Practical Pointers for Patentees By Franklin A. Cresee, M.E.
The object of Practical Pointers for Patentees is to provide inventors with crucial information and advice, drawing on the author’s observations and the experience of successful inventors, to help patentees intelligently and economically realize financial gain from their inventions once the patent has been issued. The work focuses specifically on the “business end” of inventing, detailing the best methods for valuing and selling patent rights, addressing legal forms, and navigating pitfalls such as unscrupulous patent-selling agents. The 1912 revised edition includes new forms and tables reflecting the 1910 U.S. Census.
Who May Benefit from the Book
- Patentees seeking to monetize their granted inventions.
- Inventors of modest means seeking rapid independence and wealth.
- Individuals requiring guidance on patent valuation, licensing, and sales negotiation.
- Those needing protection against dubious patent-selling agencies.
- Capitalists and manufacturers seeking advantageous new products or monopolies.
Top 3 Key Insights
- The patentee, intimately familiar with the invention’s merits, is overwhelmingly the best and most effective selling agent for the product.
- A patent’s financial worth is derived from the monopoly it provides, which must possess utility and clear commercial advantage over existing devices.
- Exclusive royalty contracts, especially those requiring guaranteed minimum payments, are often far more lucrative than selling the patent outright for a lump sum.
4 More Lessons and Takeaways
- Avoid the common pitfall of assigning an undivided interest in a patent, as co-owners are merely tenants in common and are not obligated to share profits.
- Prove the commercial value of a small invention by manufacturing a limited quantity and conducting a successful trial sale in a controlled, local territory.
- During negotiations, patentees must conceal any financial difficulty, as buyers frequently exploit inventors known to be in straitened circumstances to reduce the price.
- Seek positive, free publicity for the invention through newspapers and relevant trade journals, as this attracts investors and creates favorable public opinion.
The Book in 1 Sentence
This manual provides patentees with practical, economical methods and legal insights for effectively valuing and selling their inventions for success and fortune.
The Book Summary in 1 Minute
Practical Pointers for Patentees is the inventor’s guide to achieving financial success after a patent is issued. The book stresses that the patentee is the most capable salesperson, fueled by superior knowledge and enthusiasm. Success depends on demonstrating the invention’s commercial value—that it is cheaper, simpler, or performs better than market competitors. Patentees should secure capital by selling territorial rights or using clear contracts, strictly avoiding the dangerous assignment of undivided interests. The most profitable method is often placing the patent on an exclusive royalty basis with guaranteed minimum returns. Advertising, personal solicitation, and the use of models are effective sales tools. Finally, the book outlines the legal necessity of protecting Canadian rights and understanding various transfer agreements like assignments, grants, and licenses.
Chapter-wise Book Summary
CHAPTER I. DEMAND FOR INVENTIONS OF MERIT
“A GOOD PATENT, PROPERLY HANDLED, IS A STEPPING STONE TO SUCCESS AND FORTUNE.”
The chapter establishes that there is a genuine demand for meritorious inventions that can be profitably sold. Civilization’s continuous advancement drives the need for new apparatuses and implements that save time, labor, and expense. Capitalists and manufacturers are constantly seeking desirable, novel inventions that can supersede existing products, allowing them to gain a market monopoly and avoid keen competition. The monopoly afforded by the patent system is vital; if governments did not protect inventors for a set period, they would keep their inventions secret, preventing the public from benefiting. Any party securing the monopoly of a successful trade article is assured of a fortune. Official reports indicate that six to seven-eighths of the entire U.S. manufacturing capital, amounting to billions of dollars, is either directly or indirectly based upon patents. Large manufacturers are typically the heaviest owners and developers of patents, recognizing that a good, valid patent often forms the commencement and basis of a successful factory.
Chapter Key Points:
- Civilization drives continuous demand for new merit inventions.
- Patent monopoly is the business desideratum.
- Most U.S. manufacturing capital is patent-system dependent.
Important Quote: “By purchasing such inventions, they secure novelties which will not only enable them to avoid the keen competition and to a great extent monopolize the trade in their own respective lines of business, but also to make sales more easily, and thus make their business more profitable.”
