When dealing with patents and marketing inventions, one of the most important issues is the commercialization of the patent. Realization of the commercial potential intrinsic to a patent and intellectual copyright requires knowledge and experience. Preferably, that knowledge and experience should be acquired from those with knowledge, contacts and practical experience in the field of patents, marketing an invention and copyright Law.
There are a number of different ways to commercialize patents and inventions. The holder of the patent or the inventor must choose their own preferred track.
There are many variables in the decision making process for the sale of patents and copyright. In order to make the correct decision at the right time, the patent holder must summarize all the relevant information.
In most circumstances, the first thing to do is to protect the inventor’s intellectual copyright by filing an application for patent on the invention before its publication and before any commercial negotiations. Of course it is possible to sell an invention or the rights to use an invention after the examination of the patent application and after the patent has been granted. Nevertheless, it is possible and indeed preferable to commercialize the inventor’s intellectual copyright and title to the invention at the end of the process for the filing of a patent application.
It is also important to plan a timetable for any negotiations for the sale of the title to the intellectual copyright in the patent application and thereby ensure that such will take place within 12 months (and preferably will take less time) from the date on which the application for a national patent was filed and within less than 30 months (and preferably less) from the filing of an international, PCT application for patent.
Usually, when an approach is made to a financial organization, it is necessary to provide such organizations with a business plan, which includes an explanation of the advantages of the patent and a comparison with the current state of affairs and existing patents.
When approaching a strategic company with a line of products in the same field as the invention, it is even more important to explain the invention’s advantages over other products in the field.
To learn something about the value of the copyright for which a patent application was filed, it is necessary to calculate the potential profit from the sale and/or realization of the patent.
Intellectual copyright and title to an application for patent or a granted patent can be sold according to exploitation rights and use in each geographic area or subject to manufacturing licenses for pre-agreed quantities.
Rights to use the patent can be sold to a single body or more than one body, but naturally, the various purchasers must agree to such conditions.
Rights to a patent can be sold in lieu of a single, one off payment but preferably, the sale will involve both a one-off payment and the payment of royalties on the wholesale price for the patented product. It is common practice to receive a fixed percentage of the wholesale price for the product. It is important that any agreement for the sale of rights to any patent protected product shall determine the dates and times for the reporting of sales and payments for sales of the product.
To guarantee that the patent holder’s rights to receive royalties on the invention are not infringed, it is a good idea for the patent holder to sign an agreement with the purchaser of the rights to the patent, stating that a reasonable, minimum periodic payment shall be made and that will prevent any situation in which the purchaser does not make a commitment to a minimum quantity of sales, which would nullify any economic value in the patent sale transaction.
It is also possible to make the validity of the use of patent conditional upon additional parameters. Before the invention is marketed, the holder of the rights to the patent must draw up a plan and a timetable before taking some very important decisions:
- Does the inventor intend to realize the patent by himself? If so, what financial, technical and commercial capabilities are available to the inventor?
- Until what stage does the inventor intend to continue to finance the defense of the patent personally, taking into account the limitations imposed by time, budget and the marketing of the invention.
- Each patent must be reviewed and the possibilities for its implementation must be analyzed. Some inventors decide to finance the defense of their patents only during the initial stages and they prefer to arrange for the provision of the funding required to defend the patent by a potential purchaser or company.
- Rights to a patent can be sold or traded even when it is in the patent pending stage. Potential buyers of rights to patents will usually analyze the potential cost of developing the invention and they will analyze the potential costs for its manufacture, marketing, advertising and distribution. They will also calculate the potential economic benefits accruing from the promotion of the invention. Based on the results from those analyses and calculations, they will determine if they believe that the deal is worthwhile and the price they would be willing to pay for the rights to use the patent.
Inventors (or the owners of an innovation as it is termed by the Patent Office) often believe that they own a patent, but they are using the wrong terminology. If an innovation has not yet been filed with the Patent Office in accordance with the Patents Law 5727 – 1967 and in accordance with the Patent Regulations, they have no ownership of a registered patent.
It is more accurate to say that that they have an invention in their possession and they want to market that invention. However, before beginning marketing activities, they must protect their copyright using the legal tools that enable them to file an application for patent, a design, or a trade mark and thereby ensure that there will be no infringement of their rights.
Before filing an application for patent, it is worthwhile defining the invention in a design concept and that will ensure that the application for patent will include drawings of at least one of the possible ways to execute the invention that is the subject of the application for patent filed with the Patent Office.