternatively, you may prefer instead to focus on research, thereby avoiding the costs associated with establishing the foundations of a successful business. A short-term alternative to licencing is to sell your patent outright.

If you need money quickly, this approach may be desirable as the licensing route may require several years of product development and marketing before you start to see any notable profits.

There are many established digital marketplaces which may be used to buy and sell patents, with some offering free services and other offering brokerage services for a fee.

You can also conduct analysis on which firms are having their patent applications rejected due to your existing patents. This way you could discover which companies may actually be interested in your patents for further development of their products.

Resource: Watch our ‘What you can do with your IP?’ webinar to learn more about these opportunities

4. Win a patent infringement legal battle

You may discover that a competitor has taken one of your ideas and implemented it into their product without requesting permission or establishing an associated licencing agreement. It may be the case that someone has been inspired by an idea in your patent application after it was published and has commercialised a product based around your idea.

In all jurisdictions you have a right to enforce your patent once it has been granted by filing an infringement suit. If the court determines that an infringement has been made, the infringer may be asked to stop manufacturing and selling the product and to also pay damages to you as the patent owner. It may also be possible, and is often preferable to arrange compensation outside of the court in separate negotiations.

In certain jurisdictions, such as the UK, you may even seek damages for infringing acts which took place after patent publication but before patent grant, provided that the infringing features remain within your claims after grant.

There are risks associated with this approach however, as court proceedings may be costly and the infringing party may seek to invalidate your patent in response to an infringement suit, they would need grounds for invalidation to be successful however, such as the discovery of a prior art document which disclosed your invention before your patent application was made.

5. Inventor compensation

On a different note, it may be the case that you are the designated inventor of a patent, but not its owner. This often happens in companies which have dedicated research teams and contractual clauses to assign any acquired intellectual property rights to the company.

In the UK, an employee inventor is entitled to additional compensation, above their salary, if their invention is protected by a patent which is ‘of outstanding benefit’ to the employer, having regard to ‘the size and nature of the employer’s undertaking’. Many other countries offer similar rights.

This means that if you have an idea in your line of work which is likely to result in a large profit for your employer (relative to their size and the nature of their work), it may be worth seeking patent protection, as you may be entitled to additional compensation if the patented idea develops into a commercial success.

In addition, even if an inventor is not entitled to additional compensation under the law, many companies reward inventors whose ideas are patented with benefits ranging from cash payments to lavish inventor recognition events, in order to encourage innovation.

If you would like advice from a patent professional about how to make money from your patents, please get in touch to speak to one of our attorneys.

For further information about how you can fully exploit your patents, click here to access to our webinar.

Wilson Gunn