Prosecuting a patent is a complex process that typically requires specialized legal support. Organizations that have secured patents theoretically have sole legal control over a patented product, process or concept.
A patent allows a business to recoup what it has invested in research and development. Patents can help protect a company’s competitive advantage. In theory, no other competing business can produce a patented product or use a patented production process. However, companies that have prosecuted patents sometimes negotiate licensing agreements with businesses in adjacent industries or even direct competitors. A licensing agreement allows another business to use patented information. What are some of the benefits of negotiating a patent licensing agreement?
1. A secondary stream of revenue
Licensing agreements typically involved substantial financial compensation for the patent holder. The party licensing the concept or process pays for that privilege. Depending on the circumstances, the licensing agreement could last for years and could be worth millions of dollars for the organization that holds the patent.
The decision to license a patent can provide a regular stream of revenue in addition to company sales. Particularly when a patent holder is not the dominant player in a particular industry, licensing can be more lucrative than maintaining sole control over a patented process, product or concept.
2. The prevention of infringement
Outside parties may recognize the value of a patented product or process. In some cases, they may attempt to reverse engineer patented technology or create alternatives that serve similar functions.
By agreeing to license a patent to another business, the patent holder can prevent scenarios in which reverse engineering and similar efforts may undermine the value of the patent. Other companies don’t have to invest time in duplicating or altering patented processes, products or concepts when they can legally license the patent from another business.
3. Improved enforcement rights
Licensing makes it easier to identify parties who may have an incentive to infringe on a patent. Companies can monitor those businesses for infringement, particularly after a licensing agreement expires. It is harder for competitors to justify infringing activities in scenarios where a patent holder actively licenses patented concepts to other parties.
Negotiating a patent licensing agreement is relatively complex. Organizations seeking to monetize existing patents may need help with that process. Seeking legal guidance when prosecuting, enforcing or licensing patents can help companies more effectively protect their valuable intellectual property.
