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Licensing someone else's product

Licensing is a way to get the rights to make, sell, use or improve on a product that is copyrighted or protected as intellectual property. You might do this because you want to:

Licensing can help you access new and better products. It allows you to leverage ideas generated outside of your own development team.

Finding a product to license

Sources where you can find and research potential licensors with products to license include:

Once you have narrowed the field of possible licensors, get in touch with those that interest you. Make sure that they are ready to license. Find out if they have licensed before and who their licensees were.

The licensor should provide you with enough information to determine the feasibility, including:

The licensor may ask you to sign a Confidential Disclosure Agreement before providing any details. If the negotiations are lengthy, you may be asked for a letter of intent and a partial payment to keep the opportunity available. This gives you time to determine the feasibility of licensing the product and to figure out the terms you would like to negotiate in the agreement.

The licensing agreement

Some companies have standard licensing agreements and others negotiate on a case-by-case basis. The agreement should cover:

Royalties generally range between 3% and 7%. The rate depends on things like product readiness and the importance of the patent.

You will probably want to obtain legal advice prior to signing any agreements. Consider hiring an experienced lawyer or an intellectual property professional to negotiate on your behalf.

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