3 Factors to Always Consider when Licensing IP
Licensing is often the best and most appealing way to monetize or profit from one’s intellectual property, particularly with a manufactured device or a manufacturing process. For instance, it is always the right of the patent holder to prohibit unauthorized use of patented technology and seek out compensation if that IP is infringed.
However, identifying infringement may not always be an easy process because such unauthorized use may not always be immediately apparent. Experienced analysts can provide market landscaping services as well as reverse engineering services to help discover potential infringement and take the first steps to finding licensing partners.
Before contacting a potential infringer for licensing purposes, the patent owner should collect and assemble accurate and convincing documentation to demonstrate the alleged infringement. These services performed by TechPats analysts will help to ensure you are best equipped for any negotiation.
When preparing to negotiate a license, TechPats can also assist by providing the following services:
• Patent and portfolio valuation
• Analysis for potential defensive assertion
• Invalidation and prior art analysis
• Evaluating alternative designs for infringement
• Expert tutorials and reports
Revenue Generation
While most companies recognize the value of patent holding for defensive purposes, good patent licensing support can be just as valuable to corporate patent holders that need to monetize their patents as sources of revenue. For instance, Bloomberg reports that Eastman Kodak, in need of cash to finance corporate restructuring, has adopted a patent monetization strategy. According to the article, Kodak’s plan is reminiscent to the strategy applied by Texas Instruments Inc. (TI) that leveraged infringement litigation to compel royalties from unauthorized users of TI technology. At one point during this campaign, TI had more revenue from patent royalties than from business receipts. Kodak’s licensing programs generated $838 million in revenue in 2010, and have generated more than $3 billion in revenue since 2004.
Portfolios
While licensing a single patent is not unheard of, a general approach for licensing deals is to offer a license to a patent family, a group of patents, or an entire portfolio. Of course, the more patents involved in the deal typically means a higher royalty rate, but the number can also help draw a potential licensee to the negotiation table. Especially today, when the threats of Inter Partes Reviews and invalidations under 35 U.S.C. 101 loom large, it is important to have a backup plan when potential licensees do not immediately cough up a royalty on first notice of infringing a single patent. When initially pursuing licensing partners, having a good showing of several patents being mapped to various facets of their business can demonstrate the value of a licensor’s entire portfolio. Licensing support experts can bolster a patent owner’s leverage by identifying patents that can help drive a licensing deal, as well as developing evidence of use charts that become the backbone of the discussions.
The Time Factor
A patent monetization policy can be quite effective as a revenue generator, but time is a very significant factor. The life of a patent is a quick 20 years and it is unlikely that anyone would pay a royalty for an expired patent. In order to preserve enough time to bring potential licensees to the table, as well as generate revenue and maximize royalty payments, now is the time to retain professional support.
Ready to learn more about licensing and how to apply investor tips to increase the value of your portfolio both now and in the future? Contact the patent portfolio experts at TechPats today.
