This is part three of our three-part blog on making money from your great ideas.
In parts one and two we talked about the different ways of protecting ideas, with a focus on patents.
In this blog, we’ll be talking about how to turn intellectual property into cash.
Monetizing Ideas
So you’ve taken your great idea and you’ve turned it into a form of IP you can actually protect – probably a patent. Now what?
If the invention is a core technology for your business, you’re going to hold onto and defend that IP. You’re going to make something – for example, a product, an app, or a game – or provide something (like a service) using that invention.
However, what if the invention isn’t a core technology? What if your startup pivots and goes in a different direction that doesn’t need the invention?
Or what if your startup crashes and burns, and you’re left with nothing but the IP and a bunch of overpriced ergonomic desk chairs?
You can still monetize your IP by selling it or licensing it.
Selling IP
You can try selling your IP to a company that can use it, or to a company that buys up IP in order to resell it or license it. For example, Marathon Patent Group is one such company, and there are many others.
Companies that buy, sell, and license IP are sometimes slurred as “patent trolls,” but that shouldn’t scare you away. Some of the greatest inventors in history – including Thomas Edison – were what some today would call “trolls.”
IP Licenses
An IP license is just a contract that says “you can use my IP if you follow these rules, and if you break my rules you can’t use it anymore and I’m gonna sue you.”
Sometimes licenses are free – such as open source licenses.
But usually those who use others’ IP pay a licensing fee. This fee can be based on lots of things. For example:
- A license can give one person the right to use an app forever, in exchange for a one-time fee.
- A license can give a company the right to let 300 people use software for one year, in exchange for an annual fee.
- A license can give a manufacturer the right to use a patented component in a smartphone, with a per-unit fee based on the number of phones sold.
For some ideas on how to negotiate a smart licensing deal for your IP, check out this blog.
Carving up the Market
You can also license your IP even if you ARE making something with it.
For example, you may have software that runs a consumer water-saving widget that you sell. The same software would also work great in giant hydroelectric plants – which you don’t sell.
You can license the software just for markets you don’t compete in — including in other countries.
Get your IP Licenses Checked Fast
Software licenses are one type of agreement that the LawGeex tool analyzes. To get fast feedback on yours, click on the link to the right.
The information and materials in this blog are provided for general informational purposes only and are not intended to be legal advice.
