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How to Sell a Patent

Anthony M. Verna, III, Esq.
Your bright idea! Is it patentable?

Your bright idea! Is it patentable?

How to Successfully Sell a Patent: A Comprehensive Guide

Selling a patent can be a complex but rewarding process, offering the potential for significant financial gain and the opportunity to see your patented invention utilized in the marketplace. Whether you’re a patent holder looking to sell outright or license your patent rights, understanding the essential steps and strategies can help you maximize the value of your patent portfolio. This guide will walk you through the process, from identifying potential buyers to closing the deal.

Do you have a patent?  You can contact us at Verna Law, PC at anthony@vernalaw.com or by calling 914-908-6757.

 

1. Understand the Value of Your Patent

Before you begin the sale process, it’s crucial to determine the fair market value of your patent. The value of a patent can depend on various factors, including the scope of the patent rights, the potential for future profits, the market size, and the uniqueness of the patented invention. Conducting thorough market research and a successful patent search can provide insights into similar products and the potential demand for your invention.

2. Prepare Thorough Documentation

Potential buyers will want detailed information about your patent. Ensure you have the following documentation ready:

  • Patent grant and patent number: Proof of your patent rights.
  • Patent applications: Include both provisional and non-provisional applications if applicable.
  • Claim charts: Detailed descriptions of your patent claims.
  • Market research reports: Demonstrating the commercial potential of your invention.
  • Legal documents: Any relevant legal advice, non-disclosure agreements (NDAs), and patent sale contracts.

3. Identify Potential Buyers

Finding the right buyer for your patent is crucial for a successful sale. Potential buyers can include:

  • Large corporations: Companies looking to expand their product lines or enhance their existing products.
  • Industry leaders: Businesses that dominate your patent’s market.
  • Defensive buyers: Companies seeking to protect their market position by acquiring potentially competitive patents.
  • Assertive buyers: Firms interested in leveraging your patented technology to enter new markets.

4. Market Your Patent

Creating a solid marketing strategy is essential to attract interested parties. Consider the following approaches:

  • Trade shows and industry events: Network with key decision-makers and showcase your patented technology.
  • Trade publications and press releases: Publicize your patent to a broader audience.
  • Short videos and marketing materials: Highlight the unique features and benefits of your invention.
  • Phone calls and direct outreach: Personally contact prospective buyers to pitch your patent.

5. Conduct Due Diligence

Both patent sellers and buyers must perform due diligence. As a seller, ensure your patent is enforceable and free from infringement issues. Buyers will investigate the patent’s validity, market potential, and any existing licensing deals. Being transparent and providing all necessary information can facilitate a smoother transaction.

6. Negotiate the Terms

When negotiating the sale of a patent, consider the following points:

  • Asking price and fair market value: Base your price on thorough research and valuation methods like the cost approach and market-based approach.
  • Exclusive license vs. outright sale: Decide whether to grant an exclusive license or sell the patent outright, depending on your long-term goals.
  • Legal fees and additional costs: Factor in the cost of legal matters and any fees associated with transferring patent rights.
  • License utilization rights: Clearly define the scope of the buyer’s rights to use, modify, and sublicense the patented technology.

7. Finalize the Sale

Once terms are agreed upon, finalize the sale with a legally binding contract. This should include:

  • Patent sale contract: Outlining the terms and conditions of the sale.
  • Non-disclosure agreements (NDAs): Protecting confidential information during negotiations.
  • License agreement: If opting for a licensing deal instead of an outright sale.

8. Post-Sale Considerations

After the sale, ensure a smooth transition for the new owner. Provide any necessary support, such as technical documentation or training on the patented technology. Stay informed about the patent’s performance in the market to understand the impact of your sale.

Conclusion

Selling a patent involves careful planning, thorough preparation, and strategic marketing. By following these essential steps and working with a reputable patent attorney or broker, you can position yourself for a successful patent sale, achieving financial success and seeing your invention brought to life. Whether dealing with large companies or industry leaders, finding the right buyer and negotiating favorable terms are key to maximizing the value of your intellectual property rights.

 

Sometimes, patent sales go awry and lawsuits result.  

Do you have a patent?  You can contact us at Verna Law, PC at anthony@vernalaw.com or by calling 914-908-6757.

