Many engineers dream of using their inventing skills to support themselves. You finish developing your new invention and you are confident that it is completely unique, innovative, and has the potential to be a game-changer. What do you do now? There are essentially two options for taking the next step and attempting to turn your invention into a profit. These are invention licensing and manufacturing. Even though both options begin the same way, they could not get more different. It is up to you to decide which path you want to take, but you should make as well-informed a decision as possible. Use this short guide to help understand what the specifics of each option are, as well as the advantages and disadvantages.
Licensing Your Inventions
Your first option is to license your invention out to others. This means you are giving permission to one or more companies to produce, use, or sell your invention in exchange for money. You will retain ownership of the concept and can also have great influence over the terms of the deal. In addition to being paid for the rights to your invention, you may also receive royalties for each sale that is made or each unit that is produced. Alternatively, for more money, you can also choose to provide a company with the exclusive, indefinite right to your invention, or even choose assignment, which actually turns the rights over to someone else. In order to license your inventions, you must get approved for a patent on your concept.
Manufacturing and Selling
The other option is to manufacture and sell your invention yourself. Obviously this requires a great deal of business sense in order to be successful. Essentially, you will be starting a business, so you should have the passion for entrepreneurship and adequate time to dedicate to building a company. If you choose this route, you do not need to have a patent, but it will likely be necessary if your business is successful.
Differences
Licensing and manufacturing an invention are just about as different as can be, but each does offer unique advantages that you should understand. The first and most significant difference is the amount of work that is involved. It cannot be overstated how much hard work is required for making a business successful, but if you choose to license your idea and collect royalties, you will simply be waiting for checks to arrive. In addition to putting in less work, those that choose the licensing route also benefit from being able to continue working on other inventions while profiting. If you are an inventor because you enjoy inventing, this is likely the path for you.
Another large difference between these two options is their success rate. It is certainly possible to earn enough to live on with either choice, but far more inventors are successful if they manufacture their inventions themselves, usually as much as 50 percent. Studies have shown that successful licensors are closer to just 13 percent.
Finally, manufacturing has a far higher risk and investment requirement. Instead of simply paying the fee for registering a patent, start-up funds must be raised to begin a business, and your own money must be put at risk. If the product fails, there is more at stake if you choose to market your invention yourself. Regardless, if you have what it takes to be a business owner, it will likely be more beneficial to take that initiative.
Making the Decision
Deciding whether you want to market your invention yourself or simply license the rights to others is huge. In addition to the advantages and disadvantages listed above, also take into consideration the following:
- What is it you enjoy? Are you an inventor or a business person?
- How much of a risk are you willing to take?
- Is it possible for you to raise adequate funds to start a business?
- Are you up to the task of managing employees, closing sales, taking care of administrative duties, and otherwise maintaining a business?
Legal Disclaimer
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.