How does an inventor make a profit from his patent?
There are generally two ways that an inventor can make a profit from his invention. In rare circumstances, the inventor will start a new business to make, market and sell his invention. However, this is pretty rare as there are more inventors that would rather invent than run a business. What happens more often is that an inventor that gets a patent on a new idea will license or assign the rights to his invention to another person or company. The license is most often in the form of a contract that gives the company developing the invention the right to make, use and sell the invention in exchange for giving the inventor a license fee and royalty payments. Royalty payments are normally calculated as a percentage of the net revenues from the invention, or they can be payments for each unit sold that uses the invention. In some situations, the inventor will choose to “assign” his rights in the patent to another party (giving over all rights to the invention) for a lump sum payment.
