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For many inventors a licensing agreement is often a great option since it lets them develop a product, but then puts the expenses associated with commercialization on a more experienced manufacturer.
A licensing agreement is a deal between the owner of a patent, brand, or trademark and someone who wants to use the patented or trademarked goods and services. (Upcounsel)
With a licensing agreement, an inventor (the licensor) develops an invention and then protects that invention through a patent, copyright, trademark, or trade secret, and thus creates intellectual property (IP). The inventor—the owner of the intellectual property—then licenses the invention to a second party (the licensee) whose responsibility is to commercialize the invention. As compensation for allowing another party to use its intellectual property, the licensor will receive a royalty.
There are many types of licensing agreements: trademark licensing, copyright licensing, patent licensing, software licensing and merchandise licensing. Intellectual property licensors use three main types of licensing agreements: exclusive license, non-exclusive license and sole license. (Read about each type on Upcounsel)
Globalization has made licensing agreements a very popular option for businesses and inventors. Often, licensing is a strategic way of entering international markets. A foreign company will obtain rights to produce and/or sell another company’s product in its home country.
Below is a list of the top benefits of licensing your invention/IP.
Overall, licensing agreements minimize risk for both parties involved. The licensor doesn’t have to setup a business and incur those additional expenses and the licensee doesn’t have to spend time on product development and testing.
Read our Case Study that details how our team worked on turning a consumer product idea into a manufacturable product for licensing to a large international retailer.
Have additional questions about licensing agreements for inventors? Please send us an email at firstname.lastname@example.org
3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.