Use an appropriate combination of these methods when negotiating patent prices.
Patent trading market and drivers
The sales value of a patent depends on a number of factors, including the scope of the claims, the size of the market for the infringing product, and the remaining term of the patent.
The adoption stage of a product also significantly impacts patent value. During the early adoption stage of a product, product sales are low and product features are not well standardized. At this stage, the value of related patents is quite low. However, as the product’s revenue enters the rapid growth stage, new companies want to enter the market and need to purchase patents for cross-licensing with existing competitors. At this stage, industrial companies value patents highly. Once the market becomes saturated, there are few new entrants and existing players have already cross-licensed with competitors, so the demand for patent purchases by industrial companies decreases. However, even after the product’s market becomes saturated, the overall industry revenue market remains high, making patent purchases in this field attractive to patent licensing companies.
A practical approach to price negotiations in patent sales
Preparation and mental readiness to improve your negotiating skills
To improve your negotiating power, it is important to first accurately understand the value of your company’s patents and the market. At PJ Parker, we evaluate the value of patents from a comprehensive perspective, paying attention not only to technical aspects but also to market demand and competitor trends. In negotiations, it is also necessary to have a flexible mindset to understand the other party’s position and needs and seek solutions that are beneficial to both parties.
Techniques for getting good results in price negotiations
At P. J. Parker & Co. we use the following techniques to help our clients negotiate the best price for their patents.
1. Information gathering
We collect information on the market for infringing products, competitors, changes in market share, etc. We also look for examples of transactions in the industry your patent covers, which can provide buyers with a basis for their proposed price.
2. Understand the other party’s position
By understanding the other party’s business and the benefits their patents bring, we can make proposals that benefit both parties.
3. Flexible proposals
We can work with patent owners to develop flexible pricing proposals – for example, we can suggest that in addition to purchasing the patent, the other party may be interested in licensing the patent or purchasing products from the patent owner.
By understanding the business situation of the other party, we can create flexible win-win transaction structures.
Legal aspects and points to note in negotiations
After reaching agreement on the price and main terms of the patent transaction, a patent purchase and sale agreement needs to be prepared, for which we strongly recommend that you hire an attorney experienced in patent purchase and sale agreements and license agreements.
