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In our Case Study blog post last week, Transitioning From Idea To Manufacturable Product, we discussed the ways in which we helped a client secure a licensing agreement. 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?
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.
Licensing agreements are becoming more common than in the past and are open to more inventors. This has also increased the number of inventors approaching manufacturers and, thus, increased competition.
What are the benefits of a licensing agreement?
Below is a list of some of the main benefits of licensing your invention/IP.
How do I evaluate a potential licensee?
When evaluating a potential licensee, you should focus on its ability to effectively commercialize your invention/IP. Often times that means considering companies that have a proven track record of marketing and selling products based on inventions similar to yours. Depending on the invention, the best way to commercialize it could also be to license it to a startup, a manufacturer, or a bunch of companies in separate territories.
Suggestions for securing a licensing agreement:
Have additional questions about licensing agreements? We would be happy to help answer them, please e-mail firstname.lastname@example.org
3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.