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Purchasing Patents for Sale

Mar 29, 2008
Just as a growing number of people are starting to sell their patents, there is a rise in the number of people looking to buy them. However, it is wise to do some homework and number-crunching before spending big bucks to own a patent. It is also altogether imprudent to buy patents or ideas from certain sources. This article will help prospective patent buyers sift through this complexity and determine when it makes sense to buy.

The first thing would-be patent buyers should know is that patent or idea listing services are generally bogus. You do not want to spend your hard-earned money to buy something from those sites. Our article "Presenting Patent Ideas" explains one example, which is typical of the idea listing and marketing field:

As recently as 2007, the FTC went after the Patent & Trademark Institute of America, or PTI. A startling finding of this investigation was the fact that PTI extracted over $60 million in fees from more than 17,000 inventors since 2000 without having one happy customer to speak of. Full details are available in an FTC release called "FTC Charges Invention Promotion Swindlers with Contempt."

When you think about it, it is just common sense. Think of the great innovations all around you, big and small, from the automobile to dental floss. Do you think the great fortunes behind this intellectual property were made by some lucky guy stumbling across these ideas right out in the open, where anyone else could find them? Of course not. The reason this is important is that presumably, you want to purchase a patent to profit from it. And for that purpose, patent and idea listing websites are probably not going to turn up many opportunities.

However, we understand that there are exceptions to every rule and diamonds in every rough. If you do choose to search for patents on these websites, there are some things you should consider before buying them. These rules apply to buying patents from any other source, as well.

The first consideration involves the seller's asking price. Is it reasonable? By reasonable, we mean, what makes you think you will recoup that cost? Do you plan on selling this patent for more than you paid? If so, what makes you think this is realistic? What are you going to do to show this patent in a more favorable light than the current seller? Maybe you can do that, but the point is that you should consciously think about it and have firm reasons for your optimism. The higher the seller's asking price, the more important and pressing these questions become.

Or maybe you intend on actually creating something from the idea behind a patent. This is a perfectly reasonable strategy, but questions are still in order. Have you done any market research? Is there a group of customers who really want what you intend to produce? How much can you justify charging them? Based on those numbers, how long would it take you to recoup what you spent on the patent? How many sales would have to be made?

You won't have exact numbers, of course, but you do need to seriously consider these questions before money and patents change hands. It is easy to get caught up in the excitement and wonder of all the great possibilities patent ownership offers. It is a bit more difficult to sit back and consider soberly how you will actually capitalize on those possibilities.

The best time to purchase a patent is in the normal course of invention, when something you want to create crosses the path of someone else's patent. Maybe you thought of an invention that requires alloy formula some obscure scientist patented decades ago. By this point, you are better situated to make a patent purchase decision because:

A) You have a clear, well-researched use in mind
B) You know (roughly) what a justifiable asking price is, and
C) The patent in question is probably not on a shady patent-listing website.

In closing, you should subject all patent buying opportunities to careful scrutiny and research. Intellectual property is not cheap, and the hundreds, thousands, or tens of thousands of dollars you spend on patents should be a prudent, considered investment - not an exercise in whim-worship.
About the Author
Eric Corl is the President of Idea Buyer LLC, a marketplace for new technology and products that gives inventors the opportunity to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers. You can email him at EricCorl@IdeaBuyer.com. You can visit the site by visiting this address; http://www.ideabuyer.com > New Technology and Products, Patents for Sale.
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