Escape 9-to-5: How to Live Off of Your Intellectual Property:
Being stuck in a cubicle isn’t most people’s dream.
If you’re like many Americans, you might be working a desk job and hustling away at your passions on the side. You may spend your time in the office dreaming of a way to escape 9-to-5 and be your own boss. If you’re an inventor, innovator, or entrepreneur, your new idea could be your way out.
But you have to know how to utilize your intellectual property.
The licensing and merchandising of Intellectual Property assets is a hundred billion dollar industry in the United States. Protecting and properly harnessing the power of your own personal intellectual property can be the key to prosperity. Looking to escape 9-5? Read on to learn how to turn your discoveries into earnings.
Getting A Patent
Creating a strong package of intellectual property elements can bring great value to your product(s). Having a patented idea as well as a trademark, copyright, or trade secrets is an excellent way to show promise to potential investors.
Having a patent for your idea will ensure the people with money that there’s not another idea like yours out on the market. Until you have a patent in hand for your product, it’s likely that investors will not feel safe hopping aboard with you. You can search the patent office yourself or work with a patent lawyer to help make sure there’s nothing else like your idea out there.
Under current law, even if an initial idea can be proven to pre-date another, whichever idea filed for a patent first will be given preference. This means you should get your idea in front of the Patent and Trademark office as soon as possible. Outside of making your idea or product much more valuable to potential investors, a patent can be a valuable asset in marketing yourself.
Audi’s famous mid-2000s ad campaign described how the car company submitted more patents than NASA in its attempt to build the perfect car. Patents are seen as official third-party verification of invention and innovation. They can give confidence to your potential audience and consumers just as well as they do for your investors. Startups sometimes end up losing their intellectual property rights by failing to protect their hard work. There’s no doubt that filing for a patent can be complicated and arduous. But the end result will bring more value to your idea than anything else you can do.
In the meantime, you can keep moving forward with your idea, content with the knowledge that you have an idea with ‘patent pending’.
Valuation of Assets
Once you have a patented idea or technology, you must get a sense of its entrepreneurial value.
Valuation of intellectual property can be a tricky process. Typically, you’d want to work with a valuation expert or intellectual property professional.
These individuals have three general methodologies in evaluating your IP.
- The cost approach reasons that the value of intellectual property is no greater than the costs needed to obtain or reproduce the asset. These costs would include direct costs such as materials, marketing, legal, designs, and so forth. It would also include more ancillary costs such as development time and overhead.
- The market approach is used more when the intellectual property is part of a field where similar patents may have been licensed or invested in. This approach searches for a comparable existing transaction as a starting point for your own valuation. This approach can be tricky, as many contextual elements must be taken into account before being able to assign a dollar status to your intellectual property. The reasons and process behind the transaction can sometimes affect the value as much as the asset itself. These other factors should not affect your own valuation.
- The final and most common approach is the income approach. It assumes the value of intellectual property is the estimated income that it could produce into the future. This approach obviously involves a lot of research and judgement on the part of the valuation analyst. It can arise from a variety of factors depending on how the intellectual property may be used.
Either way, working alongside a dedicated professional will help you understand just how much your property is worth.
It’s not a direct process, but studies have shown that patent applications have a high and positive correlation with pre-IPO financing. Startups related to technology frequently have no other asset other than intellectual property. This property is then typically leveraged and used as collateral for credit. Many use this sale as an entryway into the market.
The efficiency of the patent system usually leads to inventions being licensed as opposed to direct commercialization by the inventor. While you may be initially opposed to another party licensing your discoveries and creating a product, the fact of the matter is that these potential companies typically have a much bigger advantage in technology commercialization.
They can make product more efficiently and cost effective than you could on your own.
This means that the royalties that will come to you from the licensing may be greater than what you could make attempting direct commercialization.
Strategic licensing is also a great way to explore other markets at relatively low risk.
You can license out a specific element or technology that you have patented to another industry who could use it.
Not a bad way to escape 9-to-5.
Other Ways To Earn
Creating an intellectual property portfolio complete with patent and other elements will ensure that others find value in your idea.
Many patent holders seek investors that are attracted to their idea. These can be venture capital firms, investment groups, angel investors, and so forth. Your patent will ensure that no investors can take your idea as their own.
You could also sell your patent outright. As you grow, there may be elements of intellectual property that are less valuable to your company, and you could sell the rights to these elements.
Find Value & Escape 9-to-5
If you successfully create value for your idea there’s a wide wealth of opportunities available to you in the marketplace.
The only two steps you need to take are:
1) have a good idea
2) identify and protect your intellectual property.
If you do these two things, you’ll be well on your way and can escape 9-to-5 lifestyles.
If you’re ready to submit your patent now, feel free to schedule a meeting with us at any time.