What is the Basic Process for Selling Patents and What are the Fees and Costs?

A business strategy that creates corporate value and profits! Explaining the basics of patent sales, fees, and costs

We discuss the process of selling patents, the issues involved, and the fees and costs of working with a patent broker. We also give advice on how to keep your costs to a minimum.

Understand fees and examples! Basic knowledge of selling patents

Patent sales are one of the most important intellectual property strategies for companies. By selling patents, companies can invest in new R&D and business development, reduce patent maintenance and ownership costs, and optimize their portfolios. When selling patents, it is important to conduct detailed analysis of the patent, the technology, and potential business applications to evaluate and maximize their value and find the right buyer.

Basic process for selling patents

Understanding the patent selling process is essential to your IP strategy. First, analyze the resale value of your patents. Second, prepare evidence of patent use and marketing materials to carefully explain the value of your patents to buyers. Second, conduct market research to identify potential buyers and the right contacts at those companies. Second, contact companies to begin discussing the value of these patents.

After generating interest from potential buyers, we enter into price negotiations. Once price negotiations are complete, we present a proposed patent sale agreement and negotiate the terms of the sale. The sale process is completed with the signing of the agreement and the transfer of the patent.

Salable Patent Features

Characteristics of a saleable patent include innovation, market applicability, and competitive advantage. Innovative patents have the potential to set new standards in an industry and generate high interest. Patents with broad market applicability are more valuable when sold because they can be applied to multiple industries and products. Patents that provide a competitive advantage are especially valuable because they give a company a monopoly market position. Patents that possess these elements tend to command a higher price when sold.

To have high sales value, a patent must be infringed by a commercial product or likely to be infringed in the next few years. Additionally, the market for the infringing product must be large. The patent must clearly state patent claims that describe the key features of the infringing product. Also, it must be difficult for a company to change the product design to avoid patent infringement. The patent must have been granted in at least the United States or Europe. Patents granted only in Japan are relatively less valuable. A group of closely related patents is usually much more valuable than individual patents.

It is possible to sell a patent that has already been licensed. A small number of licenses usually only have a small effect on the value of the patent. However, if a large proportion of infringing products are already licensed, the value of the patent will be significantly reduced.

Maximizing patent sales value

Patents are worth different things and are valued differently by different buyers. Each buyer will value a patent based on how it contributes to the buyer’s business.

Therefore, patent valuation, cost, revenue contribution, or comparable patents only provide a rough guide to the value of a patent.

Instead, it is best to create compelling marketing materials that explain how the patent is used in your product and get competing price offers from a variety of buyers.

Analysing patents to understand how they are used in commercial products requires deep technical and patent law knowledge. P. J. Parker & Co. works with specialist analysis companies around the world to generate evidence of patent use to support our marketing efforts.

Preparing high quality patent infringement analyses and marketing materials is essential to maximizing the selling price of your patent.

Patent Selling Fees and Costs

Costs involved in selling a patent

The costs associated with selling a patent can be broadly divided into three categories:

Patent infringement analysis and marketing materials creation costs
Brokerage fees (fees paid to patent brokers who mediate patent transactions)
Attorney’s fees (fees paid to lawyers etc. required for sales contract procedures and document preparation)

In order to ensure a smooth patent sale, it is important to understand the costs in advance.

Patent infringement analysis and marketing materials creation costs

A good patent broker will cover the cost of patent infringement analysis and the cost of developing marketing materials at no charge to the patent owner.

Broker Fees

Commissions on patent sales are calculated primarily based on the value of the patent. Generally, patent brokers’ commission is a percentage of the patent sale price. The percentage varies depending on the type of broker you use and the services offered. The best brokers are fully contingent fee and pay for the cost of a patent infringement analysis. These brokers do not charge a commission unless you sell the patent. Patent owners are encouraged to use this type of broker.

Other brokers will charge you a commission even if you do not sell your patent. We do not recommend using this type of broker.

Commission rates vary depending on the services offered, so you should carefully consider which level of service is right for you.

Cost-cutting measures

Controlling the costs of selling patents is important, and here we will focus on cost-cutting measures.

Have your patents evaluated at the broker’s expense

A good patent broker has extensive experience evaluating whether a patent is saleable and for how much, and will usually provide this service free of charge. A good broker will be willing to evaluate the patent at their own expense and will not charge the patent owner for this service.

Choosing a Patent Broker

When selecting a patent broker, it is advisable to choose a broker that only charges a contingency fee, which should be a percentage of the sale price of the patent, so that the patent owner bears no risk.

Use of digital tools

If you are selling patents, it is important to manage your patent information efficiently. Make sure your patent management system allows you to track when patent maintenance fees are due. Also, make sure your management system documents any existing licenses for your patents, as this information will be important to your buyers.

Effectively leveraging your patent broker of choice and efficient use of digital tools can reduce the fees and costs associated with patent sales.

Finally, working with an experienced broker who is trusted by both sellers and buyers can help a patent sales transaction move quickly and efficiently, saving both sellers and buyers costs.