I am often asked, “Can I have multiple licensees?” Meaning, if an individual has a great idea, is it possible to license it to multiple companies? The honest answer is: sometimes. Most companies want to have the exclusive right to a technology – exclusivity allows them to maintain an advantage over their competition. But, there are several ways of you could potentially license your product idea to multiple companies.
First, establish a correlation between exclusivity and minimum guarantees in your contract. For example, if a company doesn’t sell a certain volume of product and cannot pay you the pre-established minimum you both agreed upon, they lose their right to exclusivity. You could establish a low first-year minimum, with raises in the second and third year. If a company doesn’t meet that minimum, you could license the technology to another company.
When you begin to get close to making a deal with a company, you should also pay close attention to how they run their business. Channels of distribution differ for every company. Some companies don’t have capacity to distribute across the entire country. Ask what their channels of distribution are. Who do they sell to? Who do they not sell to? You may be able to carve out an area of distribution someone else could take advantage of. For example, if you find a licensee that sells to WalMart and Target and Kmart, but not Ace Hardware or drug stores, you could offer the company the exclusive right to sell your idea in the first three stores mentioned in addition to licensing to a company with different channels.
It honestly depends on how large your product’s market is. If the market is very small, total exclusivity may be of extreme importance.
Stephen Key is a successful award-winning inventor who has licensed
over 20 products in the past 25 years. Along with business partner
Andrew Krauss, Stephen runs inventRight, a company dedicated to educating inventors about selling their ideas and the skills needed to succeed. You can ask questions and get advice on the inventRight forum, check out the resource center, and listen to the weekly radio show on inventing. Get In The News, list your invention to have media outlets find you for news stories.