Consumer product licensing

In the specific instance of an individual creating a unique dietary supplement formula together with a unique name of said supplement, and having the supplement name trademarked and the formula potentially patented or in process for patent , and also in the unique circumstance that an already well established supplement company would take interest in partnering by manufacturing and selling said product on their label, what percentage of the net profit of each bottle sold would be reasonable to ask for?

In this scenario, there would be no up-front cash or equity stake requested. Is there any time that a company interested in licensing your product will ask you to pay a fee in order to get a licensing agreement? This is an image of a 9" Node. The modular sizes available are 3", 6", 9", 12", and 15". Hi Bruce, I realize that this article is a few years old so I am not sure if you are still monitoring it. I found it very helpful though as well as all of the comments. I noticed that you gave some contact information for OXO and you had mentioned that Ikea also in interested in outside design.

Ikea is number one on my list to licence my product to or in their usual case according to this article, buy my idea. I designed and manufacture a fairly revolutionary and aesthetically pleasing ceramic wall planter called The Node Collection that I think would fit seamlessly into Ikea's range and manufacturing process. I own the design patents in 33 countries and currently manufacture these planters myself. I did not just want to design the product, I wanted to figure out the manufacturing as well.

In the slip casting ceramics business, I have come up with additional innovative way to mass produce which is why I am able to do it myself still. I believe that this adds more value to my product. The Node Collection has received many awards and draws a lot of attention from the NYC design trade show I exhibit it in.

It is currently a high design product and not meant for everyone as they are priced according to what I need to make from them to live my life.

Ikea could bring this high design wall planter to everyone in the world which is why I think they would be interested. I have sent the Creative Leader a few emails as well as a sample pack to the home office in Amhult with no response. I have also emailed Ikea's new proposal email address with no response. My next step is to call, and call, and call, until I get someone who is interested and while looking into other ways to contact Ikea I ran across this very helpful article.

If you have the time and interest, my website is www. Thank you, David. Hello Bruce M. So, I appreciate whatever advice that can be given to make that company does not steal my idea and profit off of it without my permission and me not receiving nothing.

Thank you. Hello Bruce, Thanks for this article. Its been very helpful. I am an architect who now designs furniture. I have designed a chair that i spent a year prototyping and developing and have exhibited it in numerous fairs milan, ldf, clerkenwell etc. An outdoor furniture brand has contacted me and are interested in the product. I initially said no as its an indoor chair and i wouldn't be able to produce it anymore, then I proposed that they get the rights to the outdoor version and i keep the rights to the indoor one.

I am inclined to refuse the deal as i find its really unfair because i put a lot of money before they got in touch and has been in design publications and has had a lot of interest NYT for example I was wondering what your thoughts were.

Thanks Sara. Albert, It is possible that doing your own market research would be helpful to a potential licensee. Presumably they would need to be convinced that it is not significantly biased in any way, e.

Fundamentally it needs to be good information that moves toward standards of validity, reliability, and generalizability. Other marketing data can be helpful as well, like a market analysis of the competitors, though often if a licensee is in the industry they have a better sense of this than you might.

Honestly, I am not so sure that a bunch of positive comments from unknown people--just names--would have a great deal of influence. It is certainly better than if they were bad comments, but do these people actually represent those who might purchase?

Just because someone likes the idea does not mean that they are moved to purchase. Perhaps there are other ways to get user feedback, or more specific or more useful feedback. I have seen very convincing videos of people using products where it is obvious that they are amazed, or convinced, or otherwise pleased.

Perhaps you want to convey that it is easy to use and you show candid videos--no need for high production. Of course you want to do the research that helps answer the most important questions that a licensee would have and that would help mitigate risk. If i was a potential licensee I might be more concerned with how your solution compares to other competitive products--like air in a can, for example.

Do people prefer yours? At what price? What are their biggest concerns or barriers to purchase? Generally research provided by the inventor at the pitch stage would likely only nudge a licensee unless it was powerful research that was believable. Third parties are helpful, but of course add cost. But perhaps just as much as convincing a licensee, research helps you the inventor know more and be more confident or better understand the shortcomings which all products do and how to address them.

Best of luck! Thanks Bruce for checking my product out, and for your honest opinion. A couple of years ago I had done another survey on another product I invented. I got over people to give me a rating from 1 to 10 and most all of my ratings I got all nines and tens. After I did the survey I decided to market it myself so I took it to Walmart. They wanted me to demonstrate my product to them.

After I demonstrated my product the manager told me that he loved my idea. And he told one of the other managers that were in the room with us to take me where the beach equipment was. He showed me that he had a place on the shelf where they would display my product.

I was surprised that Walmart was ready to do business with me. They were ready for me to start manufacturing my product by the thousands. But I had to tell them that I will have to get back with them, because I didn't have any experience in marketing.

I have many great ideas but I don't know how to read or write because I had dyslexia and I also got lead poisoning when I was a kid in the Bahamas, so it makes it very hard for me to do what I am trying to do but I know one day I will be able to get my products into a manufacturer company hands. Hi Bruce, I would like to have your honest opinion on what you think about my emergency air supply line.

