Few independent product developers have the resources, experience and knowledge to create a successful company based on their brainchild. For those unable or unwilling to make the leap from inventor to entrepreneur, there's a viable option: licensing.
Licensing lets innovators earn money by selling their intellectual property to someone else. Licensing agreements have become essential components of modern commerce. Microsoft Corp., for example, isn't in the business of making computers. But it licenses its ubiquitous operating system to computer manufacturers. Critical ingredients in any licensing agreement include:
. Royalties and duration of license
. Rights and obligations of each party
. Remedies if there is a violation
. Geographic territories the license covers
Licensors - those who are licensing their intellectual property - also will want the agreement to spell out whether improvements they make on their inventions will be automatically included in the deal. And innovators should insist that the licensees place relevant patent number(s) and/or trademarks on all goods manufactured and sold under the agreement.
Licensing agreements can get extremely complex. Innovators should hire a good lawyer to represent them in negotiations. A starting point is the Licensing Executives Society, www.usa-canada.les.org. The organization has regional chapters, which can refer qualified local attorneys.
After more than 50 years working with inventors all over the world, let me impart additional words of wisdom:
. To be rich and famous as an inventor, you need to be realistic and make sure you have done your in-depth research. This includes much more than walking down the aisles of a store to find a similar product.
. Even though there are about 30,000 new products introduced to U.S. consumers each year, only a small percentage are successful.
. Don't try to do it by yourself, unless you have business experience and the financial resources to help make it happen.
. Do not, under any circumstances, jeopardize your family and your personal life by mortgaging your assets to make it happen. I have seen lives destroyed by such actions of selfgratification.
. And last, but certainly not least, do not live and die with your one and only brainchild. Be creative. Look around. You'll will find countless things that either need to be improved upon, or a new way of doing the same thing.
