Many inventors wish to profit from their innovation without providing the product or service themselves. This is a good idea if the barriers to entry in the market for your invention are high. For example, inventions benefiting capital intensive industries or industries where most of the players are large are often best monetized through licensing. Licensing is also a good strategy if you don't want to build a business yourself.
The two most common strategies for licensing an invention are:
- Licensing to businesses that are already using your invention
- Convincing a business to adopt and license your invention
To license to a business that is already using your invention, you must first secure patent protection for your invention. During the time between invention and the issue of your patent, it is likely that others will discover your solution and use it in their business. These businesses already profit from your invention, and must pay you to continue using it.
To convince a business to adopt and license your invention, you must present your innovation as a cost effective solution that will save the other party money, even if they pay you a royalty. You typically must have filed for at least a provisional patent. Otherwise, there is no guarantee that you will own the invention. You must also have a solid valuation of your invention and its economic worth. Finally, you should have a well-developed implementation plan that allows a licensee to quickly benefit from your invention.
Profiting From Ideas
