Key Takeaways

  • Owning a patent gives exclusive rights to make, use, or sell an invention for a limited time under U.S. law.
  • You can obtain patent ownership by developing your own invention or purchasing rights from another inventor or company.
  • Proper due diligence—verifying ownership, assessing patent validity, and reviewing market potential—is critical before purchasing.
  • Patent transfers must be documented through an assignment agreement and recorded with the U.S. Patent and Trademark Office (USPTO).
  • Buyers can profit from owning a patent through manufacturing, licensing, or reselling the patent.
  • Consulting a patent attorney ensures compliance, valuation accuracy, and protection of your rights.

How to Purchase a Patent: Everything You Need to Know

Determine how to purchase a patent by first understanding what a patent is. Companies invest and make millions in revenue each year by patenting or manufacturing patented items. Before the first penny of profit, however, manufacturers have to lock down the legal rights to a patent.

Manufacturers are required to either develop and curate items of their own to patent or to pay for the use of existing patents. Finding these patents may be difficult, but it’s essential for most manufacturers to operate. Once a manufacturer identifies a proper patent, the seller and buyer have to transfer rights to the patent and must register the transaction with the U.S. Patent and Trademark Office (USPTO). Patents give their owners the right and legal authority to manufacture, license, or otherwise utilize a particular invention.

Among other things, these patents can cover:

  • A new physical invention
  • A creative idea
  • A means of conducting business
  • A piece of software

They are considered business assets, which means they fall under the same category as things like company vehicles, computers, or a company’s headquarters. Just like these other assets, a company can seek to purchase patents that may be useful or beneficial to them.

Once an inventor or inventors have legally acquired a patent for their invention, they have a very limited period of time in which they can make money from their exclusive rights before the patent expires. For this reason and others, inventors often sell their patents to the highest bidder — usually a company that is better equipped to manufacture or market the invention to the public.

Rights concerning patents may be bundled out in the form of licenses for limited, particular use. Choosing the patent to buy is best done carefully — by reviewing both current and former issues of the USPTO newsletter, which is published weekly and announces weekly patents that have been issued.

Individual, unique announcements about newly-minted patents from the U.S. Patent and Trademark office include the contact information of the owner of the rights and basic schematics of the newly-patented invention.

One should contact a patent owner and ascertain whether or not they are willing to sell their rights to a given patent. If so, attempt to negotiate purchase terms so ownership transfer can occur.

Understanding Patent Ownership and Rights

Owning a patent means you hold the exclusive legal right to prevent others from making, using, selling, or importing your invention without authorization. Patent ownership is a form of intellectual property ownership, similar to owning tangible assets like land or equipment. However, patents provide time-limited rights—typically 20 years from the filing date for utility patents and 15 years from issuance for design patents.

It’s important to understand that inventorship and ownership are not the same. The inventor is the person who conceived the idea, but ownership can be transferred through a written assignment agreement. For example, when an employee invents something for their employer under contract, the company usually owns the patent rights rather than the individual inventor.

Ownership also grants the holder the right to license the invention to others. This allows patent owners to generate revenue without producing the product themselves. Licensing agreements should be drafted carefully to outline payment terms, duration, and scope of use to avoid future disputes.

Conducting Due Diligence Before Buying a Patent

Before purchasing a patent, it’s essential to perform due diligence to ensure that the patent is valid, enforceable, and valuable. This involves:

  1. Verifying Ownership and Chain of Title: Confirm that the seller truly owns the patent and that there are no disputes or shared ownership claims. Review the assignment history through the USPTO Assignment Database.
  2. Assessing Patent Validity: Ensure the patent is still active and has not expired, been abandoned, or invalidated by the USPTO or courts.
  3. Analyzing Patent Claims: Review the claims to determine how broad or narrow the protection is. Broader claims often mean stronger commercial value.
  4. Evaluating Market Potential: Analyze whether the invention still has market demand or whether technology has made it obsolete.
  5. Checking for Encumbrances: Look for any liens, licenses, or prior agreements that could limit your future use or resale rights.

Performing these checks protects you from acquiring patents that are legally weak or economically impractical

Find a Patent to Purchase

Whoever currently owns the patent is the same individual who has the legal authority to make the sale. If they deem your offer good enough, nothing is stopping them from accepting it and legally transferring the patent rights to you.

If the owner of a patent is a business, one can negotiate to buy the entire company, thus acquiring a patent of interest as one of the business’s assets.

One can browse auction houses or trade show listings, as well. Hard copy and digital means of doing so both exist, and are a great source of patents that are not directly available for sale through the United States Patent and Trademark Office.

One should identify the patent they want to buy and should study the procedures of an auction. If, should you attempt to purchase patents this way and require guidance as to what patent types fit your needs the most, you should contact a patent attorney.

If you see a product and wish to see the associated patent — for example, if you wish to license it or purchase it outright — there is an online database made available by the USPTO. The full text and image database allows users to search the text of every single patent issued since 1976, and it includes the most recent patents, too.

