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Your Business First


Top 3 ways to earn from a patent


A patent protects your technical invention. Your competitors are not allowed to use it without your permission. That reinforces your market position considerably. Other aspects of a patent generate money as well. I like to share with you my top 3:

1. Licence

If you are the owner of a patent, you can get it to work for you by granting a licence for it to one or more other parties. By doing so you give the licensee permission to produce, sell or use your invention. All this for an agreed fee, of course. Licenses can be issued per market, per country or per field of application. They can also serve the patent holder in a different way, for example by providing access to a sales market which you would otherwise find difficult to get a foothold in. A good example of a company that has used licences successfully is IPN Group in the Netherlands. The company designed a dispenser with a connector for refill bags. IPN was able to use the revenue from the corresponding patent to set up international production facilities. In the meantime, the company has grown to become an internationally operating concern that produces dispensers and couplings for liquid packaging for customers such as L’Oréal, Coca-Cola, Heinz, Remia, Nestlé and Danone.

2. Attract financiers

A patent is an effective way to attract investors for entrepreneurs looking for financing for the production and marketing of their new invention. In the context of financial assessments banks are especially interested in the exclusiveness of a product and therefore in the patent that provides the necessary protection. Another method of financing which can be successful is crowdfunding. When taking the decision to participate, the consumer is influenced by the product's degree of exclusivity. Many inventions, usually by private individuals and that have captured the imagination, are marketed using this way of collecting funds. These vary from a smart motorbike helmet full of gadgets by Skully Systems to ClickTight, a simple click system that prevents laces coming undone.

3. Marketing instrument

In the United States it is usual to use the term ‘patent pending’ in connection with the product for which a patent has been applied for. Everyone then knows that the product in question is nothing short of a new invention. That makes it even more attractive and that, in turn, is an interesting marketing instrument. It makes the product more exclusive and that usually justifies asking consumers to pay a higher price. Allegedly, ‘patent pending’ products also sell better. In the Netherlands there is nothing to stop you stating in the marketing information that a product has been patented in order to emphasise its innovative and exclusive character.