Unleashing Value from Intellectual Property
Patent selling strategies for Indian startups, Patents are some of the most valuable assets available to an Indian start up; they can act as a form of competitive advantage and unlock new revenue streams. Some people just carry their patents for a rather long period of time, or use patents for any kind of product development, while others sell or monetize the patent as a source of instant financial gains from the same. Patents can become one of the very effective means of exploiting your intellectual property and pushing growth in your start-up. Selling a patent is not easy. It requires strategic thinking, familiarity with the market, and knowledge of legal structures related to intellectual property in India. This guide will explore various strategies to sell patents to Indian start-ups and guide you through the complex landscape while maximizing the value of your patent.
1.Understanding Patents and Their Value
Before learning how to sell a patent, it would be best to first know what a patent is and how it could help your business.
What is a Patent?
It refers to the exclusive right granted by a country for a product or process invented to an inventor. In India, it is given for 20 years from the date of the filing. They must be new, nonobvious, and industrially applicable. This will place the patent holder on competitive footing in the market.
In most start-ups, patents represent high-tech technology, innovative products, or unique processes that differentiate a company from the competition.
Why Should Start-ups Sell Patents?
It is such a great move that the start-ups come up with patent sale. There are the reasons why are follows:
- Cash Flow: The patents can be sold in cash directly. This is precisely what a growing start up needs working capital for.
- Core Business: If your start up is not interested in the commercialization of the patented product, selling a patent frees up some of the resources that you could invest in the core operations of the business.
- Strategic Partnerships: Patents can sell and create strategic partnerships with companies that operate in the same industrial space of the patent sold. This increases visibility of your start up.
2.Important Considerations Before You Have to Decide That You Want to Sell a Patent
There are numerous important things that you ought to consider as you make this determination:
1.Patent Value
The value for a patent is established in the market. There may be the value for a patent on the basis of its market demand, commercial opportunity, and also the level of competition in the industry. Below are the important factors responsible for changing the value for a patent:
- Novelty and Innovation: Patent would be the one which reflects innovation or quantum leap in present technology. It should be highly prized patent, yet more novel.
- Market Need: Observe if it is absolutely a need in the market, and the companies are ready to pay for that patent.
- Licensing and Commercialization Potential: If there is a strong potential for a patent to license or monetize a patented invention, then tremendous value a patent could provide lies there.
You can seek the services of an expert patent value or an attorney experienced in patents and they may quote you appropriate fees.
2.Market Research
Identify who your potential buyers or users of the patented technology are. Understand the demand in the market and find companies that would benefit from your patented technology. For example, in the case of renewable energy, target a business or corporation in the clean tech sector.
Lastly, determine if your technology is still of interest. Reach out to industry contacts or attend trade shows to see who may be interested in your patent.
3.Patents in Your Portfolio
If your start up owns several patents, then this question is associated with the strength of your patent portfolio in general. Such a portfolio would make bargaining power for sale all the more persuasive for a buyer. Furthermore, patents tend to sell and license so much easier as part of a portfolio of patents since it brings an inventory of technologies in view for a purchaser.
Indian Start-up Patent Sales Strategy
Once the patent has crossed and is satisfied with its worth, then it is high time to start planning to sell it out. Here below are a few methods that can assist Indian start-ups in maximizing the return generated from their patents.
1.Sell patent to big corporates or multi-national firms:
Large corporations buy patents because it is either a technology firm or manufacturing firm or pharmaceutical that wants to enlarge the lines of offering to the product and merely knocks out the competitors. In this sale of big corporate, there would be only one payment toward the selling of the patent offering a prospect of long association term.
- Find companies: that are interested in your patented technology. If you have patented a software innovation, then, obviously, interested parties will be in the high-technology business.
- Pitch Your Patent: Contact such companies directly and approach the departments involved in R&D, IP, or Business Development. Explain clearly the possible applications and the benefits of your patent.
- Business Case Development: Focus on the value proposition of the patent, demand for the product in the market, and the competitive advantages provided. This would help the buyer understand the value your patent adds to their business.
2.Contact Venture Capitalists and Private Equity Companies
VCs and PE firms would like to buy patents in the hope that the patents bought by them may come in handy later to augment their portfolio or be invested in some promising technology.
For most venture capitalists, patents are considered very valuable assets as they can sell them or sell the commercialized patents to big firms and gain a return.
