How to Make Money From Your Invention (Chapter 7) - Setting Your Strategy
Strategy setting, relative to the licensing/commercialization decision, is extremely important. Since there are many options that you can consider and that each one can be task and time-consuming, one needs to think carefully about the priority route to consider.
In addition, incremental costs for negotiation, document preparation, etc. will all have to be taken into consideration given your specific circumstances.
1. Strategy Examples
For example, let us assume that you are a small business research company seeking to examine potential license opportunities. Should you consider just the financial return from a successful license or are you also interested in having joint sponsorship for continuing research support in the technology field of the license or some form of on-going consulting relationship as part of the deal?
Similarly, say you are a single inventor, seeking to capture revenue for the current invention, but recognizing that the potential licensee might be a large company. Some people say that is like “a mouse dancing with an elephant”. You might consider looking at other potential licensees. If you are looking for foreign licensees, remember that meetings can be costly, but the burden can be eased by having them in the U.S.
Also, keep in mind, that in addition to direct patent licensing, there is always the opportunity for joint development or strategic alliances using your patents as part of the “deal” or putting your patents into a larger opportunity, e.g. with a venture capital firm. Also consideration must be given if issued patents may be perceived to be potentially infringeable by others.
The options are many and the strategy developed will aim to provide the most expedient path to a satisfactory result. Let’s consider some questions to ask.
1. What is the nature of the technology on which you have patents or applications?
d. National or Global filing (either patents issued or filed for)
2. What is the current state of your financial position, i.e. financial support sourcing?
a. Company (small, medium, large)
b. Governmental Laboratory
c. Single Inventor
3. What is the high level view, as to the outcome, for a potential license or patent sharing?
i- short term, paid-up royalties, or direct sale of patents
ii- long term royalty income,
iii- combination of both
i. Developmental project to enhance the technology already developed and prepare for commercial implementation
ii. Equity Position (cash or stock or both)
iii. Joint Development project — Build and commercialize (joint ownership and splitting of profits)
c. Tax Savings for Mature or Non-strategic Technology
i. Drop patents to save maintenance fees-cost savings
ii. Donate to non-profit institution (U.S. only and subject to current IRS rules)
4. What is your current financial position vs. this technology and its patent position?
a. On-going project (assumes continued financial support)
b. Change of direction for technology
i. Project terminated
ii. Project sold as part of a business divestiture
c. Limited or depleting financial resources
i. For project
ii. For patent prosecution
Your answers to these questions will help you more realistically evaluate the options and develop a strategy that will have the best chance of succeeding.
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This information is presented for the general education of independent inventors by the Invention Patenting Group. The Invention Patenting Group makes no warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed herein, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the Invention Patenting Group.