Taking License

Patent Protection

Should you patent your product before approaching manufacturers about licensing? Look at it this way: Since Lisle relies on inventors for much of his product lines, he goes to great lengths to treat them fairly. But not all companies do, and without a patent, you risk losing your idea unless you have the manufacturing company sign a Statement of Confidentiality and Non-Use.

Lisle will look at both patented and nonpatented ideas. If an idea is not patented, Lisle may choose to patent it if the idea is unique and innovative, but he also pays a royalty on ideas neither he nor the inventor has patented.

Typically, Lisle pays royalties of 3 percent of net sales for nonpatented ideas and 5 percent of net sales for patented inventions. Often, he splits the royalty between two or more inventors who have submitted the same idea.

Getting in the door to explain your product idea to manufacturers is a challenge. To improve your odds, take Lisle's advice: Emphasize that your idea is a new approach to a well-known problem. Not all manufacturers will want to work with you, but you'll have greater success setting up appointments with them if you tailor your approach to manufacturers' needs.

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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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