Welcome to the Patent Broker Information Website
Learn everything you need to know about
patent brokers and patent brokerage!
What Is a Patent Broker?
A patent broker represents the owner (or “assignee”) of a patent in the sale, licensing or other monetization of its patent or patents. Patent brokers also represent businesses seeking to acquire patents. Like a real estate broker or insurance broker, a patent brokerage firm does not take title to the patents it represents. A patent broker is not a dealer or reseller, but an agent that represents the interests of the individual, business, university or other entity whose patent(s) it represents.
When representing a buyer, a patent broker has the task of selling or licensing – or in some other manner generating revenue from – its client’s patent or patent portfolio. The better patent brokerage firms work on contingency. That is, they are paid only when they find a buyer or licensee for the patent(s) they represent.
When you use a patent broker to represent you in the sale or licensing of your patent(s), you – the client – are always in charge. Your patent brokerage firm cannot make any commitments or sign any agreements on your behalf. Your patent broker will bring you an offer, which you can accept or reject, or respond to with a counter-offer. Your patent broker is a matchmaker that matches sellers with buyers, buyers with sellers, licensors with licensees, and licensees with licensors.
The better patent brokerage firms work on contingency. They are paid a fee that is a percentage of the revenue they generate for the client. And just as a real estate broker receives its commission when the deal closes, a patent broker is paid when the deal – patent sale, patent license or other transaction – closes.
Why Use a Patent Broker?
Why not just contact potential buyers and licensees yourself? Good question. Almost everyone knows someone who tried to sell their home on their own. They put up signs and ran ads and showed the house to umpteen visitors, but never managed to sell it on their own. They gave up, selected a real estate broker to represent them, and the broker sold the house!
Real estate brokers are professionals that make a living selling real estate. It is no surprise that they will be more successful than an amateur. Similarly, a patent brokerage firm makes its living selling patents. It is no surprise that a patent broker will be more successful selling a patent than an amateur.
A patent is a substantial asset – just as your home is – and selling or licensing it is a serious matter that should be handled by a serious professional. Additionally, a patent brokerage can often get you a better price for your patent than you could on your own, and that increased revenue more than pays the patent brokerage firm’s fee.
Other Services Patent Brokerage Firms Provide
Some patent brokers just represent buyers, sellers, licensees and licensors of patents, but some offer additional services such as patent valuations and consulting services. These services can include helping a client better manage and deploy its patents, decide which patents to keep and which to divest, design and implement an IP strategy, or determine if any of the client’s patents are being infringed.
While a patent brokerage firm typically charges for its brokerage services on a contingency basis, patent valuation and IP consulting services are on a fee basis, either per project or on an hourly or daily basis.
What about Intellectual Property (IP) Other than Patents?
While some patent brokers strictly limit their businesses to patents, most patent brokerage firms will also represent clients that have trademarks, service marks, copyrights, trade secrets, technology, know-how and other intellectual property. It is not uncommon for a patent broker to represent a portfolio that includes not just patents, but also other complementary IP.
Selling vs. Licensing vs. Other Options
The vast majority of patents that are successfully brokered are sold in a cash transaction. A much smaller number are licensed because most companies that are investing in a patent want to own the patent out right, practice the technology, and be able to assert the patent against any and all infringers. A company can license a patent, but if the patentee licenses it to a direct competitor, what advantage does the first licensee have?
Other options include taking stock in exchange for your patent. Start-up companies that are tight on cash will take this option, and if the company is successful, and the stock takes off, the seller can do quite well. If the patent is paid for in pre-IPO stock, and the company has a successful IPO, the patent seller can do very, very well!
There is also license-to-buy. A company licenses the patent for an agreed-to period of time at a fixed annual royalty. When all the royalties have been paid, the patent is transferred to the licensee. During the period of the license, the original patentee retains ownership of the patent so that if the licensee defaults on the licensing agreement, the licensor stills owns the patent, and can sell or license it to another party.