Posts Tagged "licensing agreement"

This is what inventors need to know about licensing agreements.

Licensing Agreement Basics for Startups

This is what inventors need to know about licensing agreements.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.

What is a licensing agreement?

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)

The Main Benefits of a Licensing Agreement

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.

  • The licensor (inventor) does not have to finance the commercialization process.
  • The licensor avoids the need to create and operate a company.
  • The invention will most likely get to market faster because a larger, more experienced company is handling the manufacturing and commercialization.
  • The invention may reach more markets if the licensee is a large, well-funded enterprise.
  • The licensor retains ownership of the intellectual property.
  • It creates passive income for the licensor.

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.

Suggestions for Securing a Licensing Agreement
  • Assess the complexity of your product. Is there a way to get a working version developed without extensive costs? 3D printing/additive manufacturing is a frequently used method to get a functional prototype ready because of its speed and the reduced costs associated with the technology.
  • Identify manufacturers. Find out which manufacturers currently sell product lines to large retailers where you can see that your product would be a good fit.
  • Create a functional prototype. Create a functional prototype of your product and pitch retail buyers. The goal is to get a commitment before you actually launch. You can possibly even offer them a few months of launch exclusivity. The mock-up of your packaging is also critically important. Your product must look as retail ready as possible.
  • Setup a meeting with an IP attorney. The attorney will be able to go over the legal aspects of the licensing agreement with you and help come up with a plan that best suits your needs.
  • Approach the identified manufacturers. If you want to get the attention of a manufacturer, before you even talk about your product, pitch the prospect your new customer, growing sales or the commitment from a major buyer. You’ll get an appointment, and your product has a better chance of moving to the front of the line in the new product development funnel.

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 info@3d-innovations.com

Articles Referenced:

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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Intellectual Property Strategies for Hardware Startups

intellectual propertyIntellectual property (IP) protection is an important consideration for any startup, and possibly even more so for hardware startups. Technology and globalization have made it even easier for companies to copy a product or steal an idea altogether.

Patents are a way to not only protect an idea, but to also minimize competition and act as a defense mechanism against infringement claims from others. Having a strong intellectual property strategy or having the patent process started, is a great way to attract or solidify partnerships and funding.

Below are four considerations for your startup’s intellectual property strategy.

File Early-On

Patent rules are strict and adhere to a tight timeline, so it is best to file for patent protection early-on in the development cycle. A provisional patent application is a good “first step” for hardware startups. A provisional application provides the means to establish an early effective filing date in a later filed nonprovisional patent application. It also allows the term “Patent Pending” to be applied in connection with the description of the invention.

It is important to note that a “provisional application for patent has a pendency lasting 12 months from the date the provisional application is filed. The 12-month pendency period cannot be extended. Therefore, an applicant who files a provisional application must file a corresponding nonprovisional application for patent (nonprovisional application) during the 12-month pendency period of the provisional application in order to benefit from the earlier filing of the provisional application (United States Patent and Trademark Office -USPTO).” Once you file a provisional application the countdown clock starts ticking and your next move must be decided within the 12-month period.

In this early period, it is also best to keep quiet about your invention. You want to avoid publicizing your invention. This does not mean that you cannot meet with potential partners or product development firms, but instead that you don’t want to share your idea online or start a crowdfunding campaign just yet.

File as the Invention Evolves

Many times the invention that you first envisioned, completely transforms during the product development process. This means that your initial patent or patent application may not cover new features that have been added on. This will leave your final product under-protected or not protected at all.

If the product is evolving quickly, consider filing a provisional patent application or a series of provisional patent applications within a year before filing a utility patent application.

Consider a Design Patent

While utility patents make up 90% of patents issued, design patents have been steadily on the rise because inventors are realizing that the exterior design and overall aesthetics of the invention can easily be replicated as well. Protecting both the design and functionality of an invention is necessary for long-term success.

According to the United States Patent and Trademark Office (USPTO), “design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture”. In short, this means that design patents cover exactly what is shown in the drawings, nothing more.

Like a utility patent, a design patent also lets you use the phrases patent pending and patent issued on all business-related material. Once you have been granted a design patent, you are then able to secure rights for the next fourteen years. Another important thing to keep in mind is that design patents are relatively cheap to file and maintain, as compared to a utility patent.

A design patent, coupled with a utility patent, offers a range of IP protection on both the inner workings and exterior design of your product.

Consider Other Brand Protections

Patent protection is only one part of your IP strategy. A registered trademark will help protect your brand as well. A trademark is a word, phrase, symbol or design that identifies and distinguishes the source of the goods of one party from another—think along the lines of logo and tagline. A recognizable trademark can be extremely valuable for distinguishing your business from the competition.

Depending on the exact nature of your startup, a licensing agreement, copyright and/or trade secret protection could also be considered during your intellectual property planning and overall strategy. Speaking to a Patent Attorney early-on will let you discuss your options, weigh the benefits and build a custom strategy for your startup.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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