Tuesday, October 21, 2014

Reinventing Patent Monetization Business Model

Patent Reuse Bank
This patent monetization model utilizes the existing patents that are developed by the government funded research institutions and are under-exploited for commercial purposes. The patent reuse bank categorizes the patents by specific industry, market, technology and pools them into a web platform. Usually, high tech SMEs in needs of specific patent portfolios license them for their commercial uses.

Patent Cloud Platform
This patent monetization model utilizes the cloud platform to link inventors, patent users, and investors. A patent development project (patenting on demand) can be initiated by inventors, patent users, or investors. For example, a patent user requests patent development for a specific commercial use, and an investor or cloud funding investors can fund the project. A specific monetization ideal also can be obtained from the cloud sourcing.

Patent Factory
This patent monetization model exploits the existing high tech SMEs that are usually in IT and telecommunications and in financial difficulties in their main business. The patent factories develop specifically targeted patent portfolios and strategically package the patents for sale. Usually, private equities fund the patent factories for a rather quick return (around two years).

IP-Backed Spin-Off
This patent monetization model utilizes existing R&D team members and patents. One example is the Newracom, Inc., which is a a start-up formed by WiFi research team members from ETRI in S. Korea supported by more than 100 patents and funded $15M from a venture capital. Another example is CF Global, which is the first spin-off from Intellectual Venture’s Invention Development Fund. 

IP-Backed Insurance & Lending
This patent monetization model utilizes an insurance policy on the value of IP (e.g. http://www.patentinsurance.com/). Then, the insurance policy becomes collateral for a bank loan for any amount of money up to the insured value. One example is the lending by a university's endowment/pension fund to a team with some good new technology and patents that obtained such a patent backed insurance policy. If the team succeeds, the university's fund gets it loan monies paid back, plus some equity gains.  If the team fails, the university's fund just gets it loan monies back from the insurance policy.

Any other models?

Alex G. Lee Ph.D, J.D
Princiapl IP Strategist
TechIPm, LLC

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