Manufacturing or Licensing of Intellectual Property: Best for Getting Your Invention to Market

So you have a patented invention, but have no idea what to do next? And what are the different options available to earn money? This article will provide you with detailed information on how to put an invention on the market: in-house manufacturing and intellectual property licensing.

The first step is to study your invention holistically and become familiar with the industries in which it may have applications. Do some market research!

Google can help you a lot in this. Find the top startups and players that are active in the target markets of your invention and study all of their existing products / services. Sources and references can include online business magazines, blogs, and magazines. Also, try to learn about the technologies that are trending and that will reach your target markets in the future. This is because you may find a product that infringes on your technology and may file an intellectual property infringement case against the manufacturer. Perhaps your technology can be used to enhance the functionality of an existing product, thus creating IP licensing opportunities for you.

You must think from the customer’s point of view if you want to be successful. Read customer feedback on social media, e-commerce sites, official company sites, and online blogs. Analyze the problems customers are facing with current products and help them find solutions. By doing so, you can build your personal brand and establish your own following. Here, you can also inform customers about future product launches and business plans.

Let’s take an example. A company is selling an electronic device that has an early heating problem. Fortunately, he developed a special chip that can solve this problem. What you need to do is look up the online reviews customers have posted about the problem and tell them that you have come up with a solution for this. You can build trust among a group of customers, making it easy for you to market your products.

If you do extensive market research, you win half the game. The next step is to study market analysis reports and a proprietary build IP monetization strategy for your invention. There can be two options:

Intellectual property licenses:

Patent licensing is the same as renting a house to a tenant; you retain ownership of your intellectual property rights and at the same time allow someone to use them to manufacture and sell products for a specified period. The license agreement can be concluded between individual inventors or companies; the owner of the intellectual property is called the licensor, and the party that obtains the right to use, sell and manufacture from the patented technologies is called the licensee.

As the owner of an intellectual property, you have the terms and conditions set out in the license agreement. Terms can include a fixed amount of future sales or a portion of the royalty per unit.

However, it is difficult to know what the total amount you can earn as inventory is by licensing your patent to others. It depends on the valuation of the patent, which is influenced by various factors. These include:

  • Total market size and growth rate
  • Number of clients who fall in the life of the patent
  • Number of customers who make purchases
  • Product development costs and taxes
  • Annual profit for the manufacturer

There are two options in the licensing of intellectual property: exclusive and non-exclusive. In exclusive licensing, only one licensee obtained the exclusive rights to develop and market an invention (typically, exclusive license agreements are made with start-ups, helping them grow in competition). On the other hand, non-exclusive licenses allow multiple licensees to practice patented technologies at the same time, thus harnessing intellectual property to its full potential.

Manufacturing on your own

Typically, royalties earned by the inventor from IP licensing range from 2% to 10% of total revenue. If you think “Why should I get a small slice of the pie when I deserve it all? to go“You must be engaged in the manufacture and sale of products on your own.

According to a study by Ed Zimmer and Ron Westrum, more than half of the inventors who decided to manufacture and market on their own claimed to be successful.

To be a successful entrepreneur, you must be familiar with the business world. In addition, you must possess these personality characteristics:

  • Seller: All entrepreneurs have a common goal, that is, to sell their products to the maximum number of people. Therefore, you have to have the qualities of a salesperson, tell people about your products and convince them to get on the list of your paying customers as well.
  • Risk taker: Sometimes you have to get out of the fold to hit six on the last ball to win the game. Although there is a chance that it will run out, but you have no other choice. Similarly, to grow as a successful entrepreneur, you must be willing to take risks. You may be facing bankruptcy or lost credits, but at the same time you have a good chance of coming back for another game.
  • Innovative: Innovation is one of the key tools of business growth and you should be an expert at it. Giving people something new and improving products and services with the latest technologies helps attract new customers and retain existing ones.
  • Manager: You must possess managerial skills and know how to manage a team. You must understand the fact that employees are central elements of a company; And they can help you increase sales only if they are focused and inspired.


Patent licensing and manufacturing are the two options for bringing an invention to market. But it is difficult to know which is better. Both have their own benefits and drawbacks, and it is up to you to choose based on your personal preferences.

Therefore, your objective must be very clear. Whether you want to start your own business or earn royalties by allowing someone to use your intellectual property rights.

However, the return on investment is higher if you opt for manufacturing but need thousands of dollars to start a business. If you don’t have enough financial resources, IP licenses are the right way to go.

Manufacturing or licensing, what do you think is the best option for the commercialization of intellectual property?

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