Patent Monetization: Tapping potential sources of wealth


The number of patent applications worldwide has grown substantially in recent years. In 2014, the World Intellectual Property Organization (WIPO) observed a 4.5% increase in applications compared to the previous year under the organization's Patent Cooperation Treaty (PCT), which provides an international unified filing procedure to protect the inventions in each of its signatory states. China and the United States led the pack in 2014, accounting for 87% of the total growth in filings combined. At the individual state level, the United States exhibited 7.1% growth in 2014 and was the primary country of origin for PCT filers with 61,492 applications total. Chinese applicants filed 25,539 patent applications, making China the only country to experience double-digit growth – an annual increase of 18.7%. Showing the first signs of improvement since 2007, the top 3 filing countries in the European Union (Germany, France, and the UK) recorded growth. According to Francis Gurry, the Director General of WIPO,  "The rapid growth in international patent applications underscores the increasing importance of intellectual property as it moves from the periphery to the center of the global economic system."

Accompanied by the rising number of patent applications worldwide, is the seemingly new-found realization that patent portfolios can be used as an additional source of revenue through monetization strategies. Whereas businesses have, in the past, viewed patents as a means of defense to fight off the competition, many C-suite executives, boards, and active shareholders have come to recognize that high-quality patent portfolios, if managed intelligently, can be used to maximize the return on investment and enhance a company's competitive edge.

The Harvard Business Review first brought light to the untapped potential for revenue from intellectual property back in 2000 with an article entitled "Discovering New Value in Intellectual Property." Hidden within this article was the shocking statistic that corporate America wastes approximately $1 trillion in underutilized patent assets. But it's not just corporate America, and 15 years later corporations, universities, governments, and research labs are still spending billions per year on R&D processes and producing thousands of patents that are not generating returns. In fact, one of the leading full-service patent monetization firms estimates that, even still, only one to three percent of patents generate revenue for their owners.

However, investment in patent monetization is on the rise. While some (often larger) companies choose to develop commercialization strategies in-house, the outsourcing of the process to full-service patent monetization firms presents an efficient way to transform a patent's untapped potential to a valuable asset for individual inventors, universities, small- or medium-sized enterprises, and larger companies alike.

There are various methods that can be used to extract value from a patented technology or process (e.g. sale, licensing), though as the process of patent monetization is relatively complicated and the strategy is dependent on a number of factors (e.g. the technology itself, future plans for its use), it is best to consult a team of experts, either in-house or externally, to design a customized solution.


Further links:

» WIPO: PCT Patent Applications in 2014

» Harvard Business Review: Discovering New Value in Intellectual Property

» Federal Trade Commission: The evolving IP marketplace

» IPNav: Do nothing or make money?

» Skadden: Patent Monetization & Valuation