Patent monetization is the process of converting intellectual property (IP) into an asset. Patents are creations, and patent monetization has the ability to give inventors, firms, or institutions a decent return on investment. It can be achieved through selling, licensing, or commercialization. They all enable the owners of the patent to convert their IP into cash and gain from the full value of their property. This article selects different streams of patent monetization and how companies along with entrepreneurs can use the same to generate the highest amount of value.

Overview of Patent Monetization

Patent monetization is simply earning money from an innovation which is patented.
It can be abandoning title to the patent, franchising the right to use for a fair proportionate consideration in terms of royalties or productizing the patented product because of no distribution in the market. Patent monetization is best suited to an individual who has excellent patents with no ownership and no intention to start a company based on them. Instead of losing their intellectual property, the owners can capitalize their funds. 1. Patent sale The simplest capitalization is selling a patent. The patent owner in this case sells all his right over his mind to a third party. Rights being sold range from the full one that encompasses the patent for marketing and manufacturing the invention to possessing the right in licensing and using it. Full sale of the patent to the purchaser is preferable to most of the owners of the patent as it provides them with the cash immediately to shift the IP.

It is a convenient option especially where the owner of the patent does not have the money required to propel the invention to product or service commercialization.
The patent is also a very appropriate alternative in event that the owner is no longer interested in being linked to the technology but desires to gain financially from the invention.
There are two methods of selling patents:

Direct Sale: The owner of the patent identifies a buyer and negotiates. This is selling to another firm, company, or industry giant in an effort to consolidate its IP holdings. Patent Brokers: Patent brokers can negotiate on behalf of patent owners and identify a buyer, fairly pricing.
Online Marketplaces: Online marketplaces such as IP marketplaces provide the possibility of patent owners selling patents and being capable of speaking with possible buyers across the world.

2. Patent Licensing

Another highly desired avenue of monetization is patent licensing where the patent ownership right is transferred to the owners of patents in installments. Patent owners grant a third party rights over using, making, or selling the invention on payment of a predetermined amount in a significant way by paying royalty. Patent licensing is much in demand in the case of the owners getting return without giving away their right of a patent.
There are two broad types of patent licenses:
Exclusive License: Ex-clusive rights are being transferred to the licensee to utilize the patent, i.e., no other person—not even the patent owner—is permitted to utilize the technology in that specific zone or industry.
Non-Exclusive License: Multiple licensees have rights to utilize the patent, and the patent owner can earn royalties from multiple different groups.
Patent license contracts can be negotiated to either party. Payment can be an upfront or recurrent royalties on a sale or use basis. Contract conditions, such as term and geographical area of the license, are negotiable and variable.

Licensing suits such business categories that are unable to sell a product independently but still want to make revenues out of their IP. Licensing is suitable for owners of patents also who want to make passive revenues without necessarily forfeiting their patent.

3. Patent Commercialization

Commercializing a patented invention involves having the patented invention in the market. Commercialization is most difficult to achieve when compared to the other forms of monetization. Commercialization involves putting the patented idea into an existing product or service that could be sold. Commercialization might be in making the patented item in production by itself or under partnership with incumbent marketplace players available for sale and marketing.
Commercialization would typically involve:

Product Development: Coordinating the process of creating a prototype and preparing the ground for mass production of the same. That means coordination with the designers, engineers, and manufacturers.

Market Analysis: Market research involving the consumers to determine the market segment, the demand for the product, and competition that exists.

Strategic Partnerships: Strategic partners from successful operational current companies, who are currently operating the concerned enterprise, for the aim of selling the product, utilizing existing distribution channel, and prospecting other properties.

Commercialization, as lucrative as it is, is not inexpensive but does carry a humongous price in terms of finances, time, and resources. But kudos, commercialization can create very huge sales volumes and mean returns on investment.

4. Patent Procurement

The second way patents are commodified is through corporation patent purchasing, mostly diversification or entering the race. Patent purchasing is the act of purchasing patents by other firms or inventors with the goal of having the desire to diversify an existing IP portfolio or experiment with entry into new firms. Patent purchasing enables corporations to purchase matured technology without investing in research and development.
Through the acquisition of worth patents, firms can incorporate them into their product or sell them to other third parties. The acquisition of patents may be an operating economic system where firms get exposed to new technology and stimulate innovation without even having to produce them.
Patent monetization is an extremely efficient way of reaping intellectual value and generating new cash flows. But the approach taken - commercialization, licensing, or sale, there are certain advantages of opting for each of them. Inventors or enterprises owning such profitable patents shall need to determine how to monetize depending on resources, objectives, and degree of engagement.

Through the patent commercialization channels, patent licensing channels, and patent sales channels, patent owners are able to monetize their IP strategically as a driver of market size, source of innovation, and revenue-generating mechanism. Patent monetization is not just one of the ways of acquiring revenue from intellectual property but also one of the biggest leaps of companies and innovators in an effort to bring home returns from intellectual work.