We have previously discussed how one of the most effective means of making money from a patent is by controlling a number of similar patents in a ‘patent pool.’ Such pools comprise an assemblage of similar patents that cover a wide swath of intellectual property, such as a communications standard or a class of pharmaceutical. The first patent pool covered technologies related to sewing machines. With a pool, you can earn extremely lucrative licensing fees, as it becomes difficult for manufacturers in related fields to make an end-run about the patents.
Patent pools make it difficult for manufacturers or companies in related fields to find an end-run around the assemblage of patents. This is what makes patent pools attractive to investors, and vital to the interests of inventors and manufacturers alike.
But to create a patent pool, you need a lot of patents. This naturally raises the question, “How do you buy a patent to add to a pool?”
We have assisted many clients with purchasing patents. To learn more about how we can help, call our office at (916) 760-8265, or send us a message using our contact form. Generally speaking, it’s always advisable to have a patent attorney or patent broker assist you with the purchase of one or more patents. To see why, here’s a look at the general process.
First, perform due diligence to ensure that the patent hasn’t been rendered worthless.
There are many, many ways that a patent can be invalidated or made useless. Inventors, particularly those who manage their own patents, frequently make critical patent mistakes. For instance, rightsholders often forget to pay required maintenance fees, resulting in patents expiring and becoming worthless.
In other cases, the inventor may not actually own the patent, or a third party has rights. This can be the result of an inventor devising their creation while employed by a company that asserts the right to patent anything created by their employees.
Research is always necessary to ensure that you’ll get what you paid for.
Identify the patent’s owner or representative, and determine the current state of the patent.
It may take some time to figure out who to ask about the patent. Typically, there is an attorney of record for every issued patent that’s worth buying. This information can usually be obtained from the U.S. Patent Office.
Someone who wishes to acquire a patent typically hires me to write a letter asking to purchase or licensing the patent. This is usually quite simple if the patent is not currently in use. In this case, the patent isn’t generating revenue, and there are no third parties or existing products to deal with. However, if the patent is currently in use in some way—a manufacturer is licensing the patent, or the inventor has utilized it in a product being sold—this can present complications. Additional parties will have to be negotiated with, and exceptions or licensing agreements made for existing licensed products
Work out a licensing or purchase agreement for the patent.
This is the boring part. These agreements cover a whole host of technical (but important) agreement terms: who pays maintenance fees, who defends against patent infringement and invalidity actions, who purchases patent insurance, is a new business entity being created to maintain the patent, and so on.
These can be quite detailed, especially if you’re purchasing a license, rather than the patent as a whole. Licensing rights can be restricted to a certain scope, specified period of time, or even a geographic region.
Lastly, a contract is drafted and necessary paperwork is filed.
When terms are finalized, we draft a conveyance—a sales contract—that specifies what patent or patents are being transferred, all agreed upon sales terms, and the date on which the buyer acquires the rights. Once the conveyance is notarized, it is submitted to the USPTO, along with any other paperwork.
Negotiating the purchase of a patent may seem simple, but failing to fully understand what rights you’re buying, or improperly drafting the purchase agreement, can significantly undermine your efforts. For assistance in acquiring a patent, contact the Law Office of Michael O’Brien at (916) 760-8265, or email us using our contact form.