PHILIP PARKER | 2025-02-20
Patent Value: What Patents Can be Sold Or Licensed?
We receive many inquiries from organizations and individuals asking if we can sell their patents. In many cases, we can. However, for some patents, there are no buyers. The market for patents depends largely on the following factors:
- Grouping patents by field provides insight into their likely use and allows buyers to focus on areas of interest.
- Identify patent families.
- Identify the best patents and their best claims.
Grouping patents by field provides insight into their likely use and allows buyers to focus on areas of interest.
A patent family consists of all patents originating from one original application (the “priority application”). A family may include multiple patents from one country and foreign counterparts from multiple countries. Since the different members of a patent family contain much duplicated information, by grouping the patents into families, you can help the reader avoid reading duplicate information and just focus on the differences within the family. As an aside, when buying or selling a patent, all family members should be included in the transaction.
Commercial Use of the Patents
Many first-time inventors believe that any patent is worth a lot of money. This is not true. To have value, a patent must provide some protection to a commercial product. If there are no current or future commercial products that fall within the scope of the patent’s claims, then the patent will have no value.
For a patent to have sale or licensing value, it should be aimed at an industry with large revenues, preferably more than $1 billion worldwide revenues.
Patent Portfolio Size
In the high-tech industries—semiconductors, electronics, IT, and telecommunications—products are very complex, and each product makes use of thousands of patents, even hundreds of thousands of patents. It is impossible to make a new product that does not infringe on other companies’ products. Therefore, companies typically cross-license patents with their competitors, and companies buy patents prior to cross-license negotiations. For cross-licensing, the number of patents (and their quality) is important. One or two patents is not very useful; a portfolio of 10 to 20 patent families is usually the minimum size for a sale.
At the opposite extreme, in the pharmaceuticals and chemicals industries, it is possible to protect a product with a single chemical composition patent. Therefore, single patents or single patent families are readily sold or licensed.
Other industries fall between these two extremes.
Patent Quality
A patent’s quality will depend on:
- Ability to withstand challenges to its validity
- The clarity and scope of its claims, and how well those claims are supported in the patent’s written description
- The remaining life of the patent
- Which products the patent reads on
- How easy it is to design around a patent so that a product no longer infringes it
- How easy it is to detect use of the patent by the product and prepare evidence of use
Below, we explain each of these factors.
Country Coverage
To have good value, the patent should be granted in at least one of these regions: USA, China, or Europe (and registered in Germany or Great Britain). If the patent is not granted in one of these, even if there is a pending patent application, it probably has no sale or license value.
In the high-tech industry, obtaining a patent in more than the above countries adds, at best, incremental value. By contrast, in the pharmaceuticals industry, a patent should be obtained in all countries that have large populations of potential patients. In addition to the preceding countries, it is common to obtain patent coverage in other major European nations, Russia, Canada, Mexico, Japan, Korea, India, Indonesia, and Australia.
Other industries fall between these extremes of the high-tech industry and the pharmaceutical industry.
Existing Licenses
Each license granted to a patent reduces that patent’s value for sale or subsequent licensing. Previously, companies granted licenses for their entire patent portfolios for very wide ranges of products, needlessly reducing the value. These days, most licenses are usually granted for specific types of products or specific technologies. However, imprecise definitions in the scope of license can lead to uncertainty as to whether certain products or technologies are licensed, reducing the value of the patents. Therefore, we recommend that companies define the scope of patent licenses precisely and as narrowly as possible. Imprecise or unnecessarily broad licenses can reduce the value of a company’s entire patent portfolio.