How to License an Invention – Tips on How to Make Money From Your Invention

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When looking at invention licensing, it is very important that you target the right type of companies. If you go to the main players in that particular field, the products potential sales value may be too low to interest them. Yet you could find that a company who are not the main player in that market but are very successful would be interested. On the other hand if you approach someone at the wrong end of the market, they simply won’t have the resources available to finance the operation.

A highly important factor in the success of your attempt to license your invention is the need to approach a company in a very similar field to the one that your invention belongs to. Given the risk in licensing products anyway, no decent company is going to take the added risk of investing in something that is outside their market place. They don’t have the time or financial resources or experience in that new field to be able to make an educated guess about the success potential of your product.

When a company gets involved in the manufacture of a similar product on a licensing basis, they like to apply certain economies of scale to reduce the cost of the venture. This means that they would prefer to be able to use their own processing plants, equipment and personnel to produce your product. This won’t be possible if your invention isn’t similar to something in their existing product range. They do not want to have to spend money on buying new equipment and recruiting staff that can use it.

The other factor is that large companies are a bit like dinosaurs. They are often unable to see the potential in new ideas as they are concentrated solely on developing their expertise in their existing markets and product lines.

When a company looks at your invention with a view to licensing it, they will be wondering whether they can get adequate protection from a patent. A Patent won’t protect the idea or the function for which the invention was invented to do; it simply protects that particular method or design. And if you have invented a better version of an existing product, you can only patent those parts of the design that you have improved on.

If the companies you approach do not believe that they can get adequate protection on your invention they are unlikely to proceed. Put yourself in their shoes. Why pour money, time and other resources into bringing a product to market only to have your competitors selling a very similar product in a relatively short space of time without them having to fund any of the costs. It simply wouldn’t be worth the risk.

Finally, you need to be aware that there is a certain protocol for the way you approach a company with an idea. If you don’t stick to the rules, it won’t matter how great your invention is, as it is highly unlikely you will get to see the people who make the decisions.

Educating yourself on the ins and outs of invention licensing will pay huge dividends in the long run not to mention save you time and reduce the rejection factor that you could face.

write by Seward

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