How Patents and Trademarks Provide Value to Investors or Potential Buyers
Patents are a form of intellectual property by which you may protect your invention(s), and a patent portfolio can represent significant value to potential buyers and investors. If you obtain a patent on one or more products, methods, or designs, potential buyers and investors recognize you have exclusive rights in that intellectual property space. This could be a way to protect and grow your value, diversifying your portfolio in the process.
At the same time, you also need to be aware of potential issues with patents, which could affect their valuation. How are patents valued, and how can they impact your portfolio or your relationships with buyers and investors?
Understanding the Basics of How Patents Are Valued
An intellectual property (IP) portfolio includes the patents obtained by a person or company. When a person or company owns a patent, they are protected by 35 U.S.C. § 154. This is the US Code section that allows individuals to protect their ideas for a set period of time, during which only they are allowed to import, make, use, offer for sale, and/or sell products and/or processes that embody their protected ideas. This is the time during which individuals need to capitalize on their patents, getting the most out of their inventions. Ultimately, the value of that right reflects the power and profitability of the patent portfolio.
Assessing the Value of Individual Patents
There are several ways that patents may provide value to not only the owner but also potential investors and buyers. These include:
- Added Revenue: This is the most direct way patents might be valued. Some patents provide value because the technology they are protecting is so important that it drives additional purchases at a premium price. Because the owner is the only one who is able to produce the technology associated with that patent, they are able to charge more for their products and services. In addition, the patent may drive sales of other products that are related directly to whatever is patented. This includes convoyed sales and derivative sales.
- Additional Value to the Patent Owner: In addition, some patented technologies might not directly lead to additional sales, but they could be valuable to the owner. These patents might allow the owner to produce other products and services at a reduced cost, slashing overhead expenses.
- Create a Defensive Barrier: There are other situations where patented technologies make create a defensive barrier. For example, someone who has a patent may be able to stake out a certain area of intellectual property. Then, if anyone sets foot inside what is covered by the patent, the owner of the patent may be able to file a lawsuit against that person for patent infringement.
- A Reputational Advantage: Finally, there are other situations where a patent may create a reputational advantage for the owner. For example, an organization that has a wide array of patents may be able to use this as a selling point to potential business partners, customers, and future employees. If a company has a reputation for developing outstanding ideas and protecting their manifestations with patents, that company can position itself as an authority in the field, attracting attention from potential buyers and investors.
- A Marketing Advantage: Products with patent protection may be advertised as such in marketing materials. “Patent” or “Patent Pending” signals to customers that the product is unique to the seller. The patent holder may enjoy a first-mover advantage into a marketplace as a result of owning an issued patent.
Ultimately, these are just a few of the many ways that a patent creates additional value for not only the holder but also for investors and buyers.
Factors Impacting the Value of the Patent
Furthermore, it is important to cover the factors that could impact the value of the patent. These include:
- The Nature of the Patent: What are the exact guidelines for the patent? Does it protect an entire product or just a part of a certain product?
- The Market Size: What is the potential market size that is protected by the scope of the patent? How many people might be interested in buying products that are protected by the patent?
- The Competitors: How close are other entities to producing similar products and services? Is there anything that is similar to that which is protected by the patent?
To get the most out of a patent portfolio, it is important to work with a patent lawyer.
If you are looking for a trademark or patent lawyer anywhere in California, and especially in Orange County or Los Angeles County, it would be our honor to help you. We are Hankin Patent Law, APC, and we have a tremendous amount of experience with patents in a variety of industries. Contact us today for a free case consultation!
Patents are a way for you to protect your intellectual property, and a patent portfolio represents significant value to potential buyers and investors. If you obtain a patent on one or more products, methods, or designs, potential buyers and investors recognize you have rights in that space. This could be a way to protect and grow your value, diversifying your portfolio in the process.
At the same time, you also need to be aware of potential issues with patents, which could affect their valuation. How are patents valued, and how can they impact your portfolio or your relationships with buyers and investors?
