Now, I’ve touched upon inventions and intellectual property before when we did the Big Idea Work Special, but it’s something that I get asked about a lot.
So, I thought I would cover in a lot more detail today how you license an invention. Licensing an invention is a great way to generate income without having to manufacture or market the product yourself. It’s also a great way of partnering with someone to give your product the ultimate exposure and reach that it can possibly have, but finding a partner and getting things moving can take a bit of work.
I’m going to run you through my kind of step-by-step guide on how to get started if you think licensing might be a better option for you.
Now, first things first – protect your intellectual property.
Before you even think about licensing your invention, I can’t stress enough how crucial it is to protect that intellectual property. Without that protection you risk someone else copying or stealing your idea.
How many times have you seen someone walk into the Den, they tell us about this amazing, unique invention that they have, and then we’ll say, have you got it protected? And they’ll be like, ‘oh, well, no, I haven’t done that yet’, or ‘I’m going to’. I’m sure that you can all see from the looks on the dragons faces just how bad this is because they’ve not protected their creation.
And, not only have they told us about it, but they’ve just gone on TV and told millions of people about it as well so you must get your intellectual property before you can start conversations with anyone.
If it’s a patent, go and apply for your patent. Now, you can patent something if your invention is novel, useful, and non-obvious. That will then give you the exclusive rights to the invention for a set period of 20 years which will prevent other people from marketing, using or selling your invention without your permission and you can apply for a patent through the country’s intellectual property office.
Now, you might want to take things one step further and look at other forms of intellectual property protection.
In some cases, you can look at copyrights, trademarks, trade secrets, they might be more appropriate for protecting your invention. So it’ll just depend on what it is and you might want to talk to a specialist about this.
And then the next step, if you haven’t done that already, is to develop a solid prototype.
While your patent will protect your idea, having a working prototype of your invention is just going to make licensing negotiations run much smoother. A prototype demonstrates that your invention works and also proves to potential licensees what’s valuable.
The next thing that you want to do is start and conduct some research.
You need to research the market that you’ll be operating in to really understand the level of demand for your invention. Find out if there are existing products available that are similar to this one.
What’s the size of the market? Who are your potential customers? Where would you fit within the market? Then you want to look at your industry so find out if there are any companies or sectors that are going to specifically benefit from this invention.
On top of that, you need to assess the competitive landscape so if you do have competitors, how does your creation compare to those in terms of features and benefits and pricing?
Once you’ve got all of that information, it can help you really understand if you need to make any changes or tweaks to your products and it’s also going to give you a better steer on who might be appropriate for you to partner with.
Then step four, which is identifying who the potential licensees could be.
Finding the right licensee is crucial to the success of this. You don’t want a company that’s not going to have the right resources to manufacture it, for example they’re not in the right market.
And, you want them to be able to distribute your invention, but also be a good fit for the technology that’s related to your invention perhaps. Start by targeting companies that already sell similar products or services, who have the expertise and the networks to bring your product to market.
I can say without a shadow of a doubt that they will be actively seeking new inventions or patterns to add to their portfolio. Now you’re going to want to reach out to the right people so make sure you target those. You’re looking for the decision makers so that means product managers or innovation departments, for example. That’s where you want to be targeting your outreach.
To find those contacts, having a presence at a trade show where these key contacts are going to be there looking for ideas is going to be critical. Join any relevant industry forums where you can ask around or maybe use social media platforms such as LinkedIn to find people.
You can also search platforms and databases which are solely dedicated to licensing products and inventions. And, once you have found a company that you want to work with and also one that wants to work with you, you can look at starting to prepare the licensing agreements.
The licensing agreements are going to outline the terms of how your invention will be used and it’s there to protect both parties. It will include details like the royalty rate, how much you’re going to earn, whether it’s an exclusive or non-exclusive agreement, where your invention can be sold, the timeframe that your agreement is, and you will typically look at around three to five years.
Some agreements will also include a minimum guarantee which looks at the minimum sales they’re agreeing to hit and the milestones that they’re working towards, so that you know that that licensee is actively working to bring the product to market.
After you’ve licensed your invention, it’s important to keep a close eye on how things are going.
Make sure that you’re tracking royalty payments, checking that you’re getting paid as agreed and keeping in touch with the licensee to see how things are going.
You want to make sure that they are always happy with the partnership so that they would want to renew when the option came.
Right, I appreciate there’s a lot of information in there, right? What I will say is the British Library has a whole support network in place for helping people to protect and look at licensing their intellectual property.
So, if you’re looking for some help and support, that’s a brilliant place to go. You are probably going to want to speak to some specialists, maybe patent attorneys or patent lawyers who can help look at what intellectual property you could use to support this and help you to get that patent applied for. But yes, I hope that’s given you some food for thought in what licensing could look like potentially for you!