7 Big Lessons We Learned on How to Sell a Patent

In 2017, we had a death in the portfolio. Once all the employees left, the only remaining assets were some patents, servers, domains, and a lot of code. Recently, we managed to learn how to sell a patent and code. Here is what we learned on how to sell a patent:

How to sell a patent in 7 steps

1. Set expectations when selling patents

The value of IP is a small fraction of what the company was once valued at; it’s maybe 1 to 5 cents on the dollar. Any acquirer of the IP is unlikely to do an all-cash deal, so don’t be surprised if the final consideration is a blend of cash, stock, royalty, earn out, or some other creative structure that reduces the acquirer’s upfront risk.

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Selling a patent is going to take a year or more with legal taking 6 to 9 months alone (we recommend specialized counsel that has M&A experience and experience in bankruptcy/winding down entities).

How to sell a patent

It’s also going to take some cash along the way as you foot the bill for legal, preparing the code, and other unforeseen expenses that have to be paid well ahead of the close. With those expectations in mind, you need to seriously consider whether it is worth the work to sell the IP, what you will really recover, and what the probability of success really is.

2. Reach out to everyone

If you’ve decided it’s worth it to try and recover something for the IP, reach out to absolutely everyone you know. That includes old customers, prospects, former customers, anyone who has ever solicited you for acquisition, your cousin, your aunt, etc.

The point is don’t eliminate anyone as a potential acquirer as you don’t know what’s on someone’s product roadmap and be shameless about reaching out to your entire network. The acquirer of the IP in our dead company was a prospect who never actually became a customer. We also had interest from very random firms that weren’t remotely adjacent to our space.

3. You need the CTO

In order to transfer code to an acquirer, you’re going to need the CTO or whoever built a majority of the code to assist. No acquirer is going to take the code as-is unless you want them to massively discount the price to hedge their risk.

They’re going to want it cleaned up and packaged specifically to their needs. In our case, it took a founding developer 3 months of hard work to get the code packaged just right for our acquirer, and of course, we paid him handsomely for successful delivery.

4. You need great counsel

The code was once part of a company, and that company has liabilities, creditors, equity owners, former employees, and various other obligations. All of those parties are probably pretty upset with you that things didn’t work out. Before you embark on a path to sell the IP, consult with an attorney that can tell you who has a right to any proceeds collected, what the waterfall of recipients looks like, who can potentially block a deal, who you need to get approval from, whether patents are in good standing, etc.

You’ll need to pay the attorney up front for his work and as you progress through the deal, so it takes take money to make money from selling IP.

5. Utilize Github

Put the code on Github. Have potential acquirers sign a very tight and punitive NDA before allowing them to see the code. It also may be advisable to only give acquirers access to portions of the code. Github is the best $7 a month you’ll ever spend when it comes to selling IP.

6. Get all the assets

Make sure you have access to all the assets. This includes all code, training modules, patents, domains, actual servers and hardware, trademarks, logos, etc. An acquirer is going to want absolutely everything even if there are some things he can’t necessarily use.

7. Make sure the acquirer is fair

The acquirer has to be someone that is negotiating fairly and in good faith with you. We got very lucky that our acquirer had an upstanding and reputable CEO. If you don’t trust the acquirer or if they’re being shifty, move on. In our case, had the acquirer been a bad guy, there were many times when he could have screwed us such as changing the terms of the deal before the close, among other things.

Given the limited recourse you often have in situations like this, ‘bad boy’ acquirers do it all the time. We got lucky finding an acquirer who was honest, forthright and kept his word. You’ll need to do the same.

Takeaways on how to sell a patent

Selling patents is incredibly challenging. In our case the recovery was very small relative to capital invested, the process took nearly 1 year, and there were a lot of people involved to make it happen. We also spent about tens of thousands of dollars in legal fees, data scientist consulting, patent reinstatement and recovery, shipping of servers, etc.

A lot of that expenditure was done along the way so we had to put more money at risk for the possibility of maybe recovering cash in the sale of IP. Learning how to sell a patent wasn’t easy, but it got done. Hopefully, we never have to do it again and neither do you.


Sammy is a co-founder of Blossom Street Ventures. We invest in companies with run rate revenue of $2mm+ and year over year growth of 50%+. We lead or follow in $1mm to $5mm growth rounds and can do inside rounds, secondaries, restructurings and special situations. We’ve made 16 investments all over the US in SaaS, e-commerce, marketplaces, and low-tech. We can commit in 3 weeks and our check is $1mm. Email Sammy directly at sammy@blossomstreetventures.com.

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  • Originally published December 31, 2018, updated April 26, 2023