How a Patent Broker Can Increase the Value of Your Portfolio
The patent market is a very opaque and inefficient marketplace. Most transactions are confidential, and most companies don’t provide insight into whether they have interest in buying patents or not. An experienced and well-connected patent broker can be the key in maximizing the value of your patent portfolio.
What is a Patent Broker?
Like real estate, a patent is property that can be bought and sold. Like a real estate broker who facilitates the sale of real property between a buyer and a seller, patent brokers facilitate the sale of intellectual property between a patent assignee (the patent owner) and a purchaser. Unlike real estate, however, where over 90% of properties are sellable, the reverse is true for patents—90-95% of patents would not transact on the secondary patent market. A good patent broker can be essential to finding a buyer of your technology patents by actively managing the process of bringing a patent portfolio to market for sale and advising in matters related to valuation, infringement, and licensing, among others.
How Does a Patent Broker Increase the Value of a Patent Portfolio?
The market for buying and selling intellectual property patents is not well-defined, so technology patent brokers are pivotal to providing a patent owner insight in how to monetize their intellectual property by providing an informed, balanced understanding of patents, technology, and the fluctuating market. These skills are essential for a good brokerage team to create new monetization opportunities for your technology patent.
Utilizing these strengths, a good patent broker can increase the value of a patent portfolio in many ways; the first of which involves understanding how to position your patents for sale. Generally, this process unfolds over six months, during which time a technology patent broker with specialized expertise in the subject matter performs extensive diligence to maximize patent value, including:
● detailed patent analysis,
● patent valuation,
● patent market research,
● infringement opinions,
● prior art searches,
● claims analysis complete with detailed claim charts,
● creation of a list of potential buyers, and
● even the development and implementation of a marketing strategy and marketing materials.
Once these tasks are completed, a technology patent broker has an accurate sense of the value of a particular patent portfolio. The next phase involves enacting the marketing plan by disseminating marketing materials and identifying potential portfolio purchasers. Once identified, the brokerage will solicit potential patent portfolio purchasers and commence with the presentation of non-confidential materials and confidential materials under a non-disclosure agreement. During this phase, the brokerage team supports potential purchasers with detailed technical and valuation discussions.
What is My Patent Portfolio Worth?
It is often said that a patent is worth whatever a buyer is willing to pay. However, understanding the value of a patent before taking it to market is key to maximizing the return of a patent holder’s investment. Developing a product or process that culminates in patent creation can be a complicated endeavor that takes years to complete. For many potential patent holders, the investment of time and capital can create an unrealistic expectation of the potential uses or market for a patent. A technology patent broker with specialized knowledge understands how to work with inventors and patent holders, uncover and analyze evidence of 2use of a patent portfolio, identify both the strengths and weaknesses of the portfolio, and thereby forecast an acceptable upper and lower price range.
In this regard, a great patent broker is well-rounded with not only a strong understanding of the market, but also an understanding of where the portfolio holds both obvious and subtle value, and how to accentuate those strengths. For example, your patent broker should not only be able to analyze if your patent portfolio is being infringed, but also identify and document evidence of this infringement in persuasive claim charts. Identifying potential infringement maximizes the value of your portfolio and also helps provide an accurate 2valuation estimate for the portfolio prior to marketing efforts.
What Negatively Impacts the Value of My Patent Portfolio?
Most of a patent’s divestment value is pent up in infringement. While there are exceptions, the rule to remember is that if your patent portfolio is not in use on the market then a buyer will not be interested. The value of most patents is negatively impacted because they are not in use. However, if your patent is being infringed, there are other elements that can negatively impact the value. Your patent broker should not only be able to identify if your patents are being used in the market, but also present a transparent and honest approach to potential weaknesses as well.
Common examples of potential concerns that impact patent valuation include:
● the strength or complexity of the claim language,
● relevance of your patent portfolio to current market,
● infringement of your patent by an existing product or service,
● the potential impact of infringement to the relevant market and technology,
● how difficult it would be for a company to design around and remove the infringing
portion of their product(s), and
● the existence of prior art.
Patent buyers are sophisticated and will uncover the weaknesses in their own due diligence. If only possible strengths are presented during valuation and marketing, and weaknesses ignored or downplayed, you are likely not working with a knowledgeable, dependable patent broker.
How Much Does It Cost to Engage a Patent Broker’s Services?
Upon the successful sale of a patent portfolio, a reputable patent brokerage will command a fee of 20-40% of the net sales price of the portfolio. Like any service, a broker that charges on the lower end of the scale typically offers fewer services, manages lower quality portfolios, and may not address crucial parts of helping you buy and sell patents successfully. A patent seller should be wary of any brokerage that charges up-front fees, as this likely indicates a lack of confidence in the broker’s ability to successfully market and sell the patent portfolio. Alternatively, a brokerage that operates under a commission fee is a broker that is confident in its ability to market and sell the patent portfolio. Moreover, by waiting until the close of a sale to assess a fee, the broker becomes a partner to the patent holder, creating a shared interest in the successful completion of the transaction.
Hiring a patent broker that understands the intricacies of patents and patent law, the technological applications of your patent, as well as the constantly changing market represents a worthy investment in your patents by investing in the experts who can initiate, support, explain, and ensure your success in the patent marketplace, including maximizing the value of your patents.
In short, just as developing your patent portfolio can be an expensive and time-consuming process, developing and executing upon a strategic monetization strategy is expensive and time-consuming as well. When you’re ready to consider whether and how to monetize your patent portfolio, the services of an experienced brokerage team with expert technical and market knowledge can help maximize your return on investment.
The core team of patent consultants at Vitek IP, LLC have analyzed over 20,000 patents, while managing hundreds of buy-side and sell-side transactions for some of the world’s largest companies. Vitek’s founders have over five decades of experience in IP and tech and have developed sophisticated patent sales and patent acquisitions strategies for some of the
world’s largest companies. Vitek’s patent consultancy, brokerage group, and research organization provide clients exceptional guidance navigating the patent landscape. For more information, contact us via our contact form.