Online marketplaces allow inventors to post their patents for sale or licensing.

Before using these websites, one should check with the United Inventors Association to ensure that the marketplace is legitimate and not a scam. Brokers are excellent allies in these situations. Consider hiring one, as they can connect investors to buyers, thus introducing parties who may have patents the other is interested in.

Before contacting an investor or broker, it’s important to know which rights would make a good asset and what has to be done in order to obtain those rights. The process can be quite convoluted already, and nothing slows it down more than improper research.

Consider an example: As a business owner, if you see a tool or invention that is patented by somebody else, such as the inventor of the tool, and you want to incorporate the invention into a device you already manufacture, you would be required by law to obtain the licensing rights to that tool before manufacturing a product that used it.

It’s often beneficial to purchase a patent outright, which allows you to avoid needing to pay royalties to the inventor or holders of the original patent.

Lawyers and brokers are adept at keeping tabs on inventions and patent sales relevant to their clients’ industries.

Staying current on the news and developments in a given industry is a great way to maintain and further your understanding of patents related to it. Of course, it’s also prudent to learn about the inventors and owners of a given patent.

If you set out to purchase a patent, you would do well to treat the situation as if it were one big job interview. You would position yourself to learn as much about the company or people you may be doing business with.

A common approach to researching an inventor is to check out their social media presence or any websites he or she may own.

If the patent owner has a business, that business probably has a website. You should research the website, the business’s reputation and activities, as well as its strengths and weaknesses.

Only through understanding an inventor’s position in their respective industry can you obtain a full picture of how best to approach them about buying their invention.

Transferring and Registering Patent Ownership

Once you and the seller agree on terms, the next step is to execute a patent assignment agreement. This document formally transfers ownership rights from the seller (assignor) to the buyer (assignee). The agreement should specify the:

  • Patent number(s) involved
  • Names and addresses of both parties
  • Effective date of transfer
  • Consideration or payment terms
  • Scope of rights being transferred (full or partial)

After signing, record the transfer with the USPTO Assignment Recordation Branch. This ensures that your ownership is publicly recognized and prevents disputes over legal title. The USPTO recommends filing the recordation within three months of execution for full legal protection.

Ownership can also be transferred through corporate mergers or acquisitions, where patents are automatically transferred as business assets. In either case, a recorded assignment is the clearest proof of ownership.

Benefits and Risks of Owning a Patent

Owning a patent can be highly profitable, but it also comes with risks that potential buyers should weigh carefully.

Benefits of Owning a Patent:

  • Monopoly Rights: Exclusive control over production and distribution for the patent’s duration.
  • Revenue Generation: Ability to license or sell the patent to generate royalties or capital gain.
  • Business Valuation: Patents enhance the value of startups and companies, attracting investors or buyers.
  • Defensive Protection: Patents deter competitors from copying or entering your market segment.

Risks and Challenges:

  • High Costs: Maintenance fees, litigation, and enforcement actions can be expensive.
  • Limited Duration: Once a patent expires, it enters the public domain, reducing its commercial value.
  • Potential Invalidity: A patent may later be invalidated if prior art is discovered or if it was improperly filed.
  • Complex Licensing: Poorly drafted agreements may cause revenue loss or ownership disputes.

Strategically managing these risks through professional legal advice and patent monitoring tools can help safeguard your investment.

How to Profit from Patent Ownership

Once you acquire ownership, your patent becomes a marketable business asset. There are several ways to generate income:

  • Manufacturing: Produce and sell the patented invention directly.
  • Licensing: Allow others to manufacture or sell your invention in exchange for royalties.
  • Cross-Licensing: Exchange rights with another patent owner to expand market access or avoid infringement litigation.
  • Selling the Patent: Sell the patent outright to investors or corporations looking to expand their intellectual property portfolios.

Each strategy has different legal and tax implications, so consult with a patent attorney or intellectual property advisor before finalizing agreements. They can help ensure compliance with U.S. and international patent laws and optimize your financial returns.

Frequently Asked Questions

1. Can I own a patent if I’m not the inventor?

Yes. Patent ownership can be transferred through a written assignment or purchased directly from the inventor or company that holds it.

2. How long does patent ownership last?

Utility patents generally last 20 years from the filing date, and design patents last 15 years from issuance, provided maintenance fees are paid.

3. What happens if I don’t record a patent transfer with the USPTO?

Failing to record the transfer can lead to ownership disputes or loss of enforcement rights against infringers.

4. Can I own part of a patent with someone else?

Yes. Joint ownership is possible, but all owners have equal rights to use or license the patent unless otherwise agreed in writing.

5. How can I make money from owning a patent?

You can earn income by licensing it to others, producing patented products, or selling the patent to investors or corporations.

If you’d like assistance or more information on purchasing a patent, post your legal need to UpCounsel’s marketplace. Lawyers from UpCounsel consist of Harvard and Yale graduates who have an average of 14 years of legal experience. They are top lawyers who have worked with the largest companies in the country and are standing by to assist with your legal needs.