What 7 Things You Must Know About Licensing Your Invention

By licensing, as an inventor, you are granting the right to use

, make, manufacture and market your invention. You are giving this right to an individual or a corporation. Here, you are the 'licensor', while the receiver is the 'licensee'. Licenses are usually exclusive, because they are granted to a particular person or a business. In return, you can get paid in two distinct ways - as a 'royalty' or a portion of the sales, and a consolidated amount or a one time payment. The term agreed upon will be noted down in the Licensing Agreement between you and the Licensee.

When you are negotiating for a licensing agreement, it is always advisable that you take the help of an intellectual property attorney. The person will be an expert in all licensing matters.

A Licensing Agreement Will Have the Following Components

*The area or the territory - You may grant licensing rights to a licensee to market product in a particular region, country, continent, or worldwide rights. The broader the territorial rights, the more will be your payment.

*Exclusiveness - You may offer licensing rights to just one business, or many of them. There are advantages and disadvantages of both. But remember, you will always get better returns by awarding exclusive rights.

*Market control - In the agreement, you should always grant marketing rights of your invention to the licensee. Discuss this with the licensee and ensure that this is included.

*Terms of Royalty payment - Royalties may be paid annually, quarterly or monthly. Quarterly payment schedules usually work fine for both the parties.

*Guaranteed Minimum Royalty - This amount may be mutually settled by both the parties. It will offer you protection if the licensee refuses to pay any royalty on the pretext that nothing could be sold due to a snag in the marketing strategy, or for any other reason.

*Indemnification clause - This important clause in the agreement indemnifies you against probable litigations arising out of any misdemeanor on part of the licensee. In fact, it safeguards you from all legal hassles.

*Termination clause - Include this always in the agreement. It will ensure that you have the right to terminate the agreement if the licensee refuses to adhere to the terms and conditions as had been agreed on.

Hire a patent attorney. The person can draft this agreement and ensure that your interests are adequately protected. An expert will guarantee that there will never be any legal flaws in the agreement.

by: Kevin Wolfe

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