You can almost smell the sweet glory of success and the intoxicating aroma of money constantly streaming into your pocket. Yes, you are at the licensing stage, the final stage, where you will allow a company or manufacturer to reproduce your invention and sell it for profit. A licensing agreement is before you and awaiting your signature. Signing it will seal the deal. However, it would be wise to review the agreement before making it so. To ensure that you are well protected and not shortchanged, you will want to know what to look for in a licensing agreement as you can read from how do you patent an idea with InventHelp. That said here are the top things to look at before signing.
Product exclusivity. It is important to get this cleared up. Do you want the licensee you are dealing with to have full exclusivity when it comes to the production and marketing of your product or do you want to be able to work with a number of licensees? Yes, this should be clear from the get-go. There are different advantages and disadvantages when dealing with both spectrums of exclusivity so make sure to think it through before deciding.
Territory. Make sure that this is well defined in the agreement. This refers to what country or state the licensee will be able to market your product in. The larger the territory you give them, the higher your royalties.
Indemnification. For your legal protection, it is imperative that the agreement contains a statute that indemnifies you from any legal action against anything that the licensee does in relation to your invention. Make sure that this statute or clause is in the agreement before signing.
Payments and terms. Depending on your negotiations with the licensee, you will be entitled to an upfront payment and a periodic royalty fee. The upfront payment is the signing bonus where you can get a lot of cash instantly. The royalty is the percentage you will get from the net sales of the product.
Reporting and auditing. To ensure that you are not shortchanged, with the licensee hiding the total figures with regards to sales and the like, make sure that the agreement has a clause stating that the licensee is required to submit sales reports periodically to you. In addition, make sure that this statement allows you to conduct an audit should you find anything suspicious with the report.
Finally, the last thing that should be in the agreement is the statute for the termination of the agreement. This is important since you will want to be able to terminate the agreement should the licensee breach any statute in the agreement or if the licensee fails to aggressively market the product as promised as explained on https://pathofex.com/invention-journey-with-inventhelp-patent-services/.