We receive many inquiries from organizations and individuals asking if we can sell their patents. In many cases, we can. However, for some patents, there are no buyers. The market for patents depends largely on the following factors:
Below, we explain each of these factors.
Many first-time inventors believe that any patent is worth a lot of money. This is not true. To have value, a patent must provide some protection to a commercial product. If there are no current or future commercial products that fall within the scope of the patent’s claims, then the patent will have no value.
For a patent to have sale or licensing value, it should be aimed at an industry with large revenues, preferably more than $1 billion worldwide revenues.
In the high-tech industries—semiconductors, electronics, IT, and telecommunications—products are very complex, and each product makes use of thousands of patents, even hundreds of thousands of patents. It is impossible to make a new product that does not infringe on other companies’ products. Therefore, companies typically cross-license patents with their competitors, and companies buy patents prior to cross-license negotiations. For cross-licensing, the number of patents (and their quality) is important. One or two patents is not very useful; a portfolio of 10 to 20 patent families is usually the minimum size for a sale.
At the opposite extreme, in the pharmaceuticals and chemicals industries, it is possible to protect a product with a single chemical composition patent. Therefore, single patents or single patent families are readily sold or licensed.
Other industries fall between these two extremes.
A patent’s quality will depend on:
To have good value, the patent should be granted in at least one of these regions: USA, China, or Europe (and registered in Germany or Great Britain). If the patent is not granted in one of these, even if there is a pending patent application, it probably has no sale or license value.
In the high-tech industry, obtaining a patent in more than the above countries adds, at best, incremental value. By contrast, in the pharmaceuticals industry, a patent should be obtained in all countries that have large populations of potential patients. In addition to the preceding countries, it is common to obtain patent coverage in other major European nations, Russia, Canada, Mexico, Japan, Korea, India, Indonesia, and Australia.
Other industries fall between these extremes of the high-tech industry and the pharmaceutical industry.
Each license granted to a patent reduces that patent’s value for sale or subsequent licensing. Previously, companies granted licenses for their entire patent portfolios for very wide ranges of products, needlessly reducing the value. These days, most licenses are usually granted for specific types of products or specific technologies. However, imprecise definitions in the scope of license can lead to uncertainty as to whether certain products or technologies are licensed, reducing the value of the patents. Therefore, we recommend that companies define the scope of patent licenses precisely and as narrowly as possible. Imprecise or unnecessarily broad licenses can reduce the value of a company’s entire patent portfolio.
In the IT, electronics, and telecommunications industries, it is nearly impossible to sell or license a single patent family. In the pharmaceuticals industry, a single patent family can be sold or licensed. Other industries lie between these extremes.
P. J. Parker & Co. will only represent a patent portfolio if there are at least some patents in the portfolio that are granted in the USA, Europe, or China, and preferably in all three regions. Without patents granted in the US, Europe, or China, it may be possible to sell the patents to a company in the country where the patents are granted. In this case, we suggest you work with a patent broker in that country.
There is no standard patent value. A patent's value depends greatly on how it will be used. A patent could be used to exclude a competitor from a market, gain licensing revenue, negotiate a cross-license with a competitor, or to counter-sue against a competitor. Each of these uses will give a different value. When selling a patent, the value equals the highest price a buyer is willing to pay, minus the costs associated with selling the patent. When licensing a patent, the value is also the result of negotiations between patent owner and licensees.
In the absence of commercial use by another company, the patent probably has no sale or licensing value.
If all the patents in your portfolio are granted, with no pending applications, it is difficult to increase the value of your portfolio. However, if you have pending applications, there are ways to increase the portfolio value by adding new patent applications. You can file a continuation application with patent claims crafted so that current or future commercial products are likely to infringe. And within a limited period, you can file the corresponding foreign patent applications.
