Licensing Your Invention

Many inventors are also business builders. After creating an elegant solution to a real problem, they want to build a business that profits from that solution. However, not all inventors like to build businesses. Some inventors are much more focused on solving problems, and having solved one problem want to move on to the next. This makes it difficult for them to profit from their innovations. However, inventors can still profit from their innovations through licensing. When you license your invention, someone else builds the business and you share in the profits.

Licensing may be your best strategy if the barriers to entry for products and services that use your invention are large. Licensing is also a good strategy if your strengths and interests do not include building an organization.

Invent Early, License Later

A common strategy for licensing and invention is to invent early and then license later. Inventors that use this strategy presciently discover the best solutions to problems years before their peers. They then file for and receive patent protection for their inventions, and then wait.

Years later, businesses discover those solutions, and incorporate them into their products and services. Often a wide variety of businesses and industries will adopt a solution, and customize it to their particular needs. However, they are still obligated to pay the patent holder of the solution. The patent holder profits by owning the solution long before it is widely adopted.

Invent, Sell, License

Other inventors prefer to actively promote the adoption and licensing of their innovations. They recognize that there are often multiple viable solutions to a problem, and seek to encourage the adoption of their solution.

The first requirement in this strategy is filing that least a provisional patent application. Otherwise, potential licensees cannot be certain that you own the solution you are selling them. Provisional patent applications are relatively inexpensive to file, but provide a year of protection for your idea while you explore its commercial viability.

The next requirement in actively licensing your invention is to develop a viable solution that will save the licensing party money, even if they also pay you. Actively licensed ideas have typically moved beyond the idea stage, and include prototypes and test data. Your licensee must be able to see how to quickly and profitably adopt your invention.

Finally, to profit from a licensing deal, you need a realistic valuation of the economic benefit of your invention. Without a convincing valuation, businesses are often reluctant to commit to appropriate royalties.

Scott Thorpe is a Registered Patent Attorney at the law firm of Kunzler Needham Massey & Thorpe. Learn more about licensing your invention at his website.

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