This strategy will help sell your patents at the best value
If you’re a seasoned innovator (or senior patent counsel), you would agree with me when I say that – One of the quickest ways to generate income from your patents is to sell them.
Immediate earnings from sales give you (or your organization) the capability to fund other great ideas you may have. It also foregoes all the hassle and uncertainty when it comes to setting up a business around it, in order to sell the product protected by your patents and generate profits later.
Granted, by selling a patent, you(or your organization) also lose your right to any future earnings which this patent might bring to your pocket. But if selling the portfolio seems to be the best option to you, then you must also ensure that you get the best from what you sell.
How do you increase the value of your patents before selling them?
Thorough due diligence and innovation strategies can help elevate the value of a patent manifold. Customizing your marketing strategy according to a prospective buyer can make a huge difference and impact, which likely cannot be attained using a “one shoe fits all” strategy.
How do you craft such a strategy?
Well, this is where consultancy firms like us can help. In our years of experience and expertise in the field of technology and IP analysis, we have devised the means to create tailored pitch decks and other marketing materials for your patent portfolio. This package can allow you to curate the value attached to your asset according to the interested parties, and help you fetch a better price for it.
Is this worth pursuing and are we any good? That’s for you to decide after going through how we helped a client sell his patents at a high value.
How we helped Tom get the best value for his patents?
Our client, Tom (original name withheld) came to us with a rather interesting problem. He had a set of patents related to minimally-invasive surgical methods to treat a particular condition and had the prospect of putting a dent in the norm. The current practices involved high-risk, invasive, and cost-inefficient surgeries. He wanted to sell the patents but did not know exactly how to.
Following is the strategy we devised to help Tom:
Firstly, we conducted a patent due diligence – strength check, freedom to operate, ideas to file for continuations in part, as well as get the patents and the technology reviewed in an unbiased way by some of the leading industry experts in the domain, to build a solid case demonstrating the real impact that those patents carried.
Pre-engagement due diligence is one of the most important steps, since doing this may reveal hidden information that can dramatically alter the value of the portfolio. In case the due diligence pushes out information that works negatively against the portfolio, then we have the liberty to prepare in advance and try to offset some of the problems.
For example, a strength check study can reveal some of the hidden qualities within the patent, as well as put the patents against a strong prior art test to see if there are any amendments we can make to the current portfolio, file continuations in parts, etc. Freedom to operate search can help provide a very clear picture regarding how the business can plan their expansions in other geographies and add untapped new value. For example, the potential buyer can get an idea of markets they can expand into post the acquisition of these patents.
In our project, we found that India and Africa have an emerging demographic which was largely uncaptured, and these patents can be used to tap into that market as well. For instance, Tom’s surgical patents were issued recently and in case of an acquisition, there is enough time for the prospective buyer to file continuation and continuation-in-part patents around Tom’s patents.
Tom had little budget to actually build a prototype and get it tested, so we brought several experts on board to review these patents and give a detailed review on how functional these patents were.
Figure for representative purposes only
We also had a look at the market trends and insights, to see the CAGR of the market which demonstrated a steep rise over the coming years. The domain in which these patents were filed had one of the highest numbers of civil lawsuits filed in a primary market, which can easily scare the investors off.
We also studied all the patent lawsuits, judgments, and appeals regarding current market products, and tried to understand if the portfolio was able to offset some of the most daunting issues plaguing this surgical domain today.
An infringement study was also conducted to see if there is any product in the market that infringed those patents or vice versa. This way, we were able to prepare some very strong marketing materials that demonstrated a clinical and market case for the patents.
Then, we were able to build a strong financial case for the patents – from the patent purchaser’s point of view, it is extremely important to understand that they may need a clear picture of how a set of patents can help them make commercially viable products as well as offset some of the costs in order to make a competing product as a new sector entrant.
The below image is taken (recreated for confidentiality reasons) from the marketing materials we made for Tom to present to prospective buyers. It describes how his patented method compares to other products available currently.
Figure for representative purposes only
With the IP angle covered, we next checked market trends to help set the right value of the patents
We dug deep into the current surgical costs (even considering revision surgeries that occur due to complications that arise post-surgery), hospital costs, the role of insurers and health systems as payers as well as how much uninsured people are willing to pay to get rid of this condition they were suffering from. We crunched the numbers, to get an estimate on how each of the above aspects will be impacted with a rollout of our product as a replacement to the current methods.
This helped make a very convincing value case for the patents, that was based heavily on facts over abstract numbers. This also helped us answer a lot of questions that may be asked by the prospective buyers, and cleared a lot of fog.
Next, it was time to figure out the right buyers for the patents
We divided our prospective buyers into various categories and curated the marketing materials which better served their interests.
For example, the perspective of a venture capitalist is very different from a fortune 500 company already in the field or an emerging technology company. This helped garner interest from active players in each of these domains, as the pitch deck and related materials addressed some of their questions on the get-go, to finally closing a deal that fetched far more value than it would have by simply placing the portfolio on an IP brokerage website.
“I get that you did a lot of research but how much really. I mean how do I know how good you guys are at it?” – If you were thinking on the above lines, the below table should clear some doubts.
This is all the data we collect for each company and craft marketing material accordingly before reaching out to them for a sale. We are pretty comprehensive.
|Company Name||Name of the company|
|Category||Type of company – Corporate, Private Equity, Venture Capital, etc.|
|Priority||A priority rating given based on discussion with the client. Indicates whom to approach first.|
|Analyst Comment||Extra insights and comments from the analyst|
|Contact Details, Geography of Operation||The details of relevant business contacts, addresses, geographic areas of operation, etc.|
|Merger & Acquisition History||Merger and Acquisition information can give an insight into a company’s business goals.|
|IP Activity in Tech domain||Relevant IP activity, portfolio in relevant tech domain to gauge the prospective interest of the company as a buyer of IP.|
|Revenue in the Tech domain||Revenue information can give an insight if the company is profitable in the operating tech domain, which increases the chances of sale.|
|Relevant Business Tie-ups||Business Tie-ups are another way to gauge a company’s strategic interest.|
|Litigation history||A litigation-happy company/a defensive company could be very interested to buy the IP portfolio for legal attack/defense purposes.|
Exemplary data collected before the company reaches outs for sale.
How Tom’s patented technology was brought to market?
In Tom’s case, one strategically important activity that added a great deal of value was that we identified a cluster of suitable third-party companies with technology or patents that Tom would need to own or license that could either be engaged or acquired in order to solve possible infringement and time to market issues.
These cluster companies had the necessary turn-key expertise or services needed to move Tom’s patent through prototype and testing to production without him having to invest in developing those abilities on their own.
Essentially, we created a more or less complete strategy for an acquiring company to make a cogent business decision by showing and sourcing the technical capabilities needed to bring our client’s patents and technology from paper to market with a reduced risk profile for development. This was a win-win for both Tom and the company he sold his patents to. The end client got a great patent portfolio that helped them bring the idea to market and Tom got great value for his patents.
If you think that’s a brilliant monetization strategy, but do not want to sell your patents, you have nothing to worry about.
A similar marketing strategy can be adopted even for licensing purposes, or to pitch your portfolio for series-level funding.
Asking and answering the right kind of questions is something that is required, and we can help you no matter what your need, be it monetizing your patent portfolio at a great value or identifying a customized cluster to help you reduce your development timeline and risks around specific patents or technologies you are considering investing in.
Want us to craft your next monetization deal? Send us an email at [email protected] and we will get talking.
Authored by: Sparsh Gupta, Infringement Team and Matt Miskimin, Senior Adviser.