So you have a patented invention but have no idea what to do next? And what are the different options for making money available to you? This article will provide you with detailed information on how to invent it on the market – independent IP creation and licensing.
The first step is to comprehensively study your invention and become familiar with the industries in which it can be applied. Do market research!
Google can help you a lot. Look for top companies and emerging players active in the target markets of your invention and study all their existing products / services. Sources and references may include online business journals, magazines and blogs. Also, try to identify emerging technologies that will hit your target markets in the future. This is because you may find a product that violates your technology, so you can also file a IP infringement case against the manufacturer. Perhaps your technology can be used to enhance the functionality of an existing product, helping you create IP licensing opportunities.
You have to think from a customer standpoint if you want to succeed. Read customer feedback on social networks, e-commerce sites, company websites, and online blogs. Analyze the problems customers face with current products and help them find solutions. This way you can create your own personal brand and establish your own fan following. Here you can also inform your customers about your future product launches and business plans.
Let’s take an example. The company sells an electronic device that has an early warming problem. Fortunately, you have developed a special chip, which can solve this problem. What you need to do is look for the online reviews that customers have posted about the issue and tell them that you have come up with a solution. You can build trust among a group of customers, help, it will be easier for you to market your products.
If you research the market comprehensively, you will get half the game. The next step is to study the market analysis reports and the exclusive IP monetization strategy for your invention. There are two options:
Patent licenses are the same as renting a house to a tenant; you retain ownership of your IP rights and at the same time allow someone to use them to produce and sell products for a specified period. The licensing agreement may be maintained between individual inventors or companies; the IP holder is called the licensor, and the party who calls the right to use, sell, manufacture from patented technologies is a licensed person.
As an IP bearer, you have the right set of conditions in the licensing agreement. The terms may include a fixed amount of future sales or a unit of copyright per unit.
However, it is difficult to say what the total amount you can earn as an inventor is licensing your patent to others. It depends on the evaluation of the patent, which is influenced by several factors. These include:
Overall market size and growth rate
Number of patents falling over the patent period
The number of customers who make the purchase
Costs and benefits for product development
Manufacturers annual profit
There are two options for IP licensing – exclusive and non-exclusive. In exclusive licensing, only one licensee has been granted exclusive rights to develop and market the invention (usually an exclusive license agreement is entered into with start-up companies, helping them to grow in competition). Non-exclusive licensing, on the other hand, allows multiple licenses to simultaneously practice patented technologies, helping to fully exploit IP.
The royalties that the inventor receives on IP licenses range from 2% to 10% of total revenue. If you think “why should i get a small slice of pie when i deserve the whole part“, you should go about producing and selling the product yourself.
According to a study by Ed Zimmer and Ron Westrum, more than half of inventors have chosen to produce and market themselves.
To be a successful businessman, you need to be familiar with the business world. In addition, you must possess these personality traits:
- Seller: All entrepreneurs have one common purpose ie. to sell their products to the maximum number of people. Therefore, you should have salesperson qualities, tell people about your products, and persuade them to enroll in your list of paying customers.
- Take the risk: Sometimes you have to get out of the crowd to hit six on the last ball to win the game. Although, there is a possibility of disappearing, but you have no other option. As a successful businessman, you must be prepared to take risks. You may face bankruptcy or reduced credit, but at the same time, you have a great chance of returning to another game.
- Innovator: Innovation is one of the key tools for business growth and you should be an expert at it. Providing people with something new and upgrading products and services with the latest technologies help attract new customers and retain existing ones.
- Manager: You need to have managerial skills and know how to handle a team. You need to understand the fact that employees are key elements of the business; and they can help you increase your sales only if they are focused and inspired.
Patent licensing and production are two options for market invention. But it’s hard to say which one is better. Both have their advantages and disadvantages, and it is up to you to choose based on your personal preferences.
So your goal should be very clear. Whether you want to start your own business or earn copyright by letting someone use your IP rights.
However, the return on investment is higher if you are going for production and you need thousands of dollars to start a business. If you do not have enough funding, IP licensing is the right path for you.
Production or licensing, what do you think is the best option for IP commercialization?