Licensing your patent can be a great way to watch your product grow into a business and still be involved. Entrepreneurs are always looking for new concepts to start and grow a business around.

Here are the five steps in licensing a patent to an entrepreneur:

1.    Research the entrepreneurs in your market.

a.    Find out if there is an entrepreneurship group in your area.

b.    Post your patent onto websites, making them aware that it is available for purchase. (IdeaBuyer.com is one that I would use. They have several members that are well known entrepreneurs.)

c.    Look for start-up companies that could use your product.

d.    Go to meetings and network. Meet people, find out what they are working on and tell them what you are doing. When you create those contacts, they will keep you in mind for their next business venture.

2.    Send a briefing document to each entrepreneur.

a.    This will give them the information necessary for contacting you in the future.

b.    Use a document with brief information about your product and its market to create interest.

c.    It should be professional looking, and should present information in a short and concise manner.

d.    If they have not responded after 2-3 weeks, call them to remind them that you sent the information and ask if they would be interested in setting up a meeting to talk more about the product and the potential future they may have with it.

3.    Present your product to interested parties.

a.    Set up a meeting to present your materials to interested parties.

b.    A non-disclosure agreement should be signed before you tell them too much about your product.

c.    This is your pitch for a licensing deal. All of the benefits of entering into an agreement should be explained well.

4.    Negotiating the licensing agreement.

a.    You should already have an idea of what you are expecting as far as the terms of the agreement are concerned. (Royalties, length of the agreement, exclusive vs. non-exclusive, etc.)

b.    Keep in mind that the other party will want to have a say in the agreement also.

c.    By allowing them to have an equal part in creating the agreement, they will be more likely to uphold their end of the deal.

5.    Writing up the agreement.

a.    Try to avoid general terms to describe the stipulations. Instead of saying: “The licensee will do X to his/ her best efforts”, the clause should include milestones, “The licensee will do X by Y.”

b.    Set royalty requirements. For example, “The license can be revoked if X percent is not paid in royalties.” Explain how and when the royalties should be paid. Do not get greedy, the royalties need to be reasonable.

c.    Specify a length of the license that you are comfortable with.

d.    Decide on an exclusive or non-exclusive license. An exclusive license will grant the licensee the exclusive right to capitalize on the patent. Non-exclusive licenses allow the licensor to license that patent to someone else.

e.    After you have the agreement well written, take it to a lawyer for review. A patent attorney will be your best help.

Licensing your patent to an entrepreneur will give the product the opportunity to grow into a business, and you will get to be a part of it!

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