Taking License

What They Want

Why do manufacturers like Lisle look for products to license? Often, it's because inventors provide new approaches to common problems that others in the industry can't solve. For example, a frequent problem for mechanics is that the "hood shock," which holds open a car's hood, has pneumatic seals that often fail with use. When that happens, mechanics typically resort to makeshift devices like a steel rod to hold up the hood. Dissatisfied with this solution, mechanic Fred Fink of Huntington, New York, invented a simple clamp with an adjustable screw that attaches to the hood shock and holds it in place. Fink's concept was a new solution to a longtime problem.

Similarly, when I worked with a dental products manufacturer, we kept a list of products on the market that didn't adequately solve our customers' problems. This didn't mean we had better solutions in mind, but it did mean we were willing to listen to inventors who claimed to have innovative solutions to those problems. Manufacturers are also likely to consider product categories in which there's been little change for several years.

Lisle considers several other criteria when evaluating a product for possible licensing:

  • How difficult is it to solve the problem?
  • How good are competing products on the market?
  • Can the product sell at least 3,000 to 4,000 units per year?
  • Does the potential sales volume justify the cost of tooling?
  • Can the product be made and sold at a reasonable price?
  • Will the product operate reliably for consumers?

The first two criteria are the most important for Lisle. The last four can often be worked out if an invention addresses a difficult problem and if competitive products don't provide an effective solution.

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This article was originally published in the October 1998 print edition of Entrepreneur with the headline: Taking License.

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