Licensing Your Invention
Licensing is a very personal decision and only you and your attorney can work out the specifics. Every situation is unique. There are a few things that you should consider. First, if you choose to offer an exclusive license, that is you will license to only one licensee, it is customary that the licensee assume the responsibility to enforce the patent. This is a biggie. No matter how great or strong your patent is it may be challenged. If it is challenged the legal fees can be enormous! It is very advantageous to the inventor to have a company assume that responsibility.
If you choose to offer non-exclusive licenses (that is more than one company will be licensed to manufacture and distribute your product) it is customary that the responsibilities for enforcing the patent remain with the inventor. Not many inventors have the resources to assume this responsibility.
The percentage of royalty paid to an inventor varies. The most common percentage is 5%. That is not a hard and fast rule, however. Some royalty rates can be as low as 1 - 2 % or as high as 15-20% or more. It all depends on the item and the industry.
When drawing up your licensing agreement we would suggest that you include provisions that allow either party (you or the manufacturer) to terminate the contract after a specific number of years with adequate notice. In addition it would be ideal to include a provision that would allow you to renegotiate the contract after a specified number of years. We would also suggest that you include a provision that addresses what would happen if the company you licensed your product to filed for bankruptcy or went out of business. Finally, you should include a guaranteed minimum of royalty to be received each contract year and penalties for late payment of royalties.
Finding Potential Licensees
Once you have your patent in hand and have had your invention evaluated by a legitimate evaluation service ( several are listed on our "Helpful Links" page ) it is time to concentrate on finding a licensee for your great invention.
The first and probably the easiest way to find a manufacturer is to go to the library and look in a set of books called the Thomas Register. If you go to the library, the librarian can help you to find a list of manufacturers in the United States who manufacture items similar to or at least in the same category as your invention. You can also find The Thomas Register online at http://www.thomasregister.com.
Another way you may
find just the right manufacturer is to go to stores
and look at products that are closest to or more similar
to your invention. Most of the packaging should list
the name and address of the manufacturer.
You can use the internet
to locate potential manufacturers through the national
Yellow Pages or by using keywords. For example, if
you have invented a new type of baby swing, use keywords
"baby swing," "baby furniture," "baby supplies," "child
swing," etc. etc. etc.
You can find potential
licensees by looking at the patents that turned up
as closest to your idea in your patent search. Check
to see if any of those patents are listed as "Assigned"
to a company. Any company that has assigned another
patent is a company that may license inventions from
independent inventors.
Still another way to find a manufacturer is to let them find you. You can do this by listing your invention with services that will post your invention on the Internet for manufacturers to see or by enlisting the help of a legitimate product developer. You can find listings for these types of services in a magazine called "Inventors Digest."
Trade Shows can be the shortcut to finding multiple potential licensing partners!
One of the best ways to locate potential licensees is to go to a trade show for that industry. There are LOTS of them. Just go to Google and type in "____________ (your category of invention ~ for example, ‘golf’) trade show" and it will come up with links to lots of trade shows that feature that category of products. At these shows the manufacturers of your type of product will have booths and they will be selling to the retailers who attend the show ordering products for their stores. I would suggest that you join one of the associations that sponsor these trade shows. You can probably join as an associate member for a reasonable fee. Then, go to one of the shows. The first couple of days you should just walk the show and make notes on the companies that look like potential licensees of your product (your item would fit right in with their existing line of products). On the last day of the show (when all the buying by the retailers is done) go to the booths you identified as potential licensees. Give them your business card and ask them if they ever license products from independent product developers. They will either say that they do, they do not, or they might. If they say that they do or they might explain that you are an independent product developer and you have a product that would fit right in their line of products and you would like to call them in a couple of weeks to set up an appointment to show it to them. Do not tell them exactly what your product is. Simply tell them that it is a product that solves such-and-such problem. Get their business card. In a couple of weeks call and remind them that you met them at the _________ show. Tell them that you are a member of that association and you will immediately be treated as a professional and someone who is familiar with their industry. Your chances of getting an appointment to show them your invention is dramatically increased when using this method. At that point make the appointment and go and pitch your product.
Before going to a trade show be sure to prepare a top notch presentation. Click here for the free guide to preparing your presentation.
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Inventright has a new page listing companies that license products from independent inventors! It is broken down by category of invention. Click on this link then scroll down the page to the directory of companies. Here is the link: http://www.inventright.com/links/
We hope you will find just the right company to license your invention on this list.
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Finding the Source for Nearly any Product
by Dane
Have you ever been to a specialty store and seen something you thought might sell well in your business? But maybe you wondered how to find the wholesale product source for it? Here’s a way to find out the wholesale product source for just about any product.
Look at the UPC Label. Nearly every product on the market is labeled with this code. If you’re not sure what a UPC Code looks like, About.com has a write-up on UPCs here.
Write down the first 6 numbers of the UPC Code (or enter them in your PDA). When you get back to the home office, get on the web. The Uniform Code Council maintains a free reverse lookup website, where you can type in those numbers and VOILA! It will show you the primary supplier (with address) for that item.
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Do you have a tool invention?
As a Manufacturing Engineer with a career in industrial marketing, I'm looking for new industrial or commercial products to license, especially tools. This e-mail is not an "ad for services" (as the UIA forbids) rather I'm the guy your members may be searching for. I want to manufacture and market their products and pay them royalties.
Please view my site www.eagle-innovationsllc.com
David Dunning
Tel: 603-526-6939
After the Patent is a new marketplace to help inventors sell or license their inventions and ideas for Free. To find them Click Here.
Licensing Agents
On our Helpful Links page there is a link to a website called InventRight.com where they have a list of companies that license products from independent inventors. Check it out!
Axonai is a new resource to us. They say they will connect inventors to manufacturers for no charge to the inventor. Click here to contact them.
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