Product Licensing

If reasonably unique,give it a name and apply for a trademark,as well as a design patent.

Yes. But you will need proper legal advice on protecting your IP and getting paid for the territory where you plan to license it.

Worth exploring. But you should take proper legal advice from an expert rather than relying hearsay on Usenet or internet boilerplates. Advice on here is worth exactly what you paid for it or sometimes much less.

The contract will be a legal document. Succinct and plain language are generally not options where such documents are concerned.

Do you want to *continue* to sell it (on your own) in "dribs and drabs"... especially when someone else is making a *business* out of similar sales?

I.e., why do you want to retain *any* rights to the design? Might it be easier just to sell the IP -- outright -- and not have to worry about "accounting discrepancies", liability, etc.?

Is any software/firmware involved that you could opt to not disclose? Or, does the prospect *want* to be able to enhance (instead of just

Bottom line: do you want to be a businessman or an engineer? And, how much are you willing to "pay" to try to be both?

Thanks for asking this, I'm interested in the answer to the same question.

If we're talking about enough money to buy a new car, something simple and clear is good--you aren't going to sue over that sort of money anyway. (Though you may need to think about product liability, depending on what it is.)

If we're talking about enough money that your grandchildren won't have to work, get two lawyers and an accountant.

I did a licensing deal late last year, and it cost me $10k in lawyer's bills even though we started with the other side's draft. If I did that with every contract, it would eat me alive.

Cheers

Phil Hobbs

I have a product which sells very sporadically, but has a lot of markup and manufactures very easily at this point. I get a PO, I write a PO, when the boards are ready (built and tested to my spec) I pick them up, enclose all the shipping papers and drop them off with FedEx. Oh, then I have to send out an invoice.

I have thought of stepping entirely out of this loop and taking a license fee from my manufacturer. The major stumbling block is the issue of having to write a contract that I am confident will result in full payments to me. The potential money involved is not enough that grandchildren won't have to work, but it is a lot more than a new car. Even if I get a lawyer involved, dealing with them is still a lot of work. I have to fully understand everything they tell me.

The upside for me would be that I don't have to maintain a company.

The other guys have an incentive to eliminate you as a competitor, like Starbucks buying La Boulange and killing it.

Make sure the deal is non-exclusive or includes a minimum annual payment.

And make sure you can verify their sales. Somehow.

And (as much as possible) not incurring unnecessary liability.

Here's one decent-looking checklist of things that should be covered:

Even if a lawyer is going to draw up the final contract, doing homework in advance of the negotiations can save money and yield a better result.

I have proper legal advice. He's expensive and I like to start with a second opinion.

It's very possible, and my lawyer makes it a point of pride to do so.

If the document is written in obfuscated legalese, someone is incompetent or trying to hide something.

I would be happy with not being able to sell the _exact_ gizmo he'll be selling, but I would want to hang onto further development. (Basically, what he's interested in is a stripped-down version of what I care about. I'd love to see the thing made, and get beer money out of it, but only if I don't bar myself from being able to carry on with my fancy version).

So yes, I would want to retain rights to the design.

I was planning on giving him hex code, a pdf of the schematic, a BOM, and gerbers.

As well as leaving room for different interpretations which result in going to court... exactly what a document is intended to prevent.

Do you want to prevent him from reverse engineering it and modifying the code? In essence, do you want him to come to you for updates, enhancements?

I trust the guys I would be doing a similar arrangement with. But we all remember Reagan's quote. The verification can be tricky. Maybe you can require that they put some legal stamp on their reports making it a crime to falsify them? I think the term would be affidavit. I don't know if that is common or acceptable.

Does anyone here have any experience with licensing a product?

I've got a product that I developed and have been selling in dribs and drabs more or less for my own amusement. I potential customer for it has come out of the wood work. He's already making similar electronic gizmos. I told him "I don't have time to make it, but you can if you want" to which he responded "hmm -- let's talk".

I'd love to have a succinct, complete, plain-language contract for similar deals that we could use as a starting point for ours.

What I really care most about is that the full product isn't taken from me. Being able to make people happy with the design is really the most I expect from licensing the thing.

So you want to prohibit the licensee or any sublicensee from making derivative works. Starts to sound like you need a lawyer, all right.

Cheers

Phil Hobbs

We have different motivations: I want to *leave* a design/project when I'm done with it. The worst part of any project was always the "lingering" contacts, updates, fixes, improvement requests, etc. ("Hey, I already got what *I* wanted out of this deal; the rest is YOUR problem!" said, cheerfully)

When you license, you'll have to worry about whether he is reverse engineering your design and embelishing it (even back-porting those features that *you* want to add to your "fancy version").

You also have to worry about whether he's being honest in his record keeping.

You have to make sure *you* don't end up fielding support calls for *his* products ("Gee, we don't know why that happens. Perhaps you should give Tim Wescott a call at ...").

You have to worry about your liability exposure -- moreso than your current "dribs and drabs" as the quantities would (apparently) be larger... more opportunities for folks to beat on HIM or *you* (will he indemnify you?).

You also have (legal) obligations to *him*! What if *he* is sued by someone claiming patent infringement (etc.)? He, of course, will want to turn around and pass that liability on to *you* as it was YOUR design (that is allegedly infringing).

Do you see why the continued relationship is fraught with potential perils? There's a point where the downside risk/aggravation just makes the potential upside "profits" not worth the effort (IMO). For me, that's a relatively low threshold of pain.

"Never go into business with anyone that you wouldn't want to MARRY!"

Your language is not very unambiguous. "the full product isn't taken from me" can mean you wish to give them a non-exclusive license. Or it can mean you don't want them to expand on the product and take over your markets.

Likewise, "Being able to make people happy with the design" doesn't explain anything to me.

I want to prevent the licensee or any sublicensee from turning around and saying they own what I'm doing. I'm not so tight on the derivative work aspect of it.