Phases of
Product Development: Licensing Phase
Preparation
To Engage
Once the engineering is complete, the cost of
tooling and producing in place, and a patent filed
for and marketing research complete, we will be
positioned for the licensing campaign. In this
phase, our staff and/or attorney will prepare:
- A non-confidential executive summary for the
initial contact with potential licensees. This
summary will briefly describe the advantages and
attributes of the concept without disclosing any
pertinent details.
- An industry standard Confidential Disclosure
Agreement (CDA).
- A presentation package, which usually
includes, but will not necessarily be limited
to, the following:
- Concept illustrations, demonstration
video, picture and/or a prototype
- Detailed summaries of the market research
findings
- Status of intellectual properties (i.e.,
patents, trademarks, and copyrights)
Engage Potential
Licensees
After the above items are complete, a member of
our staff will be designated as project director
responsible for initiating contact of selected
companies identified in the Target Company Search.
In this phase, through personal and/or telephone
interviews we will determine:
- Their attitude toward licensing
- If there is a "not invented here" (NIH)
problem
- Their criteria for new idea submissions
- Their share of the market, if available
- An "intuitive entry point" and route to the
licensing director
- Their licensing policies and protocol
Once we have obtained
this information and qualified the potential
licensees, we will send the Executive Summary and
CDA to the person responsible for new product
submittals. We will follow up the submittal until
we receive the signed CDA, or at 10, 30, and 45
days. Upon receipt of the CDA, we will forward the
presentation package. This will be followed up on
the same basis as outlined above.
Presentations To Licensees
After a definite interest has been established
with the potential licensee(s), we will begin
collaboration for the purpose of TRANSFERRING the
concept per the terms outlined in our AGENCY
AGREEMENT. This process usually involves the
following:
- Agreeing conceptually to the methodology and
approach (including a formula to determine
royalties) to be used in the TRANSFER.
- Reducing verbal agreements to a draft of a
non-binding LETTER OF INTENT.
- After terms in the draft are agreed upon
executing, the LETTER OF INTENT by our clients
and the potential licensee(s).
- Reviewing and approving of their
developmental plan.
- Scrutinizing of the values placed on the
elements in the formula, such as cost of goods,
cost of sales, etc.
- Determining the scope, breadth, and extent
of their manufacturing and distribution
capabilities.
Once this has been
completed, we will determine the components to be
deliberated in the licensing agreement. The most
critical points to consider are:
- Cash to offset developmental cost. This
could include, but not be limited to,
development of their prototype, patents,
trademarks, copyrights, marketing research, etc.
- Exclusive or non-exclusive rights
- Royalty rate
- Minimum royalties
- Foreign filing and registration
responsibility
- Due diligence to market
- Payment criteria
- Exit strategy if marketing stops
- Infringement enforcement responsibilities
- Hold harmless
- Product liability responsibility
After this, we will
negotiate and execute the Licensing Agreement per
the terms and conditions our clients agree on.
Needless to say, we will attempt to negotiate the
agreement for maximum royalty to our mutual
benefit, assuming we are working with the client
on a revenue-sharing basis. |
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