HOW TO SELL A PATENT
Sell your patent and earn royalties.

How to Sell a Patent 

Now that you have patented your invention, you may decide that the best way to make money is to simply sell a patent or invention idea. This strategy has some benefits, because it allows you to work with experts who have access to funding and markets. 

The two primary ways to do this are to license your invention, or to sell it outright. Both allow you to sell your product without having to do all of the marketing and distribution yourself.

 If you sell your patent, it is called “assignment” by the United States Patent and Trademark Office, you give all of your ownership rights to someone else. You will be paid according to your contract, but you won’t have any further control or involvement with your invention.

What is Your Invention Worth?

 As a first step, analyze the market for your invention. Estimate how much it will cost to bring your product to the market, including the cost of prototypes, production, shipping, sales, and distribution. Then create an estimate of how much you can earn from your product. Subtract costs from gross sales, and you will arrive at a rough estimate of net profit.

 This will give you a beginning estimate of what your patented invention is worth. Once you have this starting figure, you also need to assess the following:

 If you sell your product outright, you can be paid immediately. This provides cash up front, which can be used for creating new inventions or investments. It is the least risky option, but also comes with a deep discount when looking toward future earnings.

 When you assign your patents, you lose all rights to future profits. If your product becomes a huge seller, you will have missed out on the big pay-off, if you sell your invention for too little.

Sell your invention to an investor.

Find a Company to Buy Your Invention

The following steps can help you to get the best price and understand what is involved in the process.

 How do you advertise that your patent is for sale? One great thing about the internet is that you can use the many online marketplaces and trade shows to advertise your invention to potential inventors.

 Another good idea is to look for products that are similar to yours, or products that appeal to a similar demographic profile for your product, and you can then contact the manufacturers of those products to see if they would be interested in your invention. Look for products online and in stores. Make a list of likely prospects and contact these companies.

 Various online databases are out there that can be a good place to look for potential buyers. One popular list is the Thomas register, and there are a number of other lists that have potential for inventors looking to sell their invention.

 You can also run a paid advertisement in trade magazines, the USPTO Gazette, and other places where inventors commonly offer their inventions for sale or license.

Using a Patent Broker

 Patent brokers are specialists who can connect inventors and manufacturers. These experts rely on their personal contacts within their particular field, as well as their reputation and knowledge of the markets. A patent broker may be willing to market your invention for you, and will generally expect to be paid a percentage of the sale to cover their fees.

 If you have few connections within the manufacturing field, you may want to consider the benefits of working with a patent broker or some type of intermediary. The structure of payment for most of these people, which relies upon no up-front fees but simply a payment out of the royalties or payment, makes it a good low risk option for most inventors. In other words, you only pay out of your gains, with no out-of-pocket expenses.

 Represent yourself with targeted letters and inquiries. If you decide to sell your invention yourself, without the help of a broker, you first step would be to make contact with potential buyers by mail, either electronic or snail mail.

 To make the most of this way of marketing your invention, create a list of potential buyers for your patented invention. Gather their contact information, including addresses. Create a great letter that explains what your product is, who it will appeal to, how many people there are in that group, and an estimate of how much your product may be able to earn. Send these letters off, make follow-up calls, and you may very well be able to sell your invention for a good price, all by yourself.

How to negotiate to sell your patent.

Negotiations to Sell Your Patent

 Once you find a buyer, it is time to negotiate the terms of sale, or assignment. The most common assignments are for 100% control and ownership of patented inventions. However, while not common, for a variety of reasons, percentage of ownership sales do happen. This is most common when there are two or more original inventors, who share in the ownership of the initial invention.

 Be aware that most manufacturers have a system of policies and procedures to bring inventions to market. In other words, they have knowledge and experience. Manufacturers and distributors usually want full ownership and control, because they want to avoid conflict and disagreement about vital business decisions going forward. Be prepared for the likelihood that if you assign your invention idea, you will lose all control of it in the future.

 Of course, this is all decided in the negotiation process. If you demand it, you may be able to maintain 25%, 50%, or even 75% of control.

Once you have some idea of the agreement between yourself and the buyer, including the price, timeframe, and details about the deal, you can begin to draft your agreement. Write it down and send it off to your buyer, for comments and changes. This is a working document, and not meant to be signed or binding in its first draft form.

After you have broad agreement, there are several ways to approach writing a binding contract.

Benefits of Assignment

 Assess your own skills and abilities. If you aren’t a great salesman and have never done marketing, you may be better off selling your invention to a company that has people with those skills on their staffs.

 Be aware that manufacturing a product takes a great deal of time and effort. It is cash intensive. In order to bring your product to market on your own, you will have to invest a great deal of time and money. Selling your idea may be the best way to realize a profit from your idea.

Officially record your patent, it's legally required.

Patent Assignmnent Must Be Officially Recorded 

Once you find a buyer, it is time to negotiate the terms of sale, or assignment. The most common assignments are for 100% control and ownership of patented inventions. However, while not common, for a variety of reasons, percentage of ownership sales do happen. This is most common when there are two or more original inventors, who share in the ownership of the initial invention.

 Be aware that most manufacturers have a system of policies and procedures to bring inventions to market. In other words, they have knowledge and experience. Manufacturers and distributors usually want full ownership and control, because they want to avoid conflict and disagreement about vital business decisions going forward. Be prepared for the likelihood that if you assign your invention idea, you will lose all control of it in the future.

 Of course, this is all decided in the negotiation process. If you demand it, you may be able to maintain 25%, 50%, or even 75% of control.

Once you have some idea of the agreement between yourself and the buyer, including the price, timeframe, and details about the deal, you can begin to draft your agreement. Write it down and send it off to your buyer, for comments and changes. This is a working document, and not meant to be signed or binding in its first draft form.

After you have broad agreement, there are several ways to approach writing a binding contract.