How does the sale of patents work? How can a patent owner economically exploit their invention? This article attempts to answer this common question. We shall begin, therefore, by analyzing the sale of a patent, and then proceed to examine other possible types of economic exploitation of an invention.
A patent is an industrial property right that allows the person who has created an invention to exploit it economically on an exclusive basis within the State in which the patent was granted. This right has a duration of twenty years, subject to the annual payment of the relevant maintenance fees. Once this term has expired, the invention falls into the public domain and becomes freely reproducible.
In this regard, a patent owner has several tools available to economically exploit the right, such as, by way of example only, the direct commercialization of the invention, the sale of patents to third parties, or licensing.
Sale of patents: which rights are transferable?
In the event of a patent sale, the object of the alienation is the ownership of the patent and the economic exploitation rights connected to it, but not the moral rights linked to the invention. The latter, in fact, remain with the inventor and are perpetual and inalienable personality rights.
Sale of patents: how does it happen?
The sale of patents can be carried out through a transfer deed, such as a sale or donation contract, or also through a contribution into a company.
In this way, the owner transfers all or some of the economic exploitation rights connected to the patent registered by the former to a third party, in exchange for the payment of consideration.
But, in addition to the sale of patents, are there other ways that allow the inventor to exploit their patent?
The answer to this question is certainly positive.
Sale of patents: what are the alternatives?
The sale of the patent, in fact, is not the only way in which the economic rights linked to the protected invention can be exploited.
Usufruct
Nothing prevents the owner of the right from granting a usufruct, which is a diritto reale (right in rem) for a fixed term, allowing the usufructuary to fully enjoy the patent without, however, ever altering the economic purpose assigned by the owner.
Once the term provided for by the parties has expired, the bare owner regains full ownership of the patent. Other rights in rem may also be established on the intangible asset (patent) or obbligazioni in rem propriam (obligations running with the property) in specific cases.
Licensing
Owners often license their patent, whether on an exclusive or non-exclusive basis. This is, in fact, the preferred method for inventors to ensure adequate exploitation of their inventions.
A license is the permission through which the licensor, i.e., the owner of the title, allows another subject (licensee) to use the patented invention for previously agreed purposes and under specific conditions.
The license is concluded through a specific contract; it should be noted that this is an atypical contract, for which the legislator has not prescribed any specific form.
As previously mentioned, the license can be:
- exclusive
- non-exclusive
The former implies that the owner of the right undertakes to license the patent exclusively to one licensee. To this end, an exclusivity clause is included in the body of the contract.
If such a clause is not inserted into the text of the contract, the license must be understood as non-exclusive. Therefore, nothing would prevent the owner of the right from granting a license to multiple subjects.
A "sole license" is also permitted. In this scenario, only one licensee and the owner have the right to use the patented technology.
In a single license agreement, it is entirely possible to provide for the assignment of certain rights on an exclusive basis and others on a sole or non-exclusive basis.
Through a license, therefore, the owner of the right fully retains their ownership but allows a third party to use their invention in exchange for the payment of previously agreed compensation, so-called royalties and/or lump-sum payments.
Pledging
Although pledging a patent is not a very widespread practice, it is provided for by our legal system.
This opportunity comes to the aid of companies that, even if they cannot rely on their own financial resources, nevertheless continue to invent and protect their inventions through patents. By granting a pledge, entrepreneurs can thus raise the investments necessary to continue the development and innovation of their business.
A pledge is a diritto reale di garanzia (security interest in rem), which is a limited right over someone else's property that fulfills the function of encumbering an asset as security for a monetary credit. It is necessarily established by contract.
Creating strategic alliances
Another solution that allows for the exploitation of patent rights is the establishment of strategic alliances between multiple companies in order to mutually exchange licenses for their respective patents. In other words, this is the phenomenon of so-called "cross-licensing."
This solution is particularly valued by industrial groups, as it is not uncommon for complementary inventions to belong to two or more competitors. Therefore, they reach an agreement to mutually grant authorization to use their patent titles.
Sale of patents: when must economic exploitation be recorded?
Article 138 of the Codice della Proprietà Industriale (CPI - Italian Industrial Property Code) identifies a whole series of types of acts relating to property rights that must necessarily be recorded (trascrizione).
In particular, paragraph 1, letter b), provides that:
the following must be made public by means of recording at the UIBM (Ufficio Italiano Brevetti e Marchi - Italian Patent and Trademark Office): [...] acts inter vivos, whether for consideration or free of charge, which establish, modify, or transfer personal rights or rights of enjoyment in rem, special privileges, or security rights.
Therefore, all the acts illustrated above must necessarily be recorded.
In this scenario, the recording has purely declaratory effect as its purpose is to make the recorded acts enforceable against third parties, with the consequence that the licensee or the usufructuary, etc., who has recorded their title of acquisition, can assert it against any licensees, usufructuaries, etc., to whom the owner of the right has subsequently granted an exploitation right.
Sale of patents: final considerations
In light of what has been illustrated, it can be concluded that the sale of patents is indeed the main channel through which an inventor can economically exploit their right.
However, it is not the only option! It is not, therefore, necessary to divest oneself of the ownership of one's invention in order to be able to exploit it economically.
In order to economically exploit one's patent, it is essential to give the patented technology the greatest possible prominence and visibility in order to reach the widest possible audience of potential investors.