Licensing your intellectual property is an important aspect of mass-producing your product or technology. It’s one of the most effective ways to manufacture and distribute your product in the marketplace. Let’s say you have a great product idea -- a new computer monitor design that has components that no other design so far offers -- and you’ve received all the necessary patents to protect your technology. The next step is looking for the best way to produce it. During this search, you find out that you don’t have the equipment, parts or even the time to gather your resources to make them on your own. So, what’s your next best option? to find someone who does!
What Does Product Licensing Entail?Product licensing involves a form of trading of your intellectual property that is largely based on royalties. A fair amount of research and advice can go a long way in determining the best rate of royalties. However, it is not just about the royalties and percentage of profit you’d like to see in the future. Who you decide to trade to, or who you choose as a licensee, also matters, greatly. For example, let’s say your potential manufacturer or distributor happens to make their own computer monitors or, that their financial interest lies in certain companies that do. They may decide to buy your license in order to keep control over your product from entering the market successfully. As a business, that’s the last thing you want -- which is why it’s so important to have the right advice.
Steps to Find a LicenseeIt’s important to consider the following steps to find the right licensee for your product.
- Conduct research on manufacturers who work with similar products
- Contact them for more information on their rates
- Consider trade associations and trade shows to make contacts
- Seek help from professionals who work with licensing rights
BenefitsThe benefits of licensing the rights to your IP are pretty significant. For one, you can expand your sales and make a positive return on investment because you’ll have insight from people who are experienced in the business. Other benefits of licensing rights include:
- Better access to manufacturing deals
- Access to distribution channels
- Working with established brand names
- Improved sales
- Fewer financial risks
- Consumer software licensing
- Enterprise software licensing
- Software as a Service (SaaS) agreements
- Terms and Conditions
- Privacy Policies
- Non-disclosure agreements
- Joint ventures
- Patent licensing
- OEM sourcing❏ Product development
- Geographically allocated rights
- Research and development (R&D) arrangements