CHAPTER II. INCOME FROM INVENTIONS
“It may be said, as a general thing, there is more money in small inventions than in larger ones, from the fact that they can be easily manufactured anywhere with but little outlay of capital.”
This chapter addresses the financial opportunities arising from successful inventions, claiming that the annual income generated by American inventors exceeds the total value of all gold, silver, and diamond mines globally. Successful invention offers one of the quickest routes for an average person to achieve independence and wealth, especially for “improvers” who refine existing concepts. However, the author cautions that not all patents are profitable; many fail due to bad management, lack of real necessity, or being such slight improvements that the resulting claims are too narrow to be valuable. Nevertheless, the majority of granted patents prove lucrative if managed properly. The true cash value lies in the sale or use of the monopoly, emphasizing that the realized amount often depends heavily on the inventor’s business capacity. Small inventions often yield higher profits than larger, complicated ones because they require less capital outlay, fill a general need, and are easily sold. Inventors of limited means, often called the “genius of the poor,” frequently drive innovation because they are closer to the arts and manufacturing defects.
Chapter Key Points:
- Thousands of patents yield high annual incomes.
- Patent value relies on the inventor’s management and business skill.
- Small inventions are often the easiest and most profitable to handle.
Important Quote: “The actual cash value of a patent is not in the patent itself, but in the sale or use of the monopoly it affords, and the amount realized from any invention frequently depends upon the business capacity of the inventor or his agents.”
CHAPTER III. SECURING CAPITAL
“The patentee who proposes to realize from his invention should never let it be known that he is in want; of course, in some cases he cannot help himself, but he should endeavor to obtain the necessary assistance from his acquaintances…”
Many inventors lack the funds needed for promotion after securing a patent. Patentees should avoid the “fatal mistake” of selling an undivided interest in their patent for capital. Since joint-owners are merely tenants in common, an assignee of even a small undivided interest can manufacture and sell the invention freely without compensating the original patentee, effectively allowing the assignee to proceed as if they were the sole owner. Safer methods include borrowing capital contingently, selling a specific county or state right, or entering into a formal contract where a financier provides means for a percentage of net receipts. The book provides a suggested form of agreement to secure both parties. Inventors should file their patent application promptly once the invention’s principal features are complete and theoretically operative, leaving final mechanical details to manufacturers for economical production. Critically, patentees must never allow those with whom they are dealing to perceive any financial desperation, as capitalists will often take advantage of an inventor in straitened circumstances. Utilizing newspaper publicity and trade journals to describe the invention is also highly recommended as a cheap and effective way to draw the attention of manufacturers and capitalists.
Chapter Key Points:
- Avoid selling an undivided patent interest due to legal dangers.
- Formal agreements or territorial sales are better for securing capital.
- Prompt filing secures priority; refinement details can follow.
Important Quote: “In an assignment of an undivided interest, the assignee is afforded an opportunity of manufacturing, using, and selling to others to be used the article covered by the patent; also, to grant territorial grants, such rights being unlimited by the terms of the assignment, and it is actually of little consequence how small an interest is thus conveyed…”
CHAPTER IV. HOW TO ARRIVE AT THE VALUE OF A PATENT
“If the invention be fortunate enough to combine both of these features in his invention [cheaper to manufacture and yielding better results], the value is doubled and success certain.”
Pecuniary value hinges entirely on whether the invention covers something for which a demand exists or can be created; otherwise, the patent is financially worthless. To possess commercial value, an invention must exhibit utility and be able to successfully compete by being simpler, cheaper to manufacture, or yielding superior results in speed or cost of operation. Patentees must avoid overvaluing their work and be reasonable, ensuring the purchaser retains a fair share of the profits. For smaller, novelty inventions, the best way to determine value is by conducting a trial experiment: manufacturing a limited quantity (500–1,000) and selling them in a small, select territory. This conclusively proves the commercial value and significantly aids in negotiating a higher final price. If funds for a trial are unavailable, value must be estimated based on manufacturing costs, retail price, competition, and sales projections. For patents placed upon royalty, the patentee should aim for approximately twenty-five per cent. of the manufacturer’s profits, or about one-tenth to one-twentieth of the retail price for exclusive contracts. When forming a stock company, the inventor should receive between one-fourth and one-half of the capital stock in exchange for the patent rights. Valuation tables are provided in the source to assist in setting arbitrary prices for territorial rights based partly on population and regional industry concentration.
