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Pankaj Tyagi
| Updated: 04 Nov, 2021 | Category: Patent

Commercialization of Patents-A way for inventors to regain their initial investment

Commercialization of Patents

Every invention is precious, and one can obtain the full reward for their inventions when it starts bringing out monetary benefits. Now it is up to the inventor to use the absolute rights of the patent successfully to his advantage. The commercialization of a patent is not mandatory, but if a person waits for too long, another person will make the most on a similar idea and capture your invention. It always requires that one push from the inventor increase the demand for the patented inventions. Let us look into what is Patent Filing and commercialization of Patents.

What is Patent filing?

Patent filing is a process of applying in a patent office requesting a Patent grant to your invention. Patent Right is a monopolistic right that could restrict others from using or infringing on the patent holder’s rights. Given that, the inventor spends an appreciable amount of time and resources on creating a unique product or process. It also gives courage to the inventors to bring out their inventions in public. But merely securing a patent and bringing out the invented product or process does not guarantee the key to a money chest. A patent filing adds value to the product or process among potential investors.

What is Commercialization of Patents?

Commercialization of Patents here means the actual owner of the patent has either-

  • Sold the patent, 
  • Licensed the patent,
  • Introduced a new product based on the patent in the market in his firm already in existence or for a new firm.

Hence, a minimum requirement is that the patent has generated some income for the owner. However, it is not sure that the actual owner gets the profitability through Commercialization.

What are the ways of Commercialization of Patents?

The purpose of Patent filing is to factually analyze the relationship between commercialization and the renewal of patents. Also, it considers protecting patent strategies and asks if any third factors that affect the commercialization and renewal decisions. Below mentioned are the various ways of commercialization of Patents-

1. Licensing of Patent

Patent Licensing is a practical and cumulative approach to commercialize the patent. Hence, an actual owner should have a comprehensive study of the Patent licensing options. The Patent holder shall measure the profitability of each of the licensing while deciding.

A patent holder can opt for complete licensing and can give the permit to the–

  • Manufacture,
  • Use, or
  • Sell the patented product only to one company/firm/organization.

The patent holder can get an exclusive licenseglobally or within a geographical region.Also, the owner can grant patent licensing to more than onecompany/firm/organization through non-exclusive licenses. Consequently,many licensees will be manufacturing the same product.

2.  Determining the licensing fee

The Patent holder shall analyze the value of the patent while determining the licensing fee and the most common strategy to decide the fee is by benchmarking. Through Benchmarking, the parties will compare the patent with older and existing technologies. After Benchmarking[1], both the parties conduct a watchful study of already existing licenses and arrive at the licensing fee.

The companies adopt a different approach for determining the fees in case ofnew Inventions, where a comparison cannot be made with the existing technologies.

3. Ensuring the potential and capable licensees

Before licensing the patent, the licensor should study and sort out that the patent is in the right hands. Ensuring the potential and capable licensee will result in the successful commercialization of patents. It is always advisable to set targets that the licensee should achieve within a stipulated time.

These targets and performance obligations will keep the licensee agile and put the product on the market soon. However,if the licensee is unable to achieve the performance obligations, the licensor can terminate the Patent license.

4. Self-manufacturing and outsourcing

A patent holder may decide to Self-manufacture or outsource his patented product. However, Self-Manufacturing might get success in a scenario where the invention is novel, and there is a high potential for the success of the product in the market.

The Licensor may also outsource the manufacturing process to another company. Outsourcing helps the licensor to sell the product in their brand name without making any investment in Plant and machinery.

5. Selling the patent

In certain cases, The Licensor may also opt to sell their patent if the focus of the organization is towards Research and Development, and the organization is not ready for marketing risk. An inventor not having appropriate contacts to manufacture or outsource the patented product will consider the selling of the patent product the best option.

The above mentioned are the basic strategies a patent holder can adopt for the commercialization of patents. Also, it is advisable to carry and adopt the strategy that suits the most to gain maximum benefits.

What steps are required for the commercialization of Patents?

For the successful launch of an innovative product and its Commercialization in the market, below mentioned steps are required-

  • Pre-manufacture,
  • Market launch and,
  • Mass production.

Pre-Manufacturing This stage requires intelligent assessment of the market potential, approving the commercial opportunity, and testing of the manufacturing process.

Market Launch – Market Launch helps in figuring out the right products. Market launch helps in identifying your competitors, your customers, and your Partners.

Mass Production – Mass production is one of the steps required for commercializing the Patent where production is done on large scale using assembly line techniques.

Conclusion

Conclusively, The Patent holder has various ways to Commercialize the Patents and avail benefit from the patented products. Commercialization of patents has its own set of advantages and disadvantages that a patent holder could choose as per the need. Commercialization of patents requires proper strategies that should be aligned with bigger goals of achieving maximum profit. Turning inventions into products or processes, Licensing, Patent Enforcement, Pooling, and Selling a Patent are the most effective ways that would help in getting the best money out of it. The Patent holder needs to analyze the Commercialization strategies in a way to hit the bull’s eyes.

Read our article:What is the Culture for Working of Patent in India?

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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