Is it worth licensing my patent tech for quick revenue?
Are there any other potential pitfalls I'm not seeing to licensing my tech to an eCommerce platform? I have a unique patent and while the cash inflow would be nice I'm also giving away my competitive advantage to a company that already has thousands of customers built in that I would miss out on converting as my customers. Just curious to get some thoughts on licensing and seeing if its worth it. Thanks!
2 answers:
Hey @Max, would you mind giving us a little bit more information on the type of IP you are trying to license? You need to determine who you will be trying to license this tech to, are they interested, what the size of the market is, what your price-point would be so that it is worth-it for both yourself and the purchaser.
Is there a reason you are not wanting to keep the IP and compete with those larger players? If it is such a benefit, you should think about the pros/cons of losing that competitive advantage. I am interested in hearing more, with more information I can better guide you on what I see as the most beneficial for you. DM me and we can talk more.
If your patent is sufficiently strong then licensing it to companies who already have customers is a great path to revenue. You avoid all the costs of complexities of launching your own business / brand and finding your own customers. Note that you only actually have a competitive advantage at the point you're up and running in competition with them having overcome all the early-stage growing pains that building a business can entail.
However consider the negatvies:
If there's a risk that a competitor can use your patented tech for a while and then create their own modified or improved version to avoid paying your license any more then there could be a high risk involved.
If there's a chance of getting into any legal wrangling over whether a license customer (or anyone else, for that matter) who implements their own solution is infringing on your patent with their version, the legal costs could run into tens / hundreds of thousands or potentially millions to contest. Without an established business behind you to supply funds for this you'll be unable to raise enough funds to prosecute.
Is there a fixed window in which your patent offers competitive advantage? If this isn't a long time, then you will only have a limited revenue stream from the license arrangement, and it may make more sense to build your own business in order that you can continue to develop other competitive advantges. If your technology is genuinely uncopyable without risk of being ripped-off but with a limited window in which it will offer a genuine competetive edge then you might actually be best off selling it outright for a large fee to a large player in the market to give them the competetive edge.
I think the answer to your question is that you'd need to do some financial risk-reward modelling to establish whether this model would be worthwhile vs building your own business with all the costs and risks that that has in its own right. To my mind if the patent is strong enough and difficult to copy without infringing then yes licensing or patent sale would make a lot of sense.