License vs Sale
ITTr will help our clients sell the rights to their patent or arrange a license deal with a prospective customer. Which kind of deal we do is largely the option of the customer. While our clients often prefer a sale (particularly if the price is high enough), buyers more often prefer a license. For them a license is much more flexible and allows them to reduce the risk of trying out a new technology on their customers.
I like to tell our clients that a license is like a mortgage on a house. It has a down-payment, an annual fee (or minimums) , a term and a royalty rate.
Licenses can also include such items as trial periods (which could be thought of as multiple terms).
We negotiate a license by starting with a spreadsheet with the key elements identified. We then ask our clients for their preferences on each of the items to prepare an asking price worksheet to send to the prospective buyer. In negotiations the buyer will often counteroffer their terms for the same elements or they may request additional conditions or varients on a theme.
In one example there may be two terms, a trial period and a final period . The seller gets a payment for the trial period during which the patent is off the market. If the trial is successful the sale moves on to the next phase which may also require different terms. If the trail is unsuccessful , the seller is free to approach other buyers.
An outright sale brings with it the problem of setting a price on the rights to the clients intellectual property. This is often a point of significant contention. While there are valuers who will put a price on a patent using one or more complex econometric formulas and associated software, its not often that a buyer will believe the results of these analyses.
Again the selling price is a result of negotiations. How much does the buyer need this Intellectual Property and what will it earn for them,or how valuable is the intellectual property it can be used to protect.
Whether a sale or license is the end point of negotiations , an attorney will usually be needed to put the decisions of the parties into a binding agreement. While the attorneys can be brought in at any time we feel its most effective, and most inexpensive if they are brought in after the key decisions are made (unless legalities are an issue).
When you are ready to sell your intellectual property by whatever means you choose, contact us at ITTr. We are there to help.