If you want a patent, one option is to manufacture and sell your product. Perhaps you’ve patented a new electronic innovation or a type of technology. Many companies are built around new patents. As an inventor, you’ve developed something that can dominate the market, and you then scale up your business to manufacture and sell those products yourself.
However, another option is to license the use of that patent to someone else. Rather than building a company from the ground up, you can sign a licensing agreement with a company that already has the manufacturing and sales capabilities in place. This approach can still be very lucrative while making the process easier for you.
A comprehensive contract
If you decide to license a patent, it’s crucial to create a comprehensive contract outlining the terms from the start. Some areas you’ll want to address include:
- Scope of use: Specify what the other company has the right to do with your invention, such as selling it directly or manufacturing its own products based on your design.
- Timeframe to market: Set a timeline for when the company must bring the invention to market. For example, you could require them to begin selling the product within a year, or the rights revert to you.
- License duration: Clarify the overall timeframe for the license. Is it indefinite or only for a specific number of months or years?
- Exclusivity: Decide whether the license is exclusive. Is this the only company you’ll license your patent to, or can others also obtain licensing rights?
- Payment structure: Specify how and when you will be paid for the use of your patent. Will the company pay a lump sum upfront and provide royalties based on product sales or both?
These are just a few key areas to address in a licensing agreement. Patent law is highly complex, and your financial future depends on getting these details right. Working with an experienced attorney can help ensure that your rights and interests are protected.
