How to buy and sell patents [Updated]

Last updated : Sept 2, 2022

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cash right cash talks are you looking to sell your patent you want to hear about how you can make money with patents hey everyone I'm JD Hooven ER USPTO patent attorney CEO and Managing Partner here at bold patents law firm today I'll be talking about selling your patent and getting you everything you need to know about moving it forward today I'll be sharing with you five steps about how to make money with your patented product the first step of the process is identification of the parties now when you're looking to sit out at the table and negotiate a patent sale or patent license you have to know who you're dealing with if you're an individual inventor and you're sitting across the table from another individual that's looking to acquire the rights it's very straightforward but things get complicated quickly if they're a company and if that company has many moving parts you're going to want to know who will have rights to make use sell or import your invention and how much of its can be licensed or sold and now it's time to consider what the party's intentions are the party a which is the one giving up their patent rights and party be the one receiving them in the contract you've got to lay it out clearly what the goals are and what the what is being conveyed right this is a transaction the party giving up their patent write needs to say exactly what is being granted in a patent you've got the ability to grant the ability to make it to use it to sell it in to import it okay and depending on how many countries we're talking about this is a lot of different rights and so clarifying who's giving up what and who's receiving it is also in part of this the major part of the patent sale after the parties and tensions are clear and we already know who the parties are now has talked about the actual rights themselves what is it that you own in the contract you're not going to want to specify the whole list of claims that are listed in the bottom of a patent in the top of the contract what you want to do is instead is say look at Exhibit A or C Exhibit A in the exhibit down at the bottom of the contract will identify the patent number the patent applications that may be pending and the whole portfolio that's being conveyed from there each party will want to inspect each of those identified to make sure that those are indeed the patents publication numbers serial numbers and dates that are associated with the conveyance the actual rights aren't gonna be listed in the contract at all you want to make sure that you look at each of those exhibit references at the USPTO gov to make sure those claim scopes of independent and dependent rights are as you've specified and negotiated for the next step before you move on to the purchase statement which of course is probably what you're all hoping to hear about is the money part of the contract you've got to talk about the prior or existing licenses these are conveyances right transactions at the party a who's giving up rights may already may still be under the obligations for right if you're one trying to license your right to party be its party bees job to make sure that you are getting that they're receiving the full amount of that right if you have actually licensed your invention out to a to someone else in the past or you're under an obligation to assign your patent to another company that needs to be cleared up right up front if the party bee is gonna be a non exclusive licensee that needs to be cleared up upfront as well in the contract that means that they're not going to be the only one that gets to make use or sell the invention they're gonna have competitors built-in now whether those competitors are actually only to market or not is irrelevant it's that they could enter the streaming market against them in competition and in that scenario just painted for you it's gonna likely decrease the value and help them party be the one receiving it negotiate down the royalty or the lump sum payment all right so now it's time to talk about price right this is the part the contract that everyone probably Scrolls down tunes okay how much and you're right this is key this is probably the most important part of the negotiation process what's at play here is the money in terms of lump sum what's received upfront and what's potentially received over time or including contingency payments contingency payments are when you see receive money via royalty if and when a product is sold these are terms that get negotiated patents can be sold out right for a lump sum payment tour there's no license at all it's being sold or the purchase price can be one that's paid for over a several quarters or years or contingent upon certain activity up to an including sale something else to include here in purchase price is to make sure it's not just about the revenue you've got to get more specific are we talking about gross revenue or net revenue that's a big difference it's easy to calculate gross revenue so that's how most deals are done if we're doing net you've got to really get into the business and see what expenses are at play to calculate this properly last but not least once you've negotiated the purchase price and all the other terms of the agreement now it's time to record it with the US Patent Office recording an assignment or license is important it helps to publish the information so that any other competitor or folks that may need to look at this later in a litigation will have the record preserved it's also useful for making sure that deals get done and it's a clear a clear transparent transaction towards there's no no third party that's going to be left out of the loop this is something that both parties agree to and it's not going to be a private transaction it's for all their customers and all the folks that may need to see this after the fact look it up online in the public USPTO database all right we've had fun we talked about how to do a patent sale transaction and what you've got to think about in order to make that happen we talked about how each party has their own intentions and how they need to be articulated right up front in the contract how it's no joke that you've got to make sure you do your diligence to make sure the patents that you're buying are indeed contain the claims that you hope they do then make sure you've done the diligence as well to put down in writing the price point okay is this going to be a royal tea payment lump sum payment or a contingency based on some other activity or performance later on and make sure before you close up that agreement before you both part ways that you've record the document with the USPTO so that's clear and transparent for all third parties later now you know how to make and a transaction right this is the the finish line you've done all the hard work of researching applying for getting your patent granted and now you've made some money with it congratulations thanks for watching I'm JD Hooven or managing partner and CEO here at bold patents law firm have a great day everybody go big go bold

