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From the Inventors of Ghostline
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Free
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How to Invent: Seven things every inventor should know
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Licensing Your InventionLicensing 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 LicenseesOnce 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 to find potential manufacturers for your product is to go to the directory of manufacturers http://www.mfginfo.com Still 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. 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." Licensing Agents
* If we put you in touch with an agent who licenses your product to a manufacturer we may receive a small share of the agent's portion of the royalty as a referral fee. This does not come from the inventor's portion of the royalty. |
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