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It is not easy to bring a new product or invention to market. It’s a time-consuming procedure that starts from the day you experienced your eureka moment. There are many obstacles between filing a patent to protect your invention and progressing from the planning stage to manufacturing.

Even getting a patent is a big challenge in itself. The procedure is lengthy and expensive, and after your patent is issued, the next step is to commercialize it so that you may profit from it.  In this article, we will be giving you an overview of patent licensing, approaches to patent Licensing and why to license your patent. We will take a deep dive into the topic and explore the benefits of In Licensing and Out Licensing. By the time you finish reading the last sentence of this article, you will have a good understanding of the following concepts:

What Is Patent Licensing?

When a patent is licensed, the patent owner (or the licensor) and the person or firm who wishes to use and benefit from the patent (the licensee), enter into an agreement.

It allows the licensee to manufacture or sell the patent’s product, design, or technology. For the life of the licensing period, the patent generates revenue and royalties for both the licensee and the licensor.

Approaches to Patent Licensing

Two basic approaches to patent licensing:

  • The Carrot Approach
  • The Stick Approach

Carrot Approach

In this approach, the patent owner (and possible licensor) persuade the potential licensee to license the patent. In this case, the potential licensee has not infringed on the patent in question, thus they can simply decline to license it. So, it is up to the patent owner to convince the potential licensee that the product, design, or technology covered by their patent will benefit the potential licensee in some way, usually by helping them to make money.

Stick Approach

In this “serious” approach, it has already been established that the potential licensee has infringed on the patent in question and is using the patent’s technology in some way. The primary message is that the potential licensee must license the patent or face a lawsuit.

Why License Your Patent?

When you sell a patent to a large corporation, you may receive a large sum of money for your innovation, but you will lose all future rights to it. As a result, patent licensing may be a viable alternative to selling a patent.

Besides the obvious benefit of earning money, there are a few more advantages of licensing your invention Some of them are listed below.

  • Licensing is a simple approach to make your product available

Licensing is the most convenient and straightforward way to turn your product concept into reality without having to invest any money and while securing a lifetime of royalties.

Note:  The lifetime refers to the lifetime of the patent, and not the person.

  • The licensor no longer has to worry about manufacturing costs.

As the product is licensed to an individual or a firm, the inventor incurs no production or distribution costs. You genuinely become risk-free and receive royalties as a result.

  • Easy and quick launching of the product

A significant investment is required for the product’s launch. It takes years to establish a product’s name in the market. When you go through a well-known source, such as licensing your patent to a well-known corporation, your product will reach the market faster and in a shorter amount of time.

  • Gives you a competitive edge

Launching a product in the market through an established source helps you to get a competitive advantage. If the unit is one of the largest distributors, your goods will reach a broader market and gain a better reputation, which will benefit you in the long run. This will not only bring you a lot of royalties, but it will also make your name known among the top inventors.

  • Easy to enter foreign markets

When we talk about capturing foreign markets, it is to be noted that it is not easy for an individual to single handily get into the big market. In this scenario, licensing will be a great option as they set up links with the firms which will help your product reach the broader horizon.

Benefits of In-Licensing and Out-Licensing

BENEFITS THROUGH LICENSING-OUT A PATENT AND TECHNOLOGY

  • Market Entry Acceleration: An firm may not have all of the assets necessary to enter a market quickly. A licensor may be able to expedite the process by discovering a potential licensee with stronger assets available to enter a specific market.
  • Avoiding production expenses and risks: Licensing out is interesting because it keeps a strategic distance from the related risks, time, and talent acquisition for producing and promoting things or services to a large extent. The patent owner can simply benefit from the royalties collected from the licensee by opting for licensing.
  • Making Use of Resources: An organization may not have the financial resources to exploit or enter a certain market. The licensor might leverage the licensee’s assets to expand its present market.
  • Unused Patents: Licensing is a good way to use or profit from existing patents or fields under patent claims that the patent owner company may never employ. An organization can convert these resources into benefits by tapping into the cash-generating potential of a patent portfolio. These patents, as well as the innovation or know-how associated with them, can be licensed to others once they have been acknowledged.
  • Expanding into new geographic markets: Many businesses lack the resources to properly cover a broad range of markets. Licensing out is a way for such firms to gain a vicarious entry into these business sectors without having to cope with the difficulties of product translation and interacting with international trading sectors and governments.

BENEFITS LICENSING-IN A PATENT AND TECHNOLOGY

  • Utilizing Resources: In some cases, a company aiming to expand its market domain may not be able to manufacture the majority of the technology in-house. It must license the innovation, or interface innovation, from third parties in such circumstances.
  • Avoiding Expensive R&D: One of the most appealing aspects of licensing patents from others is that it allows a business to avoid investing huge sums of money in preliminary R&D and instead focus on marketing or improving an existing product.

 

Conclusion

Our team of Licensing Management at Wissen Research is comprised of experts that are particularly committed to assisting you in developing a star dynamic approach to deal with the business model of Licensing in licensing out. We offer an extraordinary mix of licensing experience and accounting expertise.