 

Case Summary: Excell Consumer Products Ltd. v. Smart Candle LLC

Court: United States District Court, Southern District of New York
Date: September 10, 2013
Citation: 2013 WL 4828581

Background:

Excell Consumer Products Ltd. filed a lawsuit against Smart Candle LLC, alleging infringement of its intellectual property rights related to LED candles, which both companies manufactured and sold. Excell claimed that Smart Candle’s products infringed upon its patents and other intellectual property rights.

Key Issues:

  1. Patent Infringement: Excell alleged that Smart Candle’s LED candles violated its patents.
  2. Trademark Infringement and Unfair Competition: Excell argued that Smart Candle’s branding and marketing of its products were confusingly similar to Excell’s, leading to consumer confusion and unfair competition.
  3. Trade Dress Infringement: Excell claimed that Smart Candle’s product design and packaging were copied from its own, violating trade dress protection.
  4. Standing and Ownership of Patent Rights: The court needed to determine if Excell had the right to enforce the patents based on the sale of patent rights in 2004.

Court’s Analysis:

The court evaluated the claims based on the evidence presented, focusing on several factors:

  1. Validity and Scope of Patents: The court examined the patents held by Excell to determine their validity and the specific claims of infringement by Smart Candle.
  2. Ownership of Patent Rights: The court investigated the sale of patent rights in 2004 to ascertain if Excell retained the rights necessary to bring the lawsuit. The documentation of the sale and subsequent agreements were scrutinized to ensure that Excell had legal standing.
  3. Likelihood of Confusion: In assessing the trademark and trade dress infringement claims, the court considered the likelihood of consumer confusion between the products of Excell and Smart Candle.
  4. Comparative Product Analysis: The court conducted a detailed comparison of the design, packaging, and marketing materials of the LED candles from both companies.

Decision:

The court found that Excell Consumer Products Ltd. had retained sufficient rights from the 2004 sale to enforce the patents in question. As a result, Excell had standing to bring the lawsuit.

Regarding the infringement claims, the court found in favor of Excell:

  1. Patent Infringement: The court determined that Smart Candle’s products infringed on Excell’s patents.
  2. Trademark and Trade Dress Infringement: The court found that there was a substantial likelihood of consumer confusion due to the similarities in branding, design, and marketing between the two companies’ products.

Conclusion:

The court ruled in favor of Excell Consumer Products Ltd., finding that Smart Candle LLC had infringed on Excell’s patents, trademarks, and trade dress. The court ordered appropriate remedies for the infringement, which likely included damages and injunctions against further infringing activities by Smart Candle.

 

Do you have a patent?  You can contact us at Verna Law, PC at anthony@vernalaw.com or by calling 914-908-6757.

 

Users of an accused product whose use of it (for example, combining it into a bigger product that itself infringes) may be relevant to proving contributory infringement or inducement, or demonstrating commercial success. All of these third parties may resist discovery because it is claimed to be unduly burdensome; and indeed their status as outsiders to the dispute is entitled to some consideration. See, e.g., Katz v. Batavia Marine & Sporting Supplies, Inc., 984 F.2d 422, 424 (Fed. Cir. 1993). 

 

Case Summary: Katz v. Batavia Marine & Sporting Supplies, Inc.

Court: United States Court of Appeals for the Federal Circuit

Date: January 19, 1993

Citation: 984 F.2d 422, 25 Fed.R.Serv.3d 724, 25 U.S.P.Q.2d 1547

Background

Plaintiff, Seymour Katz, held a patent for a type of fishing pole handle. Katz sued Batavia Marine & Sporting Supplies, Inc. (Batavia) for patent infringement. Batavia countered by claiming that the patent was invalid and unenforceable due to obviousness and inequitable conduct.

 

Issue: Discovery of documents from a nonparty successor to a company involved in the sale of tear gas products.

Facts:

  • Patent Assignee: The party that held the patent for a combined key holder and protective spray.
  • Defendant: The entity accused of infringing on the patent.
  • Nonparty: Successor to a company that had sold tear gas products to the defendant.

Discovery Request:

  • The assignee sought documents from the nonparty related to:
    • Sale of the company’s assets.
    • Ownership or sale of patents.

