Is it an assignment or a license agreement? The terms "assignment" and "license" are sometimes used interchangeably. And sometimes, these two types of agreements seem to have the exact same effect, as in the case of an unlimited exclusive license, in which a licensee obtains the sole right to market the invention for an unlimited period of time.
For this reason, you or your attorney must examine the specific conditions and obligations of each agreement to determine whether it is an assignment or license, rather than simply relying on terms such as assignment and license. For those who place considerable weight on the entrepreneurial side of the scales, the financial reward of a license or assignment may seem unappealing.
Such inventors often choose to form a business and to manufacture and market the product themselves. Of course, this will require considerably more financial input than licensing.
What is your chance of success? The study by Zimmer and Westrum mentioned above revealed that nearly half of the inventors who decided to take control of producing and marketing their invention claimed to be successful. That may be because an inventor with a strong entrepreneurial drive is obsessed with growing the business and thrives on challenges; for example, how to manufacture the invention efficiently, how to acquire distribution, how to market to target audiences, and how to eke out a profit from retail sales.
Advantages and disadvantages of marketing and manufacturing your invention. The financial rewards are potentially much greater if you are willing to undertake all of the investment in manufacturing and producing your invention. This is precisely why it appeals to more entrepreneurial inventors who are willing to be CEOs of their own little companies.
On the negative side, manufacturing and marketing are incredibly risky, and can cause tremendous anxiety and engulf your life, not to mention your savings, more than you might wish. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Talk to a Lawyer. Grow Your Legal Practice. Meet the Editors. Factors to consider when deciding whether to license your invention or manufacture and market it yourself. It is when a company outsource the production of one or more of its products to another company contract manufacturer.
Contract manufacturers provide such service based on their own specifications and designs. Also called private label manufacturing. Contract manufacturer may produce products for several companies even if they are competitors. Both can be relatively low cost and low risk ways of increasing your international presence and sales. Ceris Burns, international marketing specialist for the cleaning industry discusses the pros and cons of licensing and contract manufacturing. On my travels recently I have been asked by several European cleaning products manufacturers if I could seek licensing and contract manufacturing opportunities for them.
As the cleaning industry has expressed a clear interest in these routes to market I thought it worthwhile sharing my thoughts on both options and to provide a few tips on how to avoid any possible pitfalls.
What is Licensing? Licensing is a contract in which a licenser gives a licensee the right to use: Product or process know-how, patent rights, trademark rights or copyrights. When is Licensing a good choice? If you are licensing, this business plan will provide the blueprints for submitting your product to a company; if you are manufacturing, this business plan will help you determine your net profit at the end of the day.
The next step in licensing is "proving" your product. Your work in this initial stage should be directed at answering and supporting the question "Why should my company license and invest in you and your product?
Before they do so they will want to make sure your product is both worthy and capable of success. If the technology used by your product already exists in the market and there is no need to prove that it does indeed "work" , you should create a sell sheet of your idea.
This sell sheet should detail your fresh approach, new strategy, or whatever differentiates your product from those that already exist. The important thing to remember is that you are selling the benefit of your idea, not your prototype.
You will need some form of intellectual property protection for your idea, although filing for a patent need not consume your time and resources. I am not an attorney and cannot give legal advice but here is what has worked for me: File a provisional patent; it will give you temporary protection without huge expenditures, and you can even file it yourself. My company uses the software Patent Pending Now , which includes an electronic version of David Pressman's bestselling book, Patent Pending in 24 Hours.
Be sure to cultivate an air of legitimacy with a professional Web site, business cards, letterhead, and a dedicated business phone line a cell phone number should suffice. In addition, be certain you understand the essence of the manufacturing steps required to produce your product, so that you may speak intelligently about it to potential licensees and be able to handle any problems with the implementation should they arise.
Licensing is used to monetize trademarks and technologies for use by other businesses that operate under their own brand. Franchising is used to achieve multi-unit expansion of a singular brand. Licensing is not an alternative to franchising. The reason is that the franchise laws broadly define what qualifies as a franchise.
If an agreement involves a the license of a trademark, b some control over business operations such as required standards or operating procedures that must be followed, and c the payment of a fee, the relationship is a franchise.
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