MightyRecruiterBusiness and invention often go hand in hand, and it is necessary to understand the finer points of both if you plan on marketing and distributing an invention that you feel is unique and useful. Before you are allowed to do this, you must apply for and receive a patent from Congress. This process is relatively painless, as long as no one else can lay claim to your idea. If you are an inventor who intends to start a business distributing your invention, read the following information to learn more about patents and how they can impact your plans.
Profiting From an Invention
Being able to market and profit from your invention are key aspects of the creative process. There are two primary ways that inventors can profit from their creations. The first and less common way involves starting a business to make or sell an invention. The second way occurs when an inventor patents a new idea and licenses another company or person to sell and market the invention. This is usually more advantageous since many inventors lack the necessary business, marketing and finance knowledge. The inventor will receive royalty payments that will be calculated as a percentage of the generated revenue. In some cases, an inventor will elect to give up all of his or her rights to another party in exchange for a lump sum payment. Multiple types of licenses exist in the world of patents. They are as follows:
- Exclusive – The inventor agrees to only license the invention to a single party.
- Non-Exclusive – The inventor retains the right to license the invention to more than one party.
- Sub-License – This license allows a business to issue licenses to other businesses.
- Cross-Licensing – The inventor’s creation requires multiple patents in order to be functional, so the inventor or company licenses multiple companies to sell the invention. Cross-licensing can seem like a complex concept, but many inventors actually favor this method due to the fact that it will allow them to make the most money possible. For instance, if one company holds the patent on a new type of television and another holds a patent on a new television screen, the companies could decide to cross-license so that both companies can receive the maximum amount of revenue.
Inventing for an Employer
Periodically, there will circumstances where an inventor invents a product for the company that he or she works for. Whether or not the employee can profit from their invention depends on the contract that he or she has signed with the employer. Under normal circumstances, an inventor who invents a product for work purposes will be contractually obligated to sign over all of his or her rights to the employer. A small minority of companies attempt to encourage their inventors to invent more products by rewarding them financially for new patents and creations. In order to make money from an invention, the majority of inventors will have to pitch their ideas to companies and investors. During the pitch, the creator must prove that the product is useful and capable of generating revenue. When pitching an invention, it is wise to not reveal in-depth details to other people or parties. Only disclose basic information that is relevant to understanding your invention. This will prevent other people and entities from stealing your idea and passing it off as their own.
Understand Your Licensing Agreement
From a business perspective, most inventors benefit financially from allowing larger, more established companies to market and distribute their inventions. These companies have the reach and media access to champion the idea in multiple outlets and venues. As an inventor, your key to business success lies in your understanding of the licensing and patenting process. When you understand your rights as an inventor, your chances of profiting from your invention will increase dramatically.
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.