Maximizing Value: How to Sell or License a Patent

After spending a large amount of time and money obtaining, maintaining and enforcing a patent, it makes sense to get as much value out of that asset as possible. The most obvious way to do this is to exploit the competitive advantage you have obtained by using the patented invention in your business while precluding competitors from doing so in theirs. If you have a patent on a better mousetrap and have the ability to manufacture, market and sell that mousetrap, then by all means you will want to do so yourself and not give away profits to a middleman.


But in many cases, there may be more value in selling or licensing all or a portion of your patent than in retaining exclusive use for your own business. For example, your business may not have the geographical reach to distribute and sell your patented mousetraps in every foreign market. In this case, you may want to license the patent rights to local companies, or large companies with worldwide manufacturing and distribution capabilities, and receive royalties in return.


In addition, some patents may not add much value to your business but would be very valuable to others. Or you may want to withdraw from your business, or a specific product line, and sell its assets. Under these circumstances, you may want to sell the patent outright so you don’t have to worry about maintaining and enforcing it in the future. In addition, the asset buyer may require a patent assignment so that it can control enforcement and licensing in the future.


There may also be times when it makes sense, or be necessary, for your business to buy or license a patent. Your company may be the “local business” that can provide efficient sales and distribution of another company’s patented product in Ireland. Or if patented complementary technology would improve the efficiency of your manufacturing process, you may want to license that technology. You may also want to buy the assets of a business that include a patent.


Finally, you may find that certain patents give you the opportunity to team up with other companies holding complementary technology or capabilities. Here it may make sense to form a joint venture that creates synergies and increases the value of both companies’ intellectual property.


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