Read books about licensing inventions and negotiating licensing agreements. “Then [Kim and Larry Perea] began the serious work. They read invention advice books. ‘How To License Your Million Dollar Idea’ by Harvey Reese was the most valuable book the Pereas read. They learned to expect skepticism and learned what to demand including liability insurance paid by the company that buys the product, a set payment schedule, production time constraints, approval of changes to the product and reviewing the company's financial records.” (Darren G. Brown, “Bike Toy Inventors Ride An Old Idea,” Contra Costa Times, Walnut Creek, CA, July 11, 1999, p. D03) Bike toys. Order licensing and invention advice books by Harvey Reese.
Sample Licensing Agreements
Here are links to several books about invention licensing that feature sample licensing agreements or product license agreement forms in the books for you to review:
- Complete Idiot's Guide to Cashing in On Your Inventions by Richard Levy
- Mom Inventors Handbook: How to Turn Your Great Idea into the Next Big Thing by Tamara Monosoff
- Inventing on a Shoestring Budget by Barbara Russell Pitts and Mary Russell Sarao
- All I Need Is Money: How To Finance Your Invention by Jack Lander and Richard Stim
- Inventing for Dummies by Pamela Riddle Bird, PhD, pp. 334-335
Find other sample licensing agreements, licensing agreement examples, and license agreement legal forms online in pdf format.
Find top-selling books about licensing agreements.
Minimum Guarantees
Inventors should ask for a minimum guarantee on sales. “In making an agreement with the manufacturer, look for a minimum guarantee on sales. This should say how many units will be sold for an agreed-upon number of dollars. That will entice the licensor to get out and sell the product and not hold on to it or come out with a deviation.” Patent licensing agreement minimum guarantees. Best practices for licensing agreements. (Pamela H. Riddle, chief executive of Innovative Product Technologies quoted in Marcia Heroux Pounds, “Licensing Offer Inventors A Safe Path to Production,” Knight Ridder/Tribune Business News, November 10, 1998). Learn more about negotiating licensing agreements.
Minimum guarantee explanation. “The minimum the manufacturer agrees to pay for the first year, or each year thereafter, to keep the license.” Intellectual property licensing agreement. (Howard Jay Fleischer, “From idea to reality: the next great product idea could walk in your door tomorrow,” Candy Business, September 1, 2004)
Annual minimum requirement. “This is the contractual term that requires the licensee to pay the licensor a minimum amount of royalties, irrespective of the actual royalties due from sales. To me, the purpose of annual minimums is to ensure that the manufacturer places sufficient effort and resources behind promoting the product. Therefore, I believe that annual minimums are most important in the initial years of the agreement--when the product is being launched--to ensure that the licensee adequately prioritizes this item when deploying sales resources.” Inventor licensing agreement. Product license agreement. Patent licensing agreement. (Tamara Monosoff, founder and CEO of Mom Inventors Inc., and author of The Mom Inventors Handbook: How to Turn Your Great Idea Into the Next Big Thing, quoted in “Entrepreneur Column,” Entrepreneur, February 16, 2006) Order Tamara’s best-selling book The Mom Inventors Handbook.
Do you need help with a licensing agreement? Are you looking for an attorney that can answer your questions about invention or product licensing agreements? If you would prefer to have some professional help from a nonprofit organization, you can contact Inventors Workshop International (IWI) by email or by calling the organization at 805-879-1729. One of the nation's oldest nonprofit inventor assistance organizations, IWI has been providing trusted help to inventors and working with patent lawyers and licensing attorneys for more than 35 years.
Good Faith Up-Front Fees
Licensees should pay inventors an upfront good faith fee. "The average royalty is 5 percent of the manufacturing cost of the product.” The manufacturer should give the inventor an upfront fee to show it is working in good faith. That may be anywhere from $5,000 to $150,000. "The highest one I had was $3.1 million," …That's part of the negotiation. Have them make you an offer, which puts you in a counter-offering position." Invention product licensing. (Pamela H. Riddle, chief executive of Innovative Product Technologies quoted in Marcia Heroux Pounds, “Licensing Offer Inventors A Safe Path to Production,” Knight Ridder/Tribune Business News, November 10, 1998)
Up-front payment. "This is the money that the licensee pays the licensor up front, before development or sales even begin, for the assignment of the rights. This can be an outright payment, but most commonly takes the form of an advance against (future) royalties. The amount of up-front payment varies. However, it's not unusual for an inventor to seek an up-front payment that covers the cost of her patent filing. Another way to come to an agreeable sum is to base your payment on projected sales expectations for the first year." (Tamara Monosoff, founder and CEO of Mom Inventors Inc., and author of The Mom Inventors Handbook: How to Turn Your Great Idea Into the Next Big Thing, “Entrepreneur Column,” Entrepreneur, February 16, 2006) Order Tamara’s best-selling book The Mom Inventors Handbook.
Licensing Royalty Rates
Find information and answers to your questions about invention intellectual property licensing royalty rates.
Licensing Agent Fees
Find information and answers to your questions about fees charged by licensing agents for inventions.
Pros and Cons of Licensing versus Manufacturing
Find information on the advantages of licensing and the disadvantages of licensing compared to the advantages of manufacturing and the disadvantages of manufacturing.
