We have discussed intellectual property, and how to protect it, in several previous blog posts; but how do you use that IP to your best advantage? One option is product licensing. Licensing gives other companies permission to use your protected intellectual property while you receive royalties in return.
Here are some reasons to consider licensing your ideas:
Exposure and relationships
Allowing a larger company to license your idea can potentially increase your visibility in the marketplace, and it sets the stage for doing future business with that company. One large company, cited in this Fast Company article, reported that “half of its new product initiatives involve ‘significant collaboration with those outside our walls’ … including partnerships with ‘small companies… and individual inventors.'”
If you are seeking new avenues for your business to grow, cultivating ideas that can be licensed is one avenue to try. Encourage your employees to think creatively and look for ideas that meet a consumer need or want.
Explore an idea at a lower cost
In this IPWatchdog article, inventor and author Stephen Key talks about how the initial process to bring a new idea to market is the same, whether you start a company and manufacture it yourself or license it. He recommends trying to license the idea initially for the following reasons:
“I tell everybody, even if you want to venture yourself, manufacture yourself, or even license, try to license at first to companies. Get their feedback. Understand the good points, the bad points. Understand manufacturing. Do all the testing, even at the very beginning, it doesn’t matter. So you understand, number one, it can be manufactured. Number two, I can protect it.”
There are some cons to licensing, however. Keep in mind that:
- The licensing process is not always simple; it may take years to secure a licensing agreement
- You most likely won’t get a say in how the product is packaged, marketed and sold
- There are still costs involved in developing your idea in order to secure a patent or other protection prior to licensing
If you would like to learn more about protecting your business ideas and intellectual property, as well the business agreements you will need for business growth, contact EmergeCounsel.