Licensing your inventions
Licensing your inventions can be an alternative means to earn income and defray most of the costs of development and marketing. This is one of the foremost strategies successful inventors use to secure development income.
Simply put, patents give you the exclusive right to manufacture, use and sell products falling under the scope of the patent. In turn, a license conveys those rights to others. An inventor (patent owner) who conveys these rights is referred to as the licensor. The company that is receiving these rights is the licensee. The agreement between the parties is called a license.
Generally speaking there are three common types of licenses. They are: 1) Licenses to manufacture, use and sell; 2) Licenses to sell, and; 3) Licenses to use (common when purchasing software). The most common license for inventors and owners of patents is the first, "to manufacture, use and sell".
With these types of licenses, there are two general variations. There are both exclusive and non-exclusive licenses. The one that's best for your invention will depend upon several factors. From Patent to Profit discusses these variations.
Often inventors think of "licensing manufacturers". This may be a good approach if the invention is a manufacturing related process or product, but otherwise it's usually a misguided approach. You see, licensing a manufacturer is easy. But that won't necessarily make any money for you. What good is a license if the product doesn't sell?
Thus, the chief focus of most licenses is sales, not "manufacturing". That's what you want. Sales generate income, which in turn pays you royalties. Nothing happens until sales are generated. Finding the right marketing partners as licensees should be your chief objective. Focus on sales/marketing. Remember, "show me the money".
If you plan to license in a patented technology from some other entity, or license out your technology to industry, you better know what you're talking about and you better know what they are looking for. Don't go off half-cocked talking about matters you are unsure of.
Licensing
When licensing out technologies, you would be wise to know what the other party--your licensee--is going to be looking for. The licensee is going to have a long list of criteria that you're patented, or patent pending technology must meet. Do you know how to view your patents from a licensee's perspective? You best find out, because when these questions are asked, and the answers are insufficient, you'll be leaving yourself, your patents and your invention vulnerable.
Likewise, when licensing in technology as a licensee, what do you look for? You can't just willy-nilly take on projects and you can't rely solely upon a legal decision. There are pertinent manufacturing, marketing, engineering and finance decisions that must also be made. Be prepared, because licensing in new technology may be the most important step your company has ever taken!
Essentials of Patents explains in great detail how to evaluate licensing opportunities. It will save you weeks even months of agony trying to find out and to understand what it takes to be on either end of a license agreement. Don't make the mistake of talking like a rookie, when you can be the commensurate professional!