Archive for the ‘Patent Royalties’ Category
Patent Royalties
Patent royalties from an improvement or invention are what most people are trying to achieve with their invention ideas. A licensing agreement is a contract between an inventor and a company. Typically the contract gives the company the right to manufacture and sell the invention. The inventor is referred to as the licensor of the invention. The licensor receives a small percentage on each product that is sold.
Many inventors come up with a great idea and wish to sell this idea to another company in trade for patent royalties for use of their product or service. This makes sense because the inventor does not have to start his own company and go through all the risks to build the device and can sit back in his or her home workshop and come up with his next invention or innovation. Often these inventors when making an agreement do not put in the contract that they want audit rights to the company’s books which will be mass producing and bringing to market this innovative invention that they thought of and patent royalties they are entitled to.
Well if this company starts selling your invention, how will you be able to know how many they sold? So how can you tell if they are being honest with you about the amount of royalties per unit sold monies you will receive? If they are giving you per unit stipend then you would need to be sure that they told you of all actual sales, whether they were from the internet, mail order, infomercial or in retail stores.
Patent royalty rates are influenced by the importance of the patent and its value to the products. Some realms of business have conventions regarding royalty rates and other license terms. Royalties are often computed as a percentage of the value of the finished product made by using the patent. Royalty rates may also be affected by whether a patent is strong or weak; whether it is a fundamental patent or merely a slight improvement on a known technology; whether substitute technologies are available or an ability to work around the patent; the extent of the contribution of the patented technology to the value of the final product and whether there are other patents that must also be licensed.
Not only are patents good protection for inventors but also they are also good for companies. Companies are always looking for new products and ideas that can give them an edge in the ever increasingly competitive marketplace. By providing them with an original innovative idea inventors can give companies what they need. In turn the inventor gets royalties or a small percentage of the sales price.
Patenting an invention is in my opinion the best way for most inventors to capitalize on their ideas. If you get the product right and are able to secure a patent, or become patent pending, you can be extremely successful. The process of procuring a patent is not overly complicated but still requires work. The results can be worth it when you receive the first patent royalties from your invention.
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