Outlier Patent Attorneys

Insider Tips to Getting a Patent Licensing Deal Done


Licensing an invention involves a mix of strategy, legal savvy, and business acumen. While there are well-known best practices, there are also some "insider" tips or lesser-known secrets that can give you an advantage. Here are some:

Leverage a Provisional Patent

  • Insight: You don't necessarily need a full patent to start talking to potential licensees. A provisional patent can give you "patent-pending" status, which might be enough to initiate conversations and even secure a licensing deal.

Look Beyond the Big Players

  • Insight: While big companies might seem like the most attractive targets for licensing, smaller or mid-sized companies can often be more open to external innovations. They might also move more quickly through the negotiation and implementation phases.

Use Non-Disclosure Agreements (NDAs) Wisely

  • Insight: It might be tempting to request an NDA from every company before discussions, but some companies will refuse outright. Use NDAs when you're divulging deeper details but don't let them stifle initial conversations.

Offer Multiple Licensing Models

  • Insight: Being flexible with the type of licensing agreement can make you more attractive to potential licensees. Offer variations like exclusive, non-exclusive, or territory-based licenses to appeal to different needs.

Have an “Out” Clause

  • Insight: Neglecting to include performance clauses can result in a licensee sitting on your invention without actively marketing it. Make sure there’s an “out” or termination clause if certain conditions aren't met.

Leverage Industry Events

  • Insight: Industry trade shows and conferences aren’t just for networking; they are also scouting grounds for companies looking for the next big thing. Use these platforms to showcase your invention.

Third-Party Validation

  • Insight: Companies are more likely to license your invention if it has third-party validation. This could be in the form of industry awards, positive media coverage, or endorsements from known industry figures.

Master the Art of the Pitch

  • Insight: Sometimes the success of a licensing deal isn’t just about the invention but how well you can sell it. Create compelling presentations and prototypes to make your invention more appealing.

Consider International Markets

  • Insight: Don’t limit yourself to your home country. Your invention might be more appealing or relevant in international markets. Use foreign filing licenses to protect your invention abroad.

Try to Pre-Sell

  • Insight: Before signing a licensing deal, consider making pre-sales of the product. This will not only validate the market demand but also give you more leverage in negotiations.

The "Most Favored Licensee" Clause

  • Insight: If you’re entering into a non-exclusive license, you might want to include a "most favored licensee" clause. This ensures that if you license the invention to another party on better terms, the original licensee gets the same benefits.

License More than the Patent

  • Insight: Don’t forget that your invention might also involve valuable trademarks, copyrights, or trade secrets. You can include these in the licensing agreement for added value.

Consult Industry Experts

  • Insight: Seek advice from people who've successfully licensed inventions in your industry. They can offer invaluable insights into what pitfalls to avoid and how to improve your terms.

Understand Tax Implications

  • Insight: The financial structure of your licensing deal can have tax implications. Consult with a tax advisor to understand how upfront payments, royalties, and other financial terms will impact your taxes.

Be Ready for Due Diligence

  • Insight: Companies will often perform due diligence before finalizing a license agreement. Be prepared with all the necessary documentation, from prototype specs to market studies, to expedite this process.

By being aware of these less commonly discussed aspects, you can navigate the licensing landscape more confidently and increase the likelihood of securing a favorable deal.