So you have a patented invention, but have no idea what to do next? And what are the different money making options available to you? This article will provide you with detailed information on how to bring an invention to market: DIY manufacturing and IP licensing.
The first step is to study your invention thoroughly and become familiar with the industries in which it may have applications. Do market research!
Google can help you a lot in this. Find the main companies and emerging players that are active in the target markets of your invention and study all their existing products/services. Sources and references can include online business journals, magazines, and blogs. Also, try to learn about the technologies that are trending and that will reach your target markets in the future. This is because you may find a product that infringes on your technology and you may be able to file an intellectual property infringement case against the manufacturer. Perhaps your technology can be used to enhance the functionality of an existing product, thus creating IP licensing opportunities for you.
You must think from the customer’s point of view if you want to be successful. Read customer reviews on social networks, e-commerce sites, official company sites, and online blogs. Analyze the problems customers are facing with current products and help them find solutions. By doing so, you can create your personal brand and establish your own following. Here, you can also inform customers about your future product launches and business plans.
Let’s take an example. A company sells an electronic device that has an early heating problem. Fortunately, he developed a special chip that can solve this problem. What you need to do is look for online reviews that customers have posted about the problem and tell them that you have come up with a solution for this. You can build trust among a group of customers, therefore you will find it easy to market your products.
If you do extensive market research, you win half the game. The next step is to study market analysis reports and an exclusive construction IP monetization strategy for your invention. There may be two options:
IP Licenses:
The patent license is the same as renting a house to a tenant; you retain ownership of your intellectual property rights while allowing someone else to use them to make and sell products for a set period of time. The license agreement may be between individual inventors or companies; the IP owner is called the licensor, and the party that obtains the right to use, sell, and manufacture from the patented technologies is called the licensee.
As an IP holder, you are subject to the terms and conditions set forth in the license agreement. The terms may include a fixed amount from future sales or a portion of the royalty per unit.
However, it is difficult to know the total amount you can earn as an inventor by licensing your patent to others. It depends on the valuation of the patent, which is influenced by several factors. These include:
- Total market size and growth rate
- Number of clients who fall in the life of the patent
- Number of customers who make purchases.
- Product development costs and taxes
- Annual profit for the manufacturer.
There are two options in the licensing of intellectual property: exclusive and non-exclusive. In exclusive licenses, only one licensee obtained the exclusive rights to develop and commercialize an invention (exclusive license agreements are usually made with start-ups, helping them to grow in competition). On the other hand, non-exclusive licenses allow multiple licensees to practice the patented technologies at the same time, thus using the IP to its full potential.
Manufacturing on your own
In general, the royalties that the inventor receives for the licensing of intellectual property range between 2% and 10% of the total income. If you think “Why should I get a small slice of the pie when I deserve it all? Let’s go“, you should engage in the manufacture and sale of products on your own.
According to a study by Ed Zimmer and Ron Westrum, more than half of the inventors who decided to manufacture and market on their own reported success.
To be a successful entrepreneur, you must be familiar with the world of business. In addition, you must possess these personality characteristics:
- Seller: All entrepreneurs have a common goal of selling their products to the maximum number of people. So you need to have the qualities of a salesperson, telling people about your products and convincing them to also get on the list of your paying customers.
- Risk taker: Sometimes you have to get out of the crease to hit six on the last ball to win the game. Although, there is a chance that it will run out, but you have no choice. Similarly, to grow as a successful entrepreneur, you must be willing to take risks. You may face bankruptcy or opening credits, but at the same time you have a good chance of coming back for another game.
- Innovative: Innovation is one of the key tools of business growth, and you must be an expert in it. Giving people something new and updating products and services with the latest technologies helps attract new customers and retain existing ones.
- Manager: You must possess managerial skills and know how to manage a team. You must understand the fact that employees are central elements of a company; And they can help you increase sales only if they are focused and inspired.
Conclusion:
Patent licensing and manufacturing are the two options for bringing an invention to market. But, it is difficult to say which one is better. Both have their own advantages and disadvantages, and it is up to you to choose based on your personal preferences.
Therefore, your objective must be very clear. Whether you want to set up your own business or earn royalties by letting someone else use your IP rights.
However, the return on investment is higher if you opt for manufacturing, but you need thousands of dollars to set up a business. If you don’t have enough financial resources, IP license is the right path for you.
Manufacturing or licensing, what do you think is the best option for IP marketing?
