A patent is one of the intellectual property assets that yield long-term monetary returns to its owner if it is applied appropriately. In India, patents are protected by the Patent Act 1970. The act is concerned with the security of innovation and invention. This is to be done by strictly giving the inventor the rights to the creation exclusively. Most of the inventors lack a proper way for commercializing patents. Only three ways of effective monetizing a patent either by selling, licensing, or commercialization have been termed as a must with full knowledge of the process.
This paper elaborates on various methods of selling or monetizing a patent in the Indian market.
Understanding the Patent Process in India
One’s appreciation of how one can sell or monetize his patent happens first. The basic insight with which this will happen is, of course, what a patent is and what it is doing under the law of India.
1. What is a Patent?
Patent is a kind of intellectual property. Patent rights are exclusive to the owner of the patent. Patent in India offers protection to new, not obvious, and industrially applicable products or processes. It is his right to restrain people from making, using, or selling his invention without his permission.
2. Patent Registration Process in India
The first approach towards patent monetization is to ensure that the invention is patented in the Indian Patent Office. This is, in fact a process through which an inventor shall submit an elaborated application stating as to why the invention would be novel and useful and not similar to those found in earlier solutions.
Examination and Granting: After filing the same, patent application remains under process of examination. Once granted, absolute rights are allowed for 20 years from the date of filling.
Patent Protection: Patent protection and rights are exclusively granted; no one can manufacture, sell, or distribute the patented product or process.
3. Patent Maintenance
Other significant things a patent requires are maintenance. It refers to the annual renewal fees. A patent may lapse if the renewal fees are not paid. A patent owner needs to know at what time such renewal dates fall so that the protection continues uninterrupted.
How a Patent Can be Monetized in India
With your patent in hand, you can exploit it in several ways. The main ways by which one can exploit his patent include selling, licensing, or commercializing an invention. Let’s discuss them step-by-step.
1. Selling a Patent
Patent selling involves the selling of ownership rights of a patent to a third party. It is pretty good when one doesn’t look forward to marketing it himself.
Key Steps for Selling a Patent:
- Determining Patent Value: The first thing to determine before selling a patent is how much it’s worth. It is possible by conducting market demand research, reviewing the technological importance of the patent, and reviewing the level of competition in the marketplace. Alternatively, this step can be left to a patent valuation expert.
- Identify your potential buyers: that is, the companies or individuals in such industries that could be interested in your patented invention. For example, if it’s a new medical device that you have patented, the buyers will be health care companies.
- Negotiate your terms: find your buyer, establish clear terms of sale in the sale and, for instance, the price for your invention, your payment terms, and rights transfer.
- Preparation of Patent Assignment Agreement: Once the buyer agrees with you on the term of agreement, prepare a legal document called a “Patent Assignment Agreement”. Assignment is a contract that commits patent rights to you by the buyer.
Normally, a sale of a patent is done only once. After completing that one, you lose all claims to your invention as well as further royalties also.
2. Patent Licensing
This is the situation wherein you can stay as the owner of the patent but lose some of your rights either to use your invention or its manufacturing. A little royalty shall be paid to you from this position, and some upfront payment could arise as well from this position.
Type of Patent Licensing
- Exclusive License: You are forced into becoming one single company that becomes licensed to utilize the patent. You are not licensed to permit these rights in anyone else.
- Non-exclusive license: In this scenario, you will have several firms that are all licensed under one patent, and you can gain your royalties from several licensees.
- Sub-licensing: If he intends to sub-license the patent, then the licensor can license it to other companies.
Process for Licensing a Patent
- Select Target Licensees: Determine the organizations or companies who would value implementing your patented innovation. An illustration is the patent of an invention part of some machinery; several manufacturers dealing in that particular category are sure to be attracted towards it.
- Term Negotiation: Royalty rate, lump sum, non-exclusive or exclusive arrangement, and time duration for which the licensing deal will be done.
