Negotiate with an Invention Licensing Company Carefully

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How do I negotiate successfully with an invention licensing company?

Negotiate with an Invention Licensing Company Carefully

If you find what you think is the perfect invention licensing company to handle manufacturing and selling your product and they end up a failure, what can you do about it? Unfortunately, not very much. Invention licensing companies may be representing other products as well and they simply may not pay enough attention to yours. That is why you should carefully choose and negotiate with any entity that will license your invention ideas. However, there are some ways you can protect yourself in these situations. First, you can insist that the agreement include minimum royalty payments. There are both simple and complex ways to formulate this arrangement into your agreement, but it guarantees you will have some income from your product each year. The amount of these payments is based on the estimated difficulty of bringing the product to market and estimated annual sales based on research. If these royalties are not met, you have the right to find another licensee. If your potential licensee will not agree to this type of minimum royalty payment, some experts believe you should obtain a non-exclusive license, which allows you to negotiate with other parties as well. Keep in mind, if you have an exclusive license arrangement, it will be your only source of revenue. Another way you can protect yourself if you license an invention is to demand some up-front fee be paid to you. This does not guarantee success either so consider the demand carefully as it may also mean your ongoing royalty payments will be based on a smaller percentage or the licensee may choose not to do business with you at all.

   

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