To grant exclusivity or to not grant exclusivity?
To grant exclusivity or to not grant exclusivity? When drafting licensing agreements, that is the question. When you’re working with a company that loves your idea and wants to use it, this should be one of the first questions you ask them. Do they want exclusive rights? In my experience, 9 out of 10 companies are going to want and ask for an exclusive. But even if you ultimately decide upon a non-exclusive agreement, you’re still giving away the rights to your idea, and that’s of value. How is that value measured? For some inventors, it’s in the advance they receive.
Any inventor who is in the process of drafting a licensing agreement has devoted a lot of time and energy to get their product to that stage. Getting a product to the point where it can be shown probably means you’ve protected it, you’ve made prototypes, etc. Who knows how much money you’ve spent (probably too much!). It’s understandable to want some of that money up front to cover your costs and to acknowledge all the work that’s been done. But how you ask for that money and that acknowledge upfront is very significant. Companies are going to be wary of top-loading a deal, or giving you cash advance. What I think is more appropriate and more prudent is to ask this company to pay for your patents, past and future (because improvements to your idea will be made and will need to be protected). It’s sound business strategy. Both partners have an interest in the protection of the idea. Companies know that the money they’re spending on you isn’t going towards your new sports car. They’ll love you for it.
But remember, always make sure that the patents are filed in your name and that you have ownership. Don’t sign over your patents! You should own all improvements.
If the company doesn’t want to pay for improvements to your patents, then they don’t have the rights to the new technology.
Stephen Key is a successful award-winning inventor who has licensed
over 20 products in the past 30 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 listen to the weekly radio
show on inventing. Get In The News, list your invention to have media
outlets find you for news stories.