Chapter Key Points:
- Commercial success requires simplicity, low cost, or superior utility.
- Market trials establish proven commercial value for higher sales prices.
- Royalty expectations should start around 25% of the profits.
Important Quote: “Perhaps one of the hardest questions that confronts the patentee is how to arrive at a just valuation of his patent, and to know just exactly what he should receive for it.”
CHAPTER V. HOW TO CONDUCT THE SALE OF PATENTS
“That the patentee himself is the best selling agent there can be no doubt, for he is familiar with the construction and operation of his invention in every detail, and knows its merits and superior points far better than anyone else…”
Selling the patent requires the inventor’s greatest prudence. Patentees are strongly cautioned against patent-selling agencies which send attractive proposals but usually require an advance fee. The author’s experience suggests these firms rarely facilitate actual sales and often operate merely to secure fees, effectively selling the patentee rather than the patent. The patentee is inherently the best agent due to personal knowledge, enthusiasm, and credibility, which are essential for sale success. If an agent is necessary, they should be a trusted acquaintance with relevant trade experience and incentivized with a commission plus a percentage on amounts exceeding the minimum price. Effective selling methods include utilizing advertisements in reputable daily papers or trade journals. Advertisements must be truthful, concise, and assume a professional stance. Targeted correspondence with manufacturers found in trade journals is an alternative method, where the goal is to briefly set forth the invention’s advantages and elicit an inquiry, rather than attempting to negotiate terms immediately. High-quality circulars with neat illustrations are recommended to save writing and appear business-like. A neat and perfect working model is almost indispensable for securing interest and creating a favorable first impression during solicitation.
Chapter Key Points:
- Unscrupulous patent-selling agencies requiring fees should be avoided.
- The inventor’s personal involvement and enthusiasm is paramount for sales.
- Concise, truthful advertising in proper mediums is critical for outreach.
- A working model facilitates immediate interest and favorable impression.
Important Quote: “Many parties who become interested in patents are not familiar with mechanical drawings and technical specifications, and very often do not get a very favorable impression from a copy of the patent; and it is very important that the first impressions should be favorably created…”
CHAPTER VI. HOW TO CONDUCT THE SALE OF PATENTS— Continued
“Patentees should not labor under the impression that because a patent is offered at a very low price that it will be quickly snapped up as a bargain;… its real value is in exact proportion to the amount of profits that can be made from its manufacture.”
This chapter details various methods of commercializing the patent. Personal solicitation is advised for establishing a satisfactory understanding. Selling outright (assigning entire interest for a fixed sum) is the quickest way to realize cash, but it typically yields a much smaller return compared to other methods, as the inventor forfeits future profits. Patents can be profitably subdivided into different classes of rights, allowing the patentee to license different manufacturers based on their respective lines of business (e.g., licensing bicycle tires to one company and automobile tires to another). Selling by territorial rights (exclusive rights to make/sell in a specific geography) has been successful, particularly for novelties, but is less common due to the system’s historically poor reputation. The most popular and advantageous method is placing upon royalty, where the manufacturer pays a stipulated fee per article. Patentees placing inventions on royalty must investigate the manufacturer and ensure the contract includes clauses to prevent the patent from being intentionally suppressed (pigeon-holed) by a company wishing to protect a competing product. Effective protection includes requiring the manufacturer to guarantee a minimum annual royalty payment, irrespective of sales, thereby obligating them to promote the product. Alternatively, inventors with business acumen can retain the patent and establish manufacturing operations themselves or organize a stock company, often yielding the inventor one-half of the capital stock for the patent. Trading the patent for securities or other property is only advised as a last resort, and requires rigorous, independent verification of title and value by an attorney.
Chapter Key Points:
- Outright sale yields quick but limited capital.
- Licensing different manufacturing classes maximizes receipts.
- Guaranteed minimum royalty prevents patent suppression.
- Organizing a stock company is advised for large, promising inventions.
