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Everything that is important to know about commercialization, sale and rental of patents - Walla! Trial

2022-01-11T05:39:48.858Z


An entrepreneur who files a patent application, as well as an entrepreneur whose application has already been approved, can make a very handsome profit from selling or renting them.


Everything important to know about commercialization, sale and rental of patents

An entrepreneur who files a patent application, as well as an entrepreneur whose application has already been approved, can make a very handsome profit from selling or renting them.

These developers have two options for commercializing the registered patent or patent application.

Instructions

Gad Bennett, co-legal zap

05/01/2022

Wednesday, 05 January 2022, 12:42 Updated: 12:57

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Entrepreneurs who work on developing a product or an innovative idea and protect it through a patent, usually do so to ensure that they do not have competitors who will be driven by their market share once they move to the production and sales stage. And yet, there are also those who trade in patents. That is, sell or lease the patent application they have filed or the patent that has already been approved for another company, which has the capital needed to develop the product, manufacture it, sell it and market it. This is the main market for patent commercialization. There is also a relatively smaller market, where the purpose of commercializing a patent is to sell it to a company that buys patents that are clearly infringed and can be made a profit through a lawsuit.



What are the options for commercializing a patent application or a registered patent for a company for the development and sale of the product?



An entrepreneur applying for a patent trade can sell it to another company or he can lease it the right to use the patent through a license.



An entrepreneur who sells the registered patent or patent application, transfers, in effect, all the rights in the patent in the name of the buyer. To this end, an orderly commercial agreement must be made with the buyer, stating the rights and obligations of the company in the development, marketing and sale of the product, as well as the type of compensation that the seller will receive for the sale.



The second option for patent trading is, as stated, to "lease" the right to use the new technology or product. That is, give the buyer company a license to use, and then the commercial agreement must also include a breakdown of the type of license of use.

What types of license to use a registered patent or patent application are there?



There are two types of use licenses: exclusive use license (exclusive) and non-exclusive use license. A company that wants to get an exclusive license from you, will probably pay you more royalties, because the expected profit for it is higher.



As stated, it is also possible to grant a non-unique license, in the framework of which you will grant the right to use the registered patent or the patent application to more than one company operating in the same market. Sometimes, such a license may increase your royalties, because its distribution and sale will be more extensive.



What are the considerations in deciding on the type of license to use a patent you are seeking to lease?



The decision on the type of license often also depends on the nature of the product or the size of the buying company. Drug development, for example, requires a huge investment of money and resources over many years, so the license to use is always exclusive.



In addition, if the company is a large company, such as Nike, then it will probably demand exclusivity.

But this is not necessarily a disadvantage, because despite the apparent limitation on the potential amount of sales, a large company has a wider distribution, marketing and sales value, and the chance that it will sell a larger amount of your product will increase.



What are the types of rewards that can be obtained for patent commercialization?



Whether you choose to sell the patent or choose to lease it, the rewards you receive are the result of commercial negotiation, and will include a combination of a one



-time payment, an initial payment combined with rewards, royalties from sales, a minimum annual royalties guaranteed (even if the company sells less) , And more.

An entrepreneur applying for a patent can sell it to another company or he can lease the right to use the patent through a license (Photo: ShutterStock)

How can you maximize the expected profit from patent commercialization?



The ability of an entrepreneur to maximize his profits during commercial negotiations on the sale or rental of a patent depends on the answer to the following 4 questions:



a. How good is his product at the competition? That is, the more the entrepreneur manages to show that the product is at a higher level than the competitors, the higher his bargaining power will be and he will be able to demand and receive a higher reward.



B. What is the level of additional development and what is the level of risk that the buying company is exposed to until you reach a finished product? The longer and more complicated the required development time, and the higher the level of risk, the lower the value of the entrepreneur's product, and with it the bargaining power of the entrepreneur.



third. To what extent does the buying company really need the product? That is, is the product likely to be "just" another product in its catalog, or is it a product that can take the buying company a big step forward, significantly increase its sales volume, open up new markets for it, and more?



D. Does the company need an entrepreneur to further develop and promote the product? If the company needs the presence and work of the entrepreneur, then it is clear that it will have an interest in rewarding him more.



When should you sell the patent to companies that buy patents?



As we mentioned at the beginning of the article, there is also the possibility of commercializing a patent by selling it to a company that buys patents. There are few such companies, and they usually only buy patents that have been approved in the United States. These companies will buy a patent in cases where its violation can be clearly identified by a large company. That is, a company that will be able to pay if the lawsuit against it is accepted. Therefore, a company that buys patents will also



carefully examine the patent and its strength before buying, in order to assess its chances of winning a lawsuit.



Gad Bennett is a managing partner and patent attorney at the firm of Paulina Ben-Ami, patent attorneys, specializing in the registration and commercialization of patents in Israel and abroad.



Ben-Ami & Co. Patent Attorneys Office



Phone

: 053-9377857



Article courtesy of Zap Legal



The information presented in the article does not constitute legal advice or a substitute for it and does not constitute a recommendation for taking proceedings or avoiding proceedings.

Anyone who relies on the information in the article does so at his own risk.

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Source: walla

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