If you have an innovative new product but lack the time and resources to bring it to market, licensing the rights to your intellectual property may be a relevant option.
To get a licensing deal, you generally need to own the intellectual property associated with the concept, typically this would be a patent. The inventor (licensor) then sells or assigns the rights to use their intellectual property to a third party (licensee). A licensing agreement is drawn up, and signed by both parties, specifying the arrangement. This typically includes the subject matter, rights and obligations of both parties; terms of the agreement; geographic or designated regions; payment schedules and fee structure (outright sales, royalty on manufactured goods, joint venture etc.) The agreement will also outline whether it is an exclusive or non-exclusive arrangement; options for renewal; audit regime and how disputes and other variables, such as new intellectual property will be handled.
Finding a potential licensee
This is the hard part. You will need to identify potential players in your market who have the capacity to manufacture and distribute your product. Sometimes a company on a growth trajectory, rather than the market leader, may be more willing to consider a new concept. You will need to think laterally about potential licensing partners and be prepared for knock-backs.
Approaching a potential licensee
Less than 10% of inventors successfully licence their products. To pitch to a potential licensee you need to clearly outline “what in it for them?” How does your product increase their profits; create a new market; fit their current product lines or offer other tangible benefits?
Ensure you can substantiate any claims you make for your product, and if possible, back it up with sales, surveys or other relevant data. A pitch presentation should be clear and succinct and demonstrate why and how this is a great opportunity for a potential licensee.
Need help? Contact INNOVIC on (03) 8060 3504 or www.innovic.com.au