- License Agreement: it is a legal document which explicitly states all terms of the license, the scope of use, the term, and the compensation. It must be drawn by a patent attorney so that it is in accordance with the Indian Patent Law.
Licensing creates long-term passive income and happens to be one very popular method because most inventors would desire to hold their intellectual properties while generating passive money from its use.
3. Commercial Exploitation of the Patent
You can commercially exploit the patent by manufacturing and selling the patented invention if you have the capacities and infrastructures. It is a commercially viable investment with higher returns in the long run.
Steps to Commercialization of a Patent
Business Plan: Patented product will be commercially viable. Therefore, an appropriate business plan is essential. Production cost, marketing plan, and distributing channel have to be considered
Product Manufacturing: Having prepared the business plan, manufacturers are to be searched for patentable product or process. That involves negotiating manufacturers either in India or abroad.
Market the Product: Sell your product by creating awareness with the right customer segments. This may be through digital marketing, attendance at trade shows, and building distributor partners.
Distribution of the Product: Distribute your product through partners or independent sales channels to get it to the ultimate consumer.
Its commercialization process is quite lengthy and time-consuming with lots of efforts in India, but it will make the owner of the product fully control the product and the generation of revenues.
4. Joint Ventures and Partnerships
You could also raise more money by sharing the profit or part of your patent through a joint venture with other firms. Most of the time, it’s in terms of partnering even bigger firms, thus offering an avenue for scale up by larger resources from bigger firms in scaling up your patented product or service.
Summary: Key Steps Identify Compatible Counterparties Identify companies whose objectives and prospects will align with your patent. If you are patenting something related to saving energy, then you can approach companies dealing in renewable sources of energy. Terms of Partnership State what form the partnership should take, investment amount, role every party plays, and revenue division.
Contract Formation: A legal contract that defines terms of partnership and usage of patent.
This would avoid risks but utilize the capacity of larger firms.
Legal and Financial Issues
Selling or commercialization of patents in India will attract several legal and financial considerations:
- Tax Implications: The income from licensing or sale of patents comes within the Income Tax Act. So, do bear in mind studying the tax structure applicable to your kind of income-a capital gain, royalty, etc.
- Patent Enforcement: Where there is an infringement, your rights can be enforced in the Indian courts. This is an extremely long process and costs lots of money. You must therefore have a very good understanding of mechanisms of enforcement.
- Indeed: legal assistance recourse to a patent attorney would be very advisable for preparing contracts, scrutinizing cases of patent infringement, and determining whether the agreements entered are proper in form and good legal practice.
Conclusion
Fair scope in whatever form the patent is sold, licensed, or commercialized and requires thought, negotiations, and laws regarding intellectual properties. Get huge returns in unlocking your patent value by looking into all the other alternatives in studying what could best be helpful for your specific invention and then hiring professionals in understanding the legal and financial sides.
FAQs
Q1. Can I sell my patent to any Indian Company?
Yes. That is possible. You can sell your patent to anyone in India. There should be a patent assignment agreement with the assignment of rights of ownership to the buyer.
Q2. Is my patent worth anything?
This value can be obtained by looking at the demand of the market, the novelty of the invention, and even commercial applications. Professional patent valuers will give you a closer approximation.
Q3: How do I locate licensees for my patent?
You can find licensees through direct approaches to companies, through trade shows, or by utilizing online patent licensing platforms. You can also connect with people through industry-specific groups.
Q4: What’s the difference between exclusive and non-exclusive licensing?
Exclusive licensing: This type of licensing is where just one licensee has the rights to use your patent. More than one licensee can have the right to use the same patent, and you can receive royalties from each.
Q5. I hold a patent, and somebody infringes my patent in India. Can I enforce my patent rights in India?
Yes, in India, no bar exists in taking legal action for patent infringement. However, the process involved is lengthy and costly, therefore proper legal advice is required in this regard
