10 Steps to Bring a Product to Market – Licensing
Inventors will have a far easier time striking a deal with a potential licensing candidate when they have a strong supporter inside the potential partner company. You want to find the supporter early before you make any formal sales calls. The contact can then help you fine tune your presentations to the company’s needs. They will also advocate for your project inside the company, urging management to move ahead with your offer. Typically you want to start with a local salesperson and then get additional support from either a regional manager or a marketing manager to help you advance he product in the company.
Last lesson we talked about the licensing presentation. I feel it is advantageous if you can first get the sales and marketing department behind the product before presenting the product to top management or the product development department. Sales and marketing departments have considerable power in most companies and they care about only one thing, selling more profitable products. The product development department often considers inventors to be competition, they want to introduce their own ideas and not yours. Top management will be concerned about a) cannibalizing their current products, which means your sales will just replace the sales of current products, and b) margins, or profitably as they will need to pay you a royalty.
You can look up licensing agreements on a search engine and find many licensing agreements to review and find one you like, or your licensing partner might have an agreement. A book that can be a valuable research is License Your Invention: Sell Your Idea & Protect Your Rights with a Solid Contract (Nolo) by attorney Richard Stim but other resources are on the Internet. As an intermediate step, to get a final commitment from the company you might want to sign a Memorandum of Understanding or MOU. This non-binding agreement shows serious intent on the part of the potential licensee and also the agreement typically has mutual confidentiality clauses which offer you protection. MOU agreements are also available on the Internet. This site has template for an MOU that you might find helpful http://templates.openoffice.org/en/template/sample-memorandum-understanding-between.