ANSWER from Joe Cote, Director, Business Development Arthur D. Little Enterprises, Inc. (Please visit our web site at www.adlenterprises.com)
It really depends on the product. If your technology can become a standard that is needed by all players in a specific market to perform their business, a non exclusive widely held license would be the most advantageous. If your product needs one company to invest heavily to commercialize the product, they will not want to have others be able to get a license (at least for a time) that puts competition in their face too quickly. Also one exclusive license may be more advantageous if the market is very competitive and there are several alternatives to your product.
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ANSWER from Bob Merrick Inventor/ Entrepreneur and Author of Stand Alone, Inventor! 1-800.426.5454 www.bobmerrick.com
Based on the information you have given, I believe you would be better off with a carefully-negotiated license to a leading firm on an exclusive basis.
Reasons:
1. A company with an exclusive license will be much more motivated to devote its resources and to push ahead with your product, knowing that there is no competition.
2. Most likely, giving an exclusive, you will be able to negotiate a bigger up-front payment and a higher royalty per cent.
But, if you give an exclusive, be sure to have your agreement call for a substantial minimum annual royalty to insure that your licensee performs well from day one. In this way you can change licensees if the minimum is not met. Hope this helps.
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ANSWER from Ed Tutle, inventor and licensing expert
If you get any offers, work seriously with the first one. You can grant an exclusive license for more money than a non-exclusive one. But the deal depends on many things including the financial capabilities of the licensee. Beyond that point I would not venture other advice except what may look good to some can in reality have little commercial value. If you have some money and believe in your invention, start a business. If your product is successful, you can later sell out your interest for more money than you might get by licensing alone. You can also license others after you have established a market, to allow other manufacturers to also invest and capitalize on you invention. They will also pay royalties.
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ANSWER from Mark Francis, Openize Ideas, Inc.
When you pursue licensing, most companies will insist on an exclusive arrangement. However, this is not an ironclad rule. When you are going through the preliminaries with a company that is interested in licensing your invention, just ask and see what the response is.
One option to offer to a company is to take a lower royalty in exchange for a nonexclusive agreement. Another possibility is that you can offer exclusive agreements in separate, non-competing markets.
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ANSWER from Jim Petruzzi, co-creator of PatentPro software
This is a tough question because no one can predict the future. Do your best to study the market and your potential share, both with an exclusive licensee and without. Unfortunately, there is no universal rule. You may consider building into any exclusive license a minimum number of sales or minimum royalty amount to maintain the exclusive nature of the license. Below the minimum, the license may terminate or revert to a non-exclusive license.
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