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By
Ronald
J. Riley
You can manufacture and market your
idea yourself while the patent is pending. Some companies will not license
a patent until it is granted. If you chose not to manufacture and market
the idea yourself then you will probably have to wait until the patent
is granted.
There are four basic marketing strategies.
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Manufacture and market the product exclusively
yourself.
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Grant an exclusive license to one party.
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Sell the patent outright.
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Grant non-exclusive licenses to any
party.
If your patent
gives you a lock on a large market number 1 or 2 will encourage other companies
to infringe and or attempt to invalidate your patent. It may be necessary
to grant an exclusive license if a significant startup investment is required
to bring the idea to market. Outright sale removes most the burden of defending
the patent but could result in dramatically less income for you if the
patent is very successful. You can still be charged with inequitable conduct
and dragged into litigation even after you have sold the patent.
Non-exclusive licenses remove much of
the market pressure to get around the patent and ensure that you are compensated
proportionate to the success of the patent's idea. In most cases, a non-exclusive
license is most profitable for the inventor and therefore the best method
of marketing your idea. One other consideration is that income from an
exclusive license that is properly drafted may qualify as a long-term capital
gain resulting in lower taxes.
Producing product yourself is often
more profitable then licensing. It may be necessary to produce a product
to prime the market if it is a new technology. Promoting a product yourself
will help to generate interest by potential licensees. One drawback to
producing a product yourself is that the demands of running a business
may leave you little time to create new inventions. I often joke about
the fact that I don't own the business. It owns me.
Many people who get a patent expect
money to start flowing without any additional effort. It doesn't work that
way. Getting a patent is only 10% to 25% of the job; now you must market
your idea. Marketing takes more effort than getting the patent. You must
identify companies that would have an interest in your idea, and you must
identify the proper person to approach within each organization. Sending
a blind letter is usually wasted effort.
The next step is finding a market
for your patent. This is where you will discover which companies are reputable
and which are not. At least half will fit into the disreputable category.
Make sure you create a clear paper trail of all your contact with each
person of every company that you attempt to license or sell product. Try
to get them to sign a nondisclosure agreement before you divulge much information.
If they are honest, this won't bother them. If their honesty is marginal,
it will show them you are serious and may deter them from trying to steal
your ideas. If they do steal, the documentation will make a much better
case and it is much more likely they will settle out of court. If they
don't settle it makes your chances of winning much higher. A clear paper
trail will make an attorney much more likely to handle your case on a contingency
basis.
My personal experience is that it
is best to market a patent by contacting upper level management persons
responsible for sales at the target companies. Persons in engineering are
usually not interested in new ideas that were not theirs. Persons in sales
are usually paid on an incentive plan that creates a strong incentive ($$$$)
for them to promote improvements in a product or expansion of the companys
product offerings.
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Patent Infringement
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