To License or Sell?

Many inventors simply want to license or sell their idea to a large manufacturer, who will then be responsible for manufacturing, distributing and selling it. In order to license or sell, your idea must be "patentable" and you should have at least "patent pending" status.

If you license your idea, you still own it, but you allow others to use it in return for royalties.

If you sell your idea, you get a payment without further royalties.

Is your product a good candidate for licensing?
To improve your chances of licensing your product to an existing manufacturer in return for royalties, you will need:

• a strong patent
• evidence the product will sell well
• product with a long life expectancy
• advanced technology
• potential to develop more than one product from the base technology.

Sources indicate that inventors typically receive 2-8% of the retail price of their invention if they disown the idea and license it to a manufacturer. Even after a licensing agreement has been signed, however, do not count on royalties because many products simply do not sell.

Get the Facts

There are good informational resources online to help you educate yourself on the pro's and con's of licensing or selling your idea. Check out the Inventor's Information Index site at http://ctn-rct.ca/ Or the Canadian Innovation Centre's "Innovator Services".

Should You Use a Licensing Agent?

A licensing agent can help you cut through red tape and open doors. Be prepared to pay for the service. According to the Canadian Innovation Centre, many agents request an upfront fee as well as a percentage of whatever royalty they eventually secure for your invention (contingency fees of 10%-20% are common). Working with a consultant or agent that operates on a fee-for-service basis may be beneficial in the long run, as all future royalties paid for your invention will belong to you.

Where to Start

Many large manufacturers will give you a list of the licensing agents or brokers that they work with. You will also need a lawyer (perhaps your patent agent) to do a licensing agreement.

Most of all, you need to have a very good understanding of the market and how the potential licensee fits into that market. You'll save time if you do your research and make sure your product is a good fit.

Negotiating an Agreement

Visit the Canadian Technology Network's Inventor's Information Index website for pointers on negotiating a licensing agreement. You will need to address duration of the license, royalties and possible up-front payment, responsibility for defending against infringement, sales territory, minimum payments of royalties, exclusivity, conditions or terms for renewal, and rights to further improvements. You might also want to consider performance criteria.

Other Web Resources
http://www.vertexips.com/
http://www.inventorsdigest.com/
http://www.marketlaunchers.com/

What About Invention Promotion Companies?

A word of caution. There are many invention promotion companies that say they can help you license your idea. Before you choose this road, do your homework. Check the United Inventors Association website's "Red Flag Warnings". Other web sites that provide information on invention promotion companies facing legal action include http://www.inventorfraud.com/  and http://www.inventored.org/ .

• Manufacturing
• Licensing or Selling Your Idea
• Getting Your Product on Store Shelves