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Patent Licensing for Licensors: Know Your Industry

Photo of a stack of 100 Euro notes, symbolizing revenue from patent licensingOver the past few years, several of my clients who had obtained patents wanted to license their rights to third parties. Only one client achieved patent licensing success.

The reason: The successful client was intimately familiar with the industry where his technology had its greatest value. He had worked in that industry for many years. He knew highly-placed executives in the most important companies. He was familiar with the companies’ product development plans.

Success vs. Failure

It took a year and a half, but ultimately we negotiated his first license agreement. It called for a six-figure sum up-front, and up to several million dollars in royalties before the patent expires.

The other clients, in contrast, had to guess at the best companies and the right individuals to approach. Not knowing the companies’ plans, these clients never gained traction. They spent time, energy and money but, from the patent licensing perspective, they failed.

Patent Licensing Recommendations for Licensors

Here are my recommendations for inventors and entrepreneurs who are pursuing patent licensing from the licensor perspective:

  • You are likely to achieve the best return by patenting inventions in an industry that you know well.
  • If you don’t know the industry well, work with someone who does.
  • Be prepared to invest several years and many thousands of dollars in the effort. If you do not have that much time and money, look for a lower-risk investment.

In summary, patent licensing can be a great source of revenue – but only if the licensor has, or can gain access to, in-depth knowledge of the relevant industry.

Related post: Patent Licensee: Have a Track Record if You Want to Succeed

Photo credit: Gabriel Schouten de Jel via stock.xchng

Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.