Thanks for your comment Bettyann Bogner, have a nice day.
- Craig Chevalier, Staff Member

how to make money from a patent so I got a great question for my YouTube viewers Franz love you guys who wrote in with his long comment about wanting to make money from a patent and big C's got this patent and he's trying to figure out should I go out and raise money get investors and build a company to create this product or should I sell my patent what's the best way to make money one of my advice so here's the thing okay typically the best way to make money from a patent is to license it out so it's not to go out and raise a bunch money and become an entrepreneur and build this huge business and selling it is is a potential option but it is a short term you get one-time cash influx where it's better if you can license it to a company and then every time they use it they're using in their production you get a small piece of the money so you get royalties coming back to you every month every week whatever it is okay that's typically the best way to do it the reason is you have to look at what your skill sets are okay a lot of people who aren't inventors are really great at inventing that's what they're really really good at that's what they should stick to that's what they that's where they get their their most fun and enjoyment and excitement is from inventing not from building a huge company right if you've got to go out and raise millions or hundreds of millions of dollars to build this business to leverage the patent that may not be what you're interested in that may not be what your skill set is and most of the inventors would go and try to do that they fail because they're not excited by that that's not what they saw what they want to do they just want to invent so stick to inventing and find the company who will pay you every time they use the patent your life licensing it out so in this case Franz was saying that it's it's really expensive to make this product it wouldn't make sense for him to do on his own so he's either got to raise lots of money or go out and sell it and what I encourage you to do is for example so think about say it say it helps cars okay say it helps cars with I don't know what your patent does but let's say it helps the car in the street okay you're not going to go out and raise hundreds and millions of dollars to create your own car company it's better to go and license it to the car companies every time they use it in the car you get paid a certain amount now how do you go out and negotiate one of these deals with a huge company now you may not have the connections to do it the best way to start I found is through connectors and the two best to look at our lawyers and accountants the bigger the name brand the better so an easy way to start is look at whoever did your patent so whatever company that you signed up with hopefully it's not just down the street patent broker you know some some patent lawyer but someone who's actually from a bigger company if they're from a bigger law firm then there are other connections in that law firm who have the in to the company that you need to talk to so if you're dealing with a big law firm and they have a patent you know patent attorney that you're dealing with people at that law firm know the the car company that you're trying to sell to they can make that connection for you and part of their job as lawyers are not just to be lawyers it's to help their clients and you might be a small client for them but the car company that's a big client for them and they want to make them happy and they could bring them a deal that helps improve their business and make them look good and gives them more Billings down the road so look at your law firm first and see how they might be able to help you the other is accounting firms so again a lot of these big accounting firms they have your client already you just need them to make the connection for you it can be a scenario where you're coming to them and you could be a potential client for them as well I'll be at a small client but you got to make this deal happen and they have the contacts to make it happen for you you just have to convince them that it's a good deal right for them to open up their contact book and make that introduction for you it has to make them look good right this is the whole idea is you're making them look good you want them do you want their clients telling them wow thank you so much for making this introduction so your invention has to really work and do a good job and convincing the accountants and the lawyers that it will do that will help them make them want to open up their books make them open up their kind get on the phone and set up the meetings for you so that's my best advice don't try to raise some money to launch this thing don't just sell it outright but try to arrange a licensing agreement where you're getting paid every single time somebody uses your patent belief usually watching like the video thumbs up below let me know what you think leave a comment ask a question below and click on my face to subscribe to the channel thank you so much I'll see you soon

Thanks Emile your participation is very much appreciated
- Craig Chevalier

About the author

Craig Chevalier

I've studied nuclear chemistry at Brigham Young University-Idaho in Rexburg and I am an expert in energy policy. I usually feel lazy. My previous job was adjustment clerk I held this position for 8 years, I love talking about homebrewing and nascar. Huge fan of Jamie Lee Curtis I practice shuffleboard and collect fabric and textiles.