An Inventor with a new product idea, basically has two options to choose from, in proceeding with getting his or her invention marketed. One option would be to actually pursue marketing the invention on their own. With this option, an Inventor will have to be responsible for every aspect of the marketing process, from top to bottom. This would include getting the invention patented or protected by other available means, such as trademark registration. It would also include getting packaging developed and produced for the product, for merchandizing it in outlets that can sell the product. The Inventor would also need to either get set up to manufacture the product or secure the services of a manufacture who can produce a finished, packaged product, ready to ship to merchandisers, such as retail outlets and distributors. There are also other odds and ends that must be completed, in order for an inventor to have a finished product, that is ready to be sold, such as "product liability insurance" requirements, that must be met, before many retail outlets will even consider carrying a product. These are the many things to take care of, to get a product ready to launch on the market however, there is another option.

The other option would be to offer the product-invention for licensing, to a manufacturer, who can take care of these issues and simply pay you a "royalty" percentage from sales of the finished product. The name for such an agreement that you would enter into with a manufacturer, is called a "Licensing Agreement".

As the product owner/inventor, you would be the "Licensor", simply meaning the party who grants these rights and the manufacturer entering into such an agreement, to market your product-invention, would be the "Licensee", simply meaning the party who is being granted these rights.

What are the advantages in licensing a product-invention, rather than in marketing it on your own? One major advantage, is that all of the above mentioned items, needing to be put in place and completed, in order to get the product ready for marketing, would be at the Licensee's expense. This might exclude the expense for patenting, since most inventors wisely choose to get at least a "patent pending" status (in process of approval for a patent) before exposure of their invention to second parties.

There are some inventors who will actually license their inventions with the condition included, that the manufacturer will also pay for securing patent protection. In cases like these however, it is important to proceed very cautiously and with use of "Non-Disclosure, Non-Use Agreements" that a manufacture would sign prior to viewing the invention. These type agreements that are signed prior to review of your invention, simply state that they agree not to use your invention, in any way or disclose your invention, to third parties, without your prior written consent. The problem with proceeding without a patent however, is that manufacturers will have reason to question your invention's potential because they may feel that if you are not willing to first patent it, before offering it for licensing, that you possibly don't have a great deal of confidence in the invention. This may cause them to conclude that if you don't believe in it enough to apply for a patent, why should they?

In addition to the advantage of expenses being the manufacturers, other than possibly the patenting, as we just looked at, another advantage, is that all other responsibilities are also the licensee's. They will be responsible for designing attractive packaging for your invention, in getting product liability insurance secured for it and in promoting your product-invention, through ongoing advertising.

The responsibilities in marketing a product, are many but the advantage in licensing a product-invention, over marketing it yourself, is the fact that an existing manufacturer, is already set up to accomplish these things. You simply grant the rights, through a Licensing Agreement and are paid a percentage on their sales, for doing so.

It is important, to proceed with a prospective Licensing Agreement, with caution. You must carefully consider and think out every condition and term, you wish to be included in your agreement. Things to consider, are the "royalty percentage" you would be willing to settle for, the "Initial term of Agreement", meaning the length of time you want the initial term to be for, in months or years. You would also want clauses/articles that protect you from law suites that might arise, from the practices of the manufacturing company. You would also need to be able to terminate the agreement, in the event the manufacturer, did not honor the agreement, due to non-payment of royalties or by not fulfilling a minimum sales requirement, in order for the agreement to remain in force, etc..., but you want to be workable with them and not be so strict as to make them disinterested in entering into a contract to market your product-invention.

Always consider and think these things through carefully and never be so eager as to enter into a binding agreement, without making sure you have covered all bases for yourself and your invention.