How Do You Sell the Licensing of an Invention?
When you come up with an idea for a new invention, you have two courses of action. You can either make and distribute the product yourself, or you can sell the license for the idea to a company so they can make it themselves. The latter option is a good idea for those who want to profit from their ideas without spending time and money on production. Although the chance of selling the license of an invention is rather low, according to Nolo, your chances are higher if you have a great idea.
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Instructions
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Apply to have your invention idea "patent pending" by filling out a provisional application for patent. You'll need a detailed description of your invention along with the name of the invention and any drawing and diagrams. This will secure your idea at a much cheaper price than filing for a full patent. Contact the United States Patent and Trademark Office to start the patent process. A link to this government office website can be found in the Resources section.
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Research the marketability of your invention. If there are similar products already on the market, ensure that your invention offers something new and unique. It should easily solve the problems of the product user. Invention ideas that don't have a unique premise on an idea aren't likely to sell when presented to licensees.
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Write up an executive summary of your invention that you can present to potential licensees. This summary should accurately describe the invention, according to Entrepreneur. It should also show potential companies how the product will work compared to competing products and how much it will cost to manufacture. Describe the cost of shipping and the ideal price for the product in order to produce a high profit margin. Print out the executive summary on high quality paper and take it to any licensee meetings.
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Present your idea to potential licensees. Find companies for your product by researching local manufacturers and looking for companies that produce or sell similar products. Contact the research department and request a meeting. Hand out your executive summary during the meeting. Bring any visual aids you have including mock-ups or prototypes of the invention. Show your excitement for the invention and give reasons why the company would benefit from purchasing the license.
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Choose a licensing plan that fits your needs. When a company shows interest in your invention, you have several options. License your invention for royalties if you want to receive money on a regular basis over the years based on product sales. For a lot of money up front, sell the license for permanent transfer to receive a lump-sum upfront without residual royalties later on. Sign a contract with the licensee once each party is happy with the decision.
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Tips & Warnings
Although licensing agents can help you find companies to purchase your ideas, they take a large portion of your licensing commissions. Consider this option only if you can't do the legwork yourself.
References
Resources
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