Important Quote: “Many patentees have been caught by manufacturers offering large royalties for the sole purpose of gaining possession of the patent, that they might pigeon-hole it, in order to keep the article out of the market…”
CHAPTER VII. CANADIAN PATENTS
“The commercial and manufacturing interests of Canada are extensive, increasing yearly, and are closely knit with our own.”
The author advises U.S. inventors to protect their inventions in Canada due to the close commercial relationship between the countries, noting that an unprotected invention could be manufactured there and imported into the U.S. royalty-free. Under the Patent Act, an inventor must apply for a Canadian patent within one year of the first foreign patent issue. If the inventor gives formal notice to the Commissioner of Patents in Ottawa within three months of the foreign patent issue, the inventor is protected for the entire year against manufacturers in Canada. Canadian patents are granted for eighteen years, with the $60 government fee optionally divided into three $20 payments over the life of the patent. Manufacturing must commence in Canada within two years of the patent date, although extensions are possible. When selling Canadian patents, the expected price should be approximately one-third of the value of the U.S. patent. It is crucial to successfully market the invention in the U.S. first, as proving commercial success domestically makes it far easier to sell the Canadian rights at full value.
Chapter Key Points:
- Canadian patent protection is essential due to trade proximity.
- Application must occur within one year of the U.S. patent date.
- Canadian patents sell for roughly one-third the U.S. patent value.
Important Quote: “It is in nearly all cases advisable for the inventor to first put his invention upon the market in the United States before trying to realize from his Canadian interests, as it will be found difficult to interest Canadian capital in a patent that has not been first put into practice here…”
CHAPTER VIII. DECISIONS AND NOTES
“Owners of a patent are tenants in common, and each, as an incident of his ownership, has the right to use the patent or manufacture under it. But neither can be compelled by his co-owner to join in such use or work, or be liable for the losses which may occur, or to account for the profits which may arise from such use.”
This chapter provides a digest of legal principles affecting patentees. Key judicial decisions confirm that joint owners of a patent are considered tenants in common, meaning each can use or license the patent without liability to account to co-owners for profits, absent a specific contract. Additionally, the lawful sale of a patented machine by an authorized party conveys absolute ownership to the purchaser, who may then sell or use it anywhere in the U.S., unrestricted by territorial limits. Legal rules clarify that a license generally cannot be transferred unless the terms expressly permit it. A crucial rule of practice dictates that an assignment, grant, or conveyance of a patent is void against subsequent purchasers for value without notice unless it is recorded in the Patent Office within three months of the date of execution. Interests in patents are vested in assignees (transferees of whole or undivided interest across the U.S.), grantees (exclusive sectional rights), mortgagees, and licensees (lesser interest). While certain States attempted to regulate patent sales (e.g., requiring affidavits or licenses), the Supreme Court indicated that Congress has exclusive authority over patent rights, making most state restrictions on the sale of patent privileges unconstitutional.
Chapter Key Points:
- Co-owners are tenants in common and owe no accounting for profits.
- Assignments must be recorded in the Patent Office within three months.
- State laws restricting patent rights transfers are generally unconstitutional.
Important Quote: “A license is not forfeitable for non-payment of royalties in the absence of express provisions to that effect.”
CHAPTER IX. THE TRANSFER OF PATENT RIGHTS
“If a man were to give another an orange he would simply say, ‘I give you this orange’; but if the transaction be intrusted to a lawyer to draw up according to the requirements of law, says the Observer, he would most probably put it in the following language: ‘I hereby give, grant, and convey to you all my interest, right, title, and advantage of and in said orange…'”
The patentee is advised to have an attorney scrutinize all transfer papers. The law defines three classes of parties who can receive an interest: an assignee (whole or undivided interest in the entire U.S.), a grantee (exclusive sectional right), and a licensee (a lesser interest, which can be oral or written). The chapter stresses that legal language is verbose but necessary for protection. It then provides standard forms for various transfers, emphasizing that custom documents tailored to specific facts are always best. These forms cover: Assignment of Entire Interest, Assignment of an Undivided Interest, Grant of a Territorial Interest (exclusive right within a specified region), License: Shop Right (personal privilege to make/use at a single location), License: Non-exclusive—with Royalty, and License: Exclusive—with Royalty. When assigning the entire interest, a specific clause must be added if the right to sue and recover for past infringement is also to be transferred. Exclusive royalty licenses should include detailed agreements regarding semi-annual returns, examination of books, and conditions for termination if sales targets or guaranteed minimum royalties are not met.
