Product licensing is one of the easiest ways for the inventors to bring their ideas into their lives and help to turn them into new products. It is another way to change an idea into a product that is ready for sale. It provides an ideal balance between risks and rewards. This makes inventors make 20 times more profit than the initial investment. It is the sale of an intellectual property (IP) to a person or a business who needs to make the profit.
Different Types of Licensing
There are different categories for Licensing. But the most basic one is as below.
It is basically an agreement in which the owner permits someone else to use the trademark which is in connection with the product or service. This license agreement must be written and signed by both the licensor and the licensee.
After obtaining the trademark license of a product, one can use the trademark of the particular product very freely.
The licensor may license the product having the patent make its product function to other manufactures having a similar product so that manufacturers can legally use the patent technology.
Step for licensing product
Step 1: Select the technology which you want to commercialize.
Step 2: Identify target companies: A company license is only applied to the inventions which help the company’s current and future business plans. For the success of a product during the patenting, the right target is very important.
Step 3: Make the agreement confidential: It is the most basic tool for protecting the intellectual property like the design, prototype, equation, pictures etc. After this agreement is made, the inventor can disclose the intellectual property.
Step 4: Negotiation: The term license agreement also reflects the payment agreement. A typical agreement includes signing fee, ongoing payment of the patent cost, a milestone payment and percentage of sales.
Step 5: patent assignment agreement: it mentions duties of each party and their mechanism to perform the agreement.
How to sell Licences?
Step 1: Contact the manufacturer or inventor: You need a manufacturer or inventor holding the right position, once you want to sell your licensed product.
Step 2: Research the market: Find out similar competing products and learn how much these products receive license fees.
Step 3: Finalize with a contract: Finalize the contract prepared by a legal professional containing all the details allowing you to sell your licensed product.
Step 4: Sell the Product: Now you can sell your product whether by E-commerce or by a physical store.
Step 5: Pay the Licensee: Your licensee should be paid more than the legal cost. The licensee should be capable of speaking of you to other business owners. This will make it easier for you to license your products in the future.
Cost for licensing the agreement
Licensing an agreement is basically making a contract between a producer and a consumer of that product and has its own costs.
For example, if you want to prepare a licensing agreement for a specific case, most of the attorneys charge about $100-$ 300 or more for an hour. Having a legal attorney for reviewing the licensing agreements proposed by the other parties could cost $100-$500. If the lawyer negotiates with you, it may take more time and cost. Depending on the amount of work, online licensing using a lawyer may cost anywhere between $100-$500.