This is my new invention that is patent pending. I am doing a survey so when I get in touch with a manufacturing company they can see that people liked my new idea. Bruce, Thank you for your articles, they are very helpful, as I am new at this inventing arena. COM They are making me an offer and I want your opinion. Thank you, dorothy. Ximena, Congrats on your deal.

The issue of indemnity is very important. This is protection if something goes wrong. It is not uncommon for a licensee to try and put the liability for a problem onto the designer, but it is not fair in general in my opinion. It is understandable that they would try, but I have never singed a contract with this. In my experience once I raised my concerns the company changed the contract in every case, because they realize that it is unfair.

If they are actually manufacturing the product, why would you be responsible if it fails? Likely they will be doing the engineering and fabrication, which you have no control over.

I suggest that you express your concerns--remember everything is negotiable. Also remember that they are making the lion's share of the profit. The only liability that I have taken on is over the originality of the idea, to the extent that I know.

It makes sense that they have no idea if you actually stole your idea from someone and would be concerned about that. While I accept liability if it turns out that I knowingly and willingly violated someone else's intellectual property, I do not accept liability for the overall originality of the idea.

Independent designers are generally not in a position to enter into intellectual property litigation--this could be a frivolous claim or a legitimate one or an international one. They should be willing to take that risk on, just as they do with their own products. My sense is that they will understand your concerns--make them known respectfully in the spirit of negotiation. But in the end you should not take on liability for anything that is out of your control because litigation can be a bankrupt-er which is why they want to try to and get you to take it on rather than themselves if you let them.

I would appreciate your feedback. Such a helpful article, thank you. I am hoping you or someone can direct me, I have two ideas: One is for an additional demographic I know of for product a company currently successfully sells. No change to the product would be necessary, only the packaging and marketing. The other is similar. I have an idea for a product currently successfully sold also approx If the company altered the color of the product and packaging it would open up a huge market.

I would like to know how I should contact the companies and what I should say. Alberta, This is a tough one, at least your second question--what you should say.

The first part is easy, you already know the companies so just call them and try and speak to someone on the phone. It may take a while to find the right person, but if they are game for this kind of thing, you will find them.

It is certainly possible that they are not open to this as companies run a risk with 'open innovation. Companies are loath to pay for something that cannot be protected. Your best bet is to try and have a conversation with them--ideally protected by an NDA, but that may be challenging--to see if they are game.

If they are you would need to find a way to directly measure the financial impact of your idea. The least risk for them is a royalty for that market. In my opinion, this only has a small chance of working out for you, but is still worth pursuing because you have very little invested in it.

You should always be thinking about return on investment, and if this were to hit, any money you would get from them would prove to be a high percentage. Without an NDA though they could very easily take your idea with no recourse. But, what have you got to lose if you do not try? As a licensor, you will be expected to provide the legal agreement that will ensure both parties are fully aware of their respective rights and responsibilities, over and above simply determining royalties.

Good legal advice is usually required to negotiate such things as:. Determining an acceptable royalty rate for a product is difficult, as there is no quick-fix percentage that can be applied as a general measure. If you are an inventor and wish to approach a large company with your invention, you may find that they have very specific policies on how they will consider unsolicited proposals.

Your first response from them will usually be to spell out the terms and conditions of their corporate policy on submissions. Click on one of the two buttons to access the content you wish to view. COVID Remote personalized support Our physical offices are closed, but our advisers remain at your disposal to help you plan the resumption of your activities. Factsheet Product licensing Share on:.

Why would a company look for products it can produce under license? What are the advantages of licensing? What are the disadvantages of licensing? How does a company search and find products that may be available for licensing? What is the procedure if you or your company has a product to license to others? You get access to the experience and know-how of the company that developed the product. This company may be much larger than yours, with development capabilities that you cannot afford.

You get to break into a new market with this new product, but with the benefit of the experience gained in another market. It makes competition easier if you're a small company with limited resources. You minimize your costs and risks:. The license agreement is normally for a considerable period of time and there may be an annual minimum royalty required. New technology may become available making the licensed opportunity obsolete. The agreement may force the licensee to accept restrictions on its marketing.

Meanwhile, the licensee gains a competitive edge in the marketplace by differentiating their products through memorable IP or associations with quality brand names. Both businesses can see their respective brands gain increased relevancy, recall, and revenue, which helps explain why some of the biggest firms make use of the product licensing business model. Entertainment properties have long been a large part of the licensing industry.

In The Walt Disney Company was the largest licensor by sales volume. While the average consumer might assume that Disney produces all the products offered for sale under the Disney brand at retailers around the world, a great number of those products are produced by licensees. So while Disney is busy animating the next blockbuster, they can leverage the expertise of other companies to make the apparel, bedding, and toys that will launch with the movie.

Because everyone involved is using the same IP characters from the movie, for example , and all are held to the highest standards, consumers never know that anyone but Disney created their beloved t-shirt, duvet cover, or doll.

The fashion industry also has an extensive history of product and merchandise licensing. While Mr. Kors or Ms. Accessories such as hats, ties, and the like are regularly made by licensees, as are home products, footwear, fragrance, eyewear, and many others. Other major players in the product licensing world are media and gaming properties, professional and collegiate sports teams, and food and beverage companies.

Each have their own reasons for using the product licensing business model, but all reach new customers and increase their product offering beyond their in-house capabilities by doing so.