Through the beginning of IP, knowledge of IP and its management you come to know that your idea has some value. It is now the time to transform your idea into an actual saleable product or to generate some revenue. At the same time you have to catch the imagination of not only consumers but also of your competitors and entrepreneurs who see its commercial potential.
How do you proceed from here?
If you have enough capacity and capability then next move definitely would be the utilization and commercialization of your patented invention at its fullest. Otherwise, you can seek strategies like franchising or licensing. It is a way of risk-free income to an inventor.
The main advantages of licenses are:
- A cost-effective way to gain entry into various markets in a comparatively shorter time.
- Enable an inventor to maximize the full potential of his invention.
- Enable an inventor to share risk of manufacturing, promoting and selling of products.
- Competitive advantages through technology transfer and cross-licensing.
- Prevent costly legal issues relating to infringement/validity.
- Allows the manufacturing , selling, importing and exporting of patented products.
- Enables an inventor to maximize returns on an invention.
- Minimize Research and Development expenditures.
Plan of Actions
Before exploitation of the invention, make sure you understand the market for your invention and the potential benefits licensing could bring to your business. Try to create a list of potential manufacturers or target audience who may be interested in your invention or product. Prepare a list of at least 30 or more.
Next, think about what you will charge for that. The valuation of your invention is not a simple exercise and if you feel that then take help of someone experienced in this area.
Then, prepare a short one-page professional portfolio for your invention and product. Such portfolio should include a description of your invention and its benefits comparing with existing one, a colored photograph of your product and contact details. Also, prepare a brief and professionally tailored marketing letter willing to consider selling or licensing your patent rights over your invention addressed to each target company on your list.
License according to need or plan
Well, after doing some home work you can license your invention according to your need or plan. A license can be:
Exclusive: Where only the licensee can use the IP. You or any other persons are not entitled to use the IP. However, you can grant exclusive license only for selling or marketing but not the manufacturing in certain jurisdiction. Means, you can break your patent rights according to the market strategy and your wish.
Sole: Where only you and your licensee can use the IP.
Non-exclusive: Where you may license to more than one licensee in the same jurisdiction.
You can also license only one part of your invention, either process or product or both.
Anatomy of a Patent License
A patent license is a common way of commercialization of the invention. A patent license has several articles and may seem more complicated unless you understand the scope and limitation of the articles.
A typical patent license comprises following heads:
- The Parties
- Joint Improvements
- Introduction
- Indemnification
- Definitions
- Confidentiality
- Rights owned
- Arbitration
- Grant Clause & Commercial Efforts
- Publishing & Advertising
- Royalties
- Term & Termination
- Payment of Royalties
- Force Majeure
- Duties of Parties
- Notices and Addresses
- Infringement
- Miscellaneous
- Improvement of Licensor
- Signatures
- Improvement of Licensee
Sample Patent License Agreement
- Patent License Exclusive
- Technology Support Service
- Patent License Non-exclusive
- Technology License Exclusive
- Patent Assignment
- Technology License Non-exclusive
- Patent Know-How License
Exhibit Included with the Agreement
- Letter of Patent.
- Prior Art Search Report.
- Complete Specification.
- Cease and Desist Letter (if any).
- Exact claims set allowed by the Government.
- Freedom-to-Operate Report.
- Patent Applications (if not granted).
- Due Diligence Report.
- All relevant Forms and Documentation.
- Sales Report (if any).
Points to consider
- First enter into a non-disclosure or confidentiality agreement.
- Take help from the experts while negotiation or drafting the agreement.
- Strictly check the clause of use of the IP through sub-licenses.
- Check the use of the IP for particular uses.
- Restrict to one or more territories.
- Check the nature of the license: Exclusive or non-exclusive.
- Check the limitations in terms of patent rights: make, use or sell.
- Check the aspect of trading: import or export.
- Check the provision of combination of IP with other IP.
- Check who will own the IP in case of further improvements or modifications.
- Carefully draft the circumstances for termination i.e. a well defined exit policy.
- Check the duration of the IP and who will pay the periodically renewal fee.
- What rights will you lose; will you still be able to conduct ongoing business?
- Will any rights or obligations remain after termination, for example confidentiality?