Chapter Key Points:
- Assignments, grants, and licenses define rights transfer.
- Custom legal forms are necessary to protect rights fully.
- Transferring infringement rights requires a specific, explicit clause.
Important Quote: “A licensee is one who has transferred to him in writing, or orally, a less or different interest than either the interest in the whole patent, or an undivided part of such whole interest, or an exclusive sectional interest.”
CHAPTER X. TABLES AND STATISTICS
[No Important Quote provided, as this chapter contains solely statistical data.]
This chapter consists entirely of statistical tables designed to assist patentees in conducting market research for valuation and sales. The tables include the Official Census of the United States by counties for 1910, allowing inventors to understand the distribution of the population by area. Population data is also provided for U.S. cities over 25,000. A detailed table summarizes the number, acreage, and value of farms, buildings, and machinery by state, based on the 1910 Census. Additionally, a comprehensive table lists occupations from the 1890 Census, categorized into areas like Agriculture, Professional Service (which includes Designers, Draughtsmen, and Inventors), Domestic and Personal Service, Trade and Transportation, and Manufacturing and Mechanical Industries. These data points are vital for patentees to estimate potential sales and determine how much of the market their invention is likely to reach.
Chapter Key Points:
- Provides U.S. population statistics by city and county (1910).
- Includes detailed farm value and acreage data (1910).
- Offers historical occupational census data (1890) for market analysis.
Notable Quotes from the Book
- “The original conception and working out of an invention is usually a labor of love on the part of the inventor…”
- “…others, through incompetency, drift into the hands of unscrupulous patent-selling agents only to be swindled.”
- “The numerous inquiries from patentees seeking practical, reliable, and up-to-date information as to the best and most successful methods of realizing from the product of their ingenuity, has led the author… to prepare and present this work…”
- “Anyone having a monopoly of a good trade article is assured of a fortune.”
- “A patent, if it is worth anything, when properly managed, is worth and can easily be sold for from $1,000 to $50,000.”
- “Experience shows that the most profitable patents are those which contain very little real invention, and are to a superficial observer of little value.”
- “Invention is sometimes called the ‘genius of the poor’…”
- “Inventors, while working on a complicated machine, should not overlook the value and importance of keeping a record of the progress of the development…”
- “…if an invention will not bring in money by manufacturing it, it is, in a financial sense, worthless…”
- “The personal push of the inventor is, in nearly all cases, essential to the successful termination of a sale.”
About the Author
Franklin Allison Cresee (F. A. Cresee, M.E.) authored Practical Pointers for Patentees, a manual designed to help inventors navigate the commercial exploitation of their patent rights. The original copyright dates back to 1901, with revisions occurring up to 1912. Cresee is associated with the Scientific American Office of Munn & Co., Inc., located at 361 Broadway in New York. Munn & Co. is known for having the largest patent practice in the country and publishing the Scientific American, a weekly journal focusing on mechanical, chemical, electrical, and engineering developments. Munn & Co. also published related technical works, including the Scientific American Cyclopedia of Formulas, Experimental Science by George M. Hopkins, Monoplanes and Biplanes by Grover Cleveland Loening, and works on mechanical movements by Gardner D. Hiscox.
How to Get the Most from the Books
Use the book’s methods for patent valuation and employ the statistical tables to estimate market potential and set reasonable prices for territorial rights or royalty contracts.
Conclusion
Practical Pointers for Patentees provides a critical commercial roadmap for inventors, ensuring that the labor of love involved in the original conception is rewarded with financial success. By emphasizing the patentee’s indispensable role as the primary selling agent, warning against destructive practices like working with unscrupulous agencies or assigning undivided interests, and detailing the profitable management of patents through royalty and manufacturing, the book provides the practical pointers necessary to turn a patent into a fortune. The inclusion of legal decisions and statistical data further equips the patentee to proceed intelligently and secure the greatest possible return from their ingenuity.