Leveraging evidence of use that infringes on a patent is one strategy that can significantly enhance the marketability of a patent. Selling patents can be complex, but this strategy can significantly increase their marketability. For sellers to effectively demonstrate the value and relevance of their patents to potential buyers, they must present concrete evidence of how the patented technology is being violated (also known as “infringement“). In the following post, we will discuss the evidence of the use of patent infringement, its benefits in selling patents, and a few other essential considerations. Let’s dive in!
What is “Evidence of Use” in Patent Infringement?
Proof that a patented technology is being used illegally by the potential buyer without the required authorization is what is meant by the term “evidence of use” in patent infringement. This evidence may be presented in various formats, such as claim charts demonstrating the buyer’s product or service compared to the patent claims. For instance, if a competitor’s product blatantly makes use of the patented technology, this can be interpreted as evidence that it is being put to use.
Importance of Evidence of Use for Selling Patents
When trying to sell patents, having evidence that the patent has been violated in some way is extremely valuable. It lends credibility and validation to the strength of the patented technology, drawing in potential purchasers by showcasing the technology’s relevance and the demand it has in the market. Sellers can leverage this evidence to negotiate higher prices or more favorable terms by emphasizing that others find the technology valuable enough to infringe upon.
Understanding Declaratory Judgment in Patent Sales
When it comes to selling a patent, having a solid understanding of the concept of declaratory judgment (DJ) is essential. It is a request that a potential infringer makes to a court asking for a determination on whether their activities would constitute an infringement of the intellectual property rights of another party. When sellers use a declaratory judgment, they can better anticipate potential legal challenges and proactively respond to them during negotiations, thereby reducing the amount of uncertainty and risk the buyers face. DJs by the buyer are an effective weapon against a seller to control a legal process and venue well before the seller can assert patent claims,
Selling Patents as a Solution to the Seller’s “Black Box”
Focusing on the patent’s benefits to the buyer’s products, without disclosing any proprietary knowledge, is a good tactic for selling a patent while protecting valuable trade secrets. This is one of the most effective strategies for selling a patent. Sellers can highlight the value of their patent while protecting the sensitive information of knowledge of actual infringement by focusing on what the patent is capable of doing and how it can improve the buyer’s products or services. This strategy helps reduce the risks of declaratory judgments and paves the way for a more efficient negotiation process.
Leveraging Evidence of Use for Competitor Trading Cards
Evidence of use can be of great assistance to purchasers who are interested in acquiring patents so that they can use them as trading cards against their rivals. Sellers can establish the value of the patents and the competitive advantage they offer by presenting evidence demonstrating how the patented technology is used against competitors. This evidence of use demonstrates the possible influence that the patented technology could have on the target market, which justifies a higher valuation in the eyes of the prospective purchaser.
Precision and Confidentiality in Selling to Patent Counsels
When selling a patent to the patent counsel of a potential buyer, it is necessary to provide accurate claim charts. However, it is best practice to refrain from sharing these charts until after an agreement has been reached and a confidentiality agreement has been signed. When a claim chart is presented first, it can raise concerns among prospective purchasers who do not want to violate existing patents inadvertently and who do not want to do so.
Selling with Evidence of Use to Improve the Buyer’s Freedom to Operate Process
When a buyer is caught off guard by potential infringement issues, it can be an opportunity to demonstrate the significance of developing a total freedom-to-operate (FTO) process. This can be done by presenting evidence of use to the buyer. Determining whether a product or technology violates an existing patent involves conducting extensive research through a freedom-to-operate process. When a patent is sold with evidence of its use, it can catalyze the buyer to improve their FTO process and avoid potential future infringement issues. This selling point can soften the blow of evidence of use.
Negotiating Power through Evidence of Infringement
The existence of infringing evidence grants the seller a significant amount of negotiating power. During negotiations, a seller could leverage this evidence to demand higher prices or more favorable terms by demonstrating that a third party infringes upon the patented technology. It is more likely that the buyer will acknowledge the value and significance of the patent, providing the seller with a stronger position to negotiate a price.
Increased Value and Potential Bidding Wars
When there is evidence of another party infringing on the patent, the perceived value of the patent goes up. When prospective buyers observe that the patented technology is already in use and is desired by other parties, it becomes clear to them that there is a market for the technology and that it has market potential. This has the potential to create a sense of urgency among prospective buyers, which may lead to competitive bidding and ultimately drive up the price of the patent.
Demonstrating an Established Market
There is a strong indication that a market exists for patented technology due to evidence of infringement. It lessens the uncertainty associated with market adoption and reassures buyers that there is a demand for the technology to be purchased. With the help of these pieces of evidence, prospective purchasers can gain a deeper comprehension of the potential size of the market as well as the competitive advantage they stand to achieve by purchasing the patent.
Enhanced Due Diligence for Informed Decisions
Because of the evidence of infringement, purchasers can engage in a more exhaustive due diligence process. They can evaluate the probative value of the evidence, as well as the potential risks and legal repercussions, and then make an educated decision regarding the patent acquisition. This level of due diligence ensures that potential purchasers have a solid understanding of the patent’s value and any potential obstacles they may need to overcome.
In conclusion, evidence of the use of patented technology that has been infringed upon is essential in successfully selling patents. It validates the relevance of the patented technology and the market demand for it, provides negotiating power, enhances the perceived value of the patent, and assists buyers in making informed decisions about purchasing the patented technology. If sellers can effectively leverage this evidence, they can significantly increase their chances of achieving favorable outcomes in the patent sales process. In the complicated world of intellectual property transactions, it can be highly beneficial for sellers and buyers to understand the potential impact of evidence of use and incorporate that into the sales process.
