Having patents will add value to your business, however, knowing how to use your patents will provided even more value. As most social media people say “passive income.” Using your patent is a businesses form of “passive income.”
SUMMARY
- Know the value of your idea.
- Everyone wants to use your idea… license it to them, sell it to them, block them.
- If someone else is using your ideas, you can enforce your rights against them and force them to pay you.
WHAT IS YOUR PATENT ACTUALLY WORTH?
This is the million dollar question. If a person offered you an amount of money, would you sell your patent to that person?
Just like any investment, it depends on the market. If there is no market, it depends on how much you believe it is worth. Lets take stocks as an example, why are stocks priced at the amount of money they are priced at? No one really knows, however, people have a belief that owning a part of a business is worth something. The amount of money it becomes priced at is dependent on the market. An investor would have to decide if that price the stock is at is worth purchasing the stock at that price or they can wait for it to move and purchase the stock at a different price. Patents are the same.
You have a right to block others from copying or using the contents of your patent. That is a relatively strong right. However, there are many different factors to take into account when deciding whether how much you should value your patent. A few factors include 1) need in the market, 2) time left before your patent expires, 3) how broad your patent is, and 4) past sales or licenses of a similar type of patent.
MAKE “PASSIVE INCOME” FROM YOUR PATENTS
Here is the juicy part. What to do after your patent gets granted? As your business grows and more people see your product, they may want to get into the same business as you. A few of your options can be to sell your patent or license your patent.
When if comes to selling your patent, there are multiple different ways to structure payment. Once you decide the value of your patent, you may ask for a lump-sum amount or a royalty. In a lump-sum sale, you should take into account the amount of time left before you patent expires since your patent is worthless after expiration and how big the market is. In the case of royalties, you may ask the opposing party to pay you a small portion of the profit that is made off of the patent. There is also the option to do a mix of both, a lump-sum with additional royalties.
If you decide to license your patent, you may be paid in the same way as selling your patent, however, you still retain the rights of your patent. You may decide to control how others use the contents of your patent or even decide how many people you want to license the patent to. You will still be able to sell your product that uses your patent, however, now there will be more “competitors.” They will compete with your business but they are also paying you to be apart of the competition.
ENFORCE YOUR RIGHTS AGAINST INFRINGERS
Enforcing your rights may be the most important part to know when it comes to e-commerce. Now that the e-commerce market is more saturated than ever, you should be prepared to enforce your rights against infringers.
In the traditional sense, this means going to court to force someone to stop selling, making, offering to sell, or using the contents of your patent and also you may be awarded money for it as well. This is a very long process that costs a lot of money, however, you should decide whether the cost is worth the amount of money you may be awarded. In addition, there is possibility to settle early in the lawsuit to avoid litigation costs on both sides. Since the cost is relatively expensive, most businesses decide to reach out to the infringers to offer them a license instead to filing a lawsuit first.
In the new e-commerce sense, many platforms are now providing ways to enforce your intellectual property rights. This route is a cheaper and quicker way to enforce your rights without going to the courts. Most platforms now have a way to send take-down notices with evidence of your intellectual property and having the platform take down the other parties products. This does not result in any money but you are able to stop them from competing against you on the platform. They may then reach out to your to license your patent so they can re-list their product.