- Proof of Concept of Your Start-up: VCs would be interested in buying patents if they have growth potential for your technology. Be prepared to discuss your start-up’s business model, traction, and competitive advantage.
- Due Diligence on Legal and Financial Aspects: Prepare yourself for due diligence processes by VCs or PE firms. Be organized with patent documents and be prepared with an attorney who understands intellectual property.
3.Patent Licensing
In the event that you do not prefer patent selling, then patent licensing is the alternative. Patent licensing will allow you to retain your rights but allow you to collect returns in the long run.
Categories of Patent Licensing:
- Patent Licensing as Exclusive Licensing: In such an instance, you license the patented technology with the licensee so that they acquire all the rights over using, making, or selling it in exchange for paying them the royalties or collecting the money together.
- Patent Licensing as Non-Exclusive Licensing: Here you get to license your patent along with third parties. You collect different revenue streams.
How to License Patent
- Term Negotiation: Specifies the terms such as royalty, payment schedules and anything with an exclusivity clause.
- Identify Interested Companies: Identify companies in the industry that would be interested in your patent including a Start-up, manufacturer, or technology company.
- Legal Framework: Avail the service of an IP lawyer to create a sound licensing agreement in a manner that all terms are enforceable under the law.
4.Patent Auction
Patent auctions are the channels through which the inventors or patent holders sell to the highest bidder. For the start-ups that have a need to liquidate their products either because they are in a rush selling or may not know who would be interested in purchasing it, this will come very handy.
How to Sell Your Patent through Auction
- List your patent: Please identify an online auction site that deals with the selling of intellectual property. The top two selected options should be IAM Market and Yet2.
- Pitch Your Patent: The minimum amount you expect to get from the sale of your patent is what is set as the reserve price.
- Market your patent: in detail so that interested buyers will have a very clear understanding of what you have to sell.
5.Join with Paten Brokers
Patent brokers can be used as middlemen. These are people that may represent the inventors or start-ups that need to meet with the possible interested parties looking to buy or acquire patents. They have leads of potential interested buyers of your patents and can easily negotiate to sell the patents.
Steps on How to Use Patent Brokers:
- Good Broker: First, choose an experienced broker dealing with your area of expertise or niche. Opt for a famous broker who enjoys a good reputation.
- Reveal all details regarding your patent: scope, commercial value, and practical industrial usage.
4.Legal and Financial Considerations
The best source of income from a patent sale, some legal and financial considerations apply also:
- Intellectual Property Protection: Description of the technology or Invention about intellectual property protection-proof that the patent is completely protected and you own the right to sell or license.
- Taxation: Income from patent sales or licensing may attract capital gains tax or royalty tax. A tax advisor is advisable to prepare you in terms of tax implications.
- Patent Assignment Agreement: Draft a clear, legally valid patent assignment agreement regarding the change in rights.
- Royalty agreements: In the event of licensing, there should be royalty agreements to contain any payment schedules coupled with performance milestones.
Conclusion
Considering everything, patents are not only the protection of Indian innovation but also a very significant source of income for start-ups. Patent selling or licensing, which, from hundreds of options-like selling outright your patent or licensing it with third parties and anything in between-can reflect the actual value that could be had by approaching them in an actual, not assumed manner.
Identify the correct buyers, get the appropriate price for your patent, and use professional services, including patent brokers or attorneys, to access the value from your intellectual property. Selling or licensing patents could be a means through which one raises finance, builds a valuable partnership, or accesses an advantage over other market players regarding competitiveness for the starter.
FAQs
Q1. How much do I value my patent to sell?
You will measure the market demand, novelty of the invention, relevance to the industry, and possibilities of its commercialization. You may opt for hiring a patent valuation expert or hire a patent attorney who will give you an exact valuation.
Q2. Can I sell my patent to an overseas company, say in USA, China or Europe?
No. Patents can be licensed or sold to companies in India and abroad. International patent sale is subject to the intellectual property law of a country; so, you shall seek a lawyer who is skilled in cross-border transactions.
Q3: I need to get a buyer of my patent from India.
You will find giant corporations, tiny start-ups, venture capital firms, and even independent inventors all wanting to buy patents in India. You may source a buyer by networking, patent online platforms, or even through patent brokers.
Q4: License rather than selling my patent?
Licensing will make possible long-term passive income by offering you a license to earn an income in regards to patents under your name, while, one-time or as a single one-time, outright sale makes for a much less desirable source for generating profits unless you prefer liquidating rather than licensing.
