Licensee – This is a person or firm that has a license to dispense, produce or profit from the use of a product that is owned by a licensor. Typically, the licensor owns the patent to a product while the licensee pays the licensor for the right to use it so he/she can make a profit.
Licensors can make a significant amount of money from a licensee’s sales. It’s important, for the good of the licensor/licensee relationship, that it’s understood that the licensor holds all ownership over the patent and the licensee is just using the product, not owning it. Licensees will typically pay around five percent of the total proceeds on the sale of the patented product, generally a royalty fee for the licensor.
How Inventors Can Find A Licensee: What Can Be Done To Make Persons Interested In A Product
Inventors, in an effort to find a licensee, must market their product successfully to possible licensees. Inventors must do at least three things to find potential licensees including:
- Take part in trade shows
- Build up contacts within their product’s industry
- Network often
There are no assurances that inventors will find someone to license out their product. However, if it’s successful, the licensing contract has the possibility of being lucrative to both the licensor and licensee.
Trade shows are great places to find licensees because investors come into contract with interested parties who look for these kinds of agreements. Licensors also need to make licensing agreement terms attractive to potential licensees. Any licensing agreement of more than 25 percent of the total proceeds to the licensor is pricing itself out of the market. If a licensee is going to be profitable, the royalty fee must be both attractive and sensible.
How To Solicit Licensees For Your Product – How You Should Present Your Product
The best way you can find a licensee to be interested in your product is to attend or be involved with road shoes, trade shoes and industry publications; anything that helps with the advertising of products so that it will lead to possible licensing agreements to occur. An inventor will get the most success presenting a product that’s got a tangible product; something possible licensees can assess for themselves. Having a full-scale model is a wonderful way to show the invention and attract possible licensees.
A Look At Foreign Licenses: Is It Worth It?
Many investors do license their innovations to foreign licensees but a factor they must consider is the patent enforceability of the country. Under the Patent Cooperation Treaty (or the PCT), a licensor has the option to file a patent application, enforceable in more than 100 countries around the world. The PCT will not grant patents in each country but it can streamline and shorten the application process for an international patent.
In the majority of countries, a product will need to have a patient in that country to be thought as the inventor’s intellectual property. With PTC, this process is much easier for every one of the 117 countries.
Should an investor authorize their US patented product to be used by a licensee in a foreign country, the US patent will not be enforced overseas and the inventor could lose all claim to it unless he/she obtains a patient from that foreign country. The best way to handle this is to get a patent in every country they seek to have a licensee relationship in.