Selling Your Patent

Selling your patent outright is a quick and easy way to exit with cash in hand. It is a “take the money and run” strategy, something one would do in recognition of the fact that thousands of patents produce no wealth and it is prudent to take the early payoff if one can get it. This reality cannot be stated enough. Most patents produce nothing; in fact, some inventors toil for so long trying to find a market for their idea that the patent expires! By selling a patent outright, you avoid this outcome and ensure that you gain at least some reward for your efforts.

Selling a patent is also an attractive option for serial inventors; that is, those who intend on developing many more ideas to patent and pursue. Anyone who does this knows that it is an expensive business. Supplies, living expenses, legal costs, and other items make the creative process a rewarding but costly endeavor. By selling a patent, you can generate some quick capital to pay these expenses and/or fund the development of other ideas. This way, your operations become more self-supporting as you rely less and less on savings or income from your day job.

That said, there are some potential drawbacks to selling. After all, if your patent protects a new or unproven idea, the patent buyer probably wont want to spend a ton of money for it. It would simply be too big a gamble. Then again, what if it becomes a huge hit? More concretely, what if you sell your patent for $10,000 and it generates $10,000,000 in profits for the new owner? This is a very real possibility that you must reckon with before selling. For many people, this possibility is enough to scare them (irrationally) into rejecting perfectly good offers and holding onto their patent indefinitely.

However, you can and should make this decision intelligently. Think long and hard about your idea. Is it so innovative, so groundbreaking, so over-the-top revolutionary that it is going to redefine an industry? Or are there similar products out there for sale already? In the former case, you might want to hold on to your idea or hold out for a higher sum. In the latter case, however, you should reason that you might make money or you might not. You should take the sure thing: ie, sell the patent if someone makes an offer.

(It is worth noting a potentially lucrative alternative to selling: licensing. Licensing your patent grants exploitation rights to a licensee in exchange for royalties and performance options to ensure the licensee acts to make the patent a success for you. For a more in-depth explanation of patent licensing, see our article on the subject.)

How do you actually go about selling your patent? Several options exist, and you should choose the one that best matches your strengths and resources.

One way to sell your patent is through direct contact. Very simply, you would make a list of manufacturers and potential users of your product. A good place to start is the Thomas Register, which is available in most public libraries and on the Internet. It has contact information for thousands of companies across hundreds of sectors. The Yellow Pages are another solid resources in this regard.

When you do make contact with a firm, you want to present yourself as a Product Developer, not a mere inventor. This exudes an air of professionalism that established companies prefer. Then, request a face-to-face meeting with a Sales Manager or Product Manager within the company. Now, a word of caution is in order. You only want to schedule such a meeting if and when you have secured a patent for your idea. Otherwise, you have to ask the company to sign Non-Disclosure Agreements which they are unlikely to sign for standard business reasons. Therefore, a patent is your best (and often, only) means of selling your patent through direct contact methods.

Another option is to attend trade or invention shows. Here, you will encounter companies or people interested in your product and potentially buying it. Generally, it helps to have secured a patent here as well, if only because it would be easy for an interested party to run with your idea him/herself.

If neither of these options suit you, you can also advertise in trade journals or inventors’ magazines to scout out potential buyers for your patent.

In closing, selling your patent is a potentially lucrative way of capitalizing from your invention. If you have secured the patent already, you are in prime position to market it to interested parties and evaluate potential buyers in your quest to profit from your labor.

Eric Corl is the Founder and CEO of IdeaBuyer.com, a marketplace for new technology and products that gives inventors the opportunity to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers. You can email him at EricCorl@IdeaBuyer.com. You can visit the site by clicking here > Patents for Sale.

This entry was posted on Friday, January 4th, 2008 at 12:54 pm and is filed under Advice, Featured, Patents. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.