Court’s Ruling:

  • Discovery Scope: The court determined that the discovery request was overly broad and exceeded the narrow scope of the issue related to the patented key ring structure containing a tear gas product.
  • Outcome: The assignee was not entitled to the requested discovery because it did not pertain directly to the specific patented invention at the center of the infringement claim.

Implications:

  • Narrow Scope of Discovery: Discovery must be closely related to the issues being litigated. Broad or tangential requests are likely to be denied.
  • Nonparty Discovery: Even when seeking information from nonparties, the requests must be relevant to the specific claims in the case.

Takeaway:The court’s decision highlights the need for discovery requests to be precisely aligned with the matters under litigation. Requests that extend beyond the immediate issues or seek information unrelated to the specific patent claim can be rejected.

 

 

Third parties may also object because the requested information is extremely sensitive and should not be made available to an arch-competitor. These objections, while legitimate, are usually met by the terms of a protective order that appropriately limits access and use of the information. However, sometimes the information, while relevant and protectable in the abstract, may be sought in ways that inappropriately threaten damage to customer relationships. In such circumstances, the court may issue a protective order requiring a heightened showing of need before the discovery goes forward. See, e.g., Joy Techs, Inc. v. Flakt, Inc., 722 F. Supp. 842 (D. Del. 1991).

 

Do you have a patent?  You can contact us at Verna Law, PC at anthony@vernalaw.com or by calling 914-908-6757.

 

Ecore International, Inc. v. Downey, 343 F. Supp. 3d 459 (E.D. Pa. 2018), 2018 WL 6333965.

Court: United States District Court for the Eastern District of Pennsylvania

Date: October 12, 2018

Facts:Ecore International, Inc. (“Ecore”) sued Downey for breach of contract related to the sale of patents. The dispute arose after Ecore, a company specializing in recycled rubber products, purchased certain patents and related intellectual property from Downey. The parties had entered into an agreement where Downey was to transfer specific patents and intellectual property rights to Ecore.

Issue:The primary issue in the case was whether Downey had breached the contract by failing to transfer all the patent rights and whether Ecore had fulfilled its obligations under the contract.

  • Breach of Contract: The court found that Downey had breached the contract by failing to transfer all of the patents and related intellectual property rights as agreed upon.

  • Validity of Sale: The court did not question the validity of the sale itself but focused on whether the terms of the contract were fulfilled. The sale was considered valid; however, Downey’s non-performance on specific contractual obligations constituted a breach.

  • Damages and Remedies: As a result of Downey’s breach, the court awarded damages to Ecore. These damages were meant to compensate Ecore for the loss suffered due to Downey’s failure to transfer the complete set of patents as stipulated in the contract.

  • The contract was problematic because Downey failed to transfer all specified patents and intellectual property rights to Ecore as agreed. This breach created significant issues, leading to legal disputes over the incomplete transfer and resulting in damages for Ecore due to Downey’s failure to fully comply with the contract terms. Downey failed to transfer the rights due to a dispute over the scope of the patents covered by the contract. Downey did not provide the complete set of patents and intellectual property rights as specified, leading to the breach. The specific reasons for Downey’s failure were related to disagreements and potential misunderstandings about the patent rights included in the transfer.

Decision:The court examined the contract’s terms, which detailed the obligations of both parties regarding the transfer of patent rights. The court found that Downey had indeed breached the contract by not transferring all the promised patents and related rights to Ecore.

Reasoning:The court’s analysis focused on the specific language of the contract, including the description of the patents and rights to be transferred. It determined that Downey’s failure to transfer certain patents was a clear breach of the contractual agreement. The court also evaluated whether Ecore had met its obligations, such as payment and other conditions specified in the contract.

Outcome:The court ruled in favor of Ecore, holding that Downey was liable for breaching the contract. Ecore was entitled to damages resulting from the breach, which included compensation for the value of the patents that were not transferred.

Significance:This case highlights the importance of clearly defining and documenting the terms of patent sales and intellectual property transfers in contracts. It underscores the need for both parties to understand and fulfill their obligations to avoid disputes and potential litigation.

 

Do you have a patent?  You can contact us at Verna Law, PC at anthony@vernalaw.com or by calling 914-908-6757.

 

 

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