Profit From Your Idea: How to Make Smart Licensing Deals PDF
Preview Profit From Your Idea: How to Make Smart Licensing Deals
“Tells prospective entrepreneurs how to move an idea ‘from thought to bought’…” LOS ANGELES TIMES With Downloadable FORMS 10TH EDITION Profit From Your Idea How to Make Smart Licensing Deals Attorney Richard Stim, author of Patent, Copyright & Trademark Free Legal Updates at Nolo.com Download Forms on Nolo.com You can download the forms in this book at: www.nolo.com/back-of-book/LICE.html We’ll also post updates whenever there’s an important change to the law affecting this book—as well as articles and other related materials. More Resources from Nolo.com Legal Forms, Books, & Software Hundreds of do-it-yourself products—all written in plain English, approved, and updated by our in-house legal editors. Legal Articles Get informed with thousands of free articles on everyday legal topics. Our articles are accurate, up to date, and reader friendly. Find a Lawyer Want to talk to a lawyer? Use Nolo to find a lawyer who can help you with your case. Th e Trusted Name (but don’t take our word for it) “ In Nolo you can trust.” THE NEW YORK TIMES “ Nolo is always there in a jam as the nation’s premier publisher of do-it-yourself legal books.” NEWSWEEK “ Nolo publications…guide people simply through the how, when, where and why of the law.” THE WASHINGTON POST “ [Nolo’s]…material is developed by experienced attorneys who have a knack for making complicated material accessible.” LIBRARY JOURNAL “ When it comes to self-help legal stuff , nobody does a better job than Nolo…” USA TODAY “ Th e most prominent U.S. publisher of self-help legal aids.” TIME MAGAZINE “ Nolo is a pioneer in both consumer and business self-help books and software.” LOS ANGELES TIMES 10th Edition Profit From Your Idea How to Make Smart Licensing Deals Attorney Richard Stim TENTH EDITION AUGUST 2020 Editor REBECCA PIRIUS Cover Design SUSAN PUTNEY Production SUSAN PUTNEY Proofreading SUSAN CARLSON GREENE Index VICTORIA BAKER Printing BANG PRINTING Names: Stim, Richard, author. Title: Profit from your idea : how to make smart licensing deals / Attorney Richard Stim. Description: 10th edition. | Berkeley : NOLO, 2020. | Includes index. Identifiers: LCCN 2020007202 (print) | LCCN 2020007203 (ebook) | ISBN 9781413327915 (paperback) | ISBN 9781413327922 (ebook) Subjects: LCSH: License agreements--United States--Popular works. | Patent licenses--United States--Popular works. Classification: LCC KF3145 .S75 2020 (print) | LCC KF3145 (ebook) | DDC 346.7304/86--dc23 LC record available at https://lccn.loc.gov/2020007202 LC ebook record available at https://lccn.loc.gov/2020007203 This book covers only United States law, unless it specifically states otherwise. Copyright © 1998, 2000, 2002, 2004, 2006, 2008, 2010, 2014, 2017, and 2020 by Richard Stim. All rights reserved. The NOLO trademark is registered in the U.S. Patent and Trademark Office. Printed in the U.S.A. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. Call 800-955-4775 or write to Nolo, 2550 Ninth Street, Suite 113-A, Berkeley, California 94710. Please note We know that accurate, plain-English legal information can help you solve many of your own legal problems. But this text is not a substitute for personalized advice from a knowledgeable lawyer. If you want the help of a trained professional—and we’ll always point out situations in which we think that’s a good idea—consult an attorney licensed to practice in your state. Dedication This book is dedicated to Andrew Bergman. About the Author Rich Stim is the author of several Nolo books including Music Law: How to Run Your Band’s Business; Patent, Copyright & Trademark: An Intellectual Property Desk Reference; and Patent Pending in 24 Hours. He writes the Dear Rich blog (http://dearrichblog.com) where he answers questions regarding intellectual property. CHAPter Table of Contents Your Legal Companion ..........................................................................................................1 1 Gearing Up to License Your Invention .........................................................................3 Licenses .............................................................................................................................................5 Assignments ...................................................................................................................................9 The Licensing Process .............................................................................................................10 Avoiding Conflicts Among Multiple Agreements ..................................................12 Challenges to Your Ownership..........................................................................................18 Transferring Ownership of Your Invention to Your Business ............................20 Disclosing Information About Your Invention ........................................................32 Keeping Your Records ............................................................................................................34 No False Hopes! Reviewing Your Invention’s Commercial Potential ..............36 2 Intellectual Property Protection ...................................................................................43 General Rules for Legal Protection of Inventions ....................................................45 Utility Patents .............................................................................................................................47 Trade Secrets ...............................................................................................................................55 Trademarks ..................................................................................................................................61 Design Patents............................................................................................................................63 Copyright Law ............................................................................................................................65 Sorting Out Nonfunctional Features: Design Patents, Product Configurations, and Copyright ...................................................................................66 3 Ownership Issues for Inventor Employees ..............................................................69 What Type of Intellectual Property Is Involved? ......................................................70 Employer/Employee: Patent and Trade Secret Ownership ................................71 Inventions Covered by Copyright ...................................................................................79 Special Employment Situations ........................................................................................79 Working Out Ownership Issues With Your Employer ..........................................84 4 Invention Financing and Joint Ownership ..............................................................89 How Much Money Do You Need to License Your Idea? .....................................91 Sources of Funding ...................................................................................................................94 Joint Ownership .....................................................................................................................103 How Income, Loans, or Investments Can Create Joint Ownership .............106 The Joint Ownership Agreement ..................................................................................108 5 Licensing Agents and Representatives ....................................................................115 Agents ...........................................................................................................................................116 Completing the Agent Agreement ...............................................................................119 Attorneys as Agents ..............................................................................................................126 Invention Marketing Scams ..............................................................................................128 6 Soliciting Potential Licensees ........................................................................................133 Before You Begin Your Search .........................................................................................135 How to Find Potential Licensees ....................................................................................137 How to Overcome a Licensee’s Bias Against Submissions ...............................140 What’s the Best Way to Solicit a Potential Licensee?...........................................142 Product Presentations .......................................................................................................146 Should You Solicit Foreign Licensees? .........................................................................147 7 Protecting Confidential Information .......................................................................155 Confidential Information and Nondisclosure Agreements ............................156 Proceeding Without an Agreement ............................................................................168 Waiver Agreements ...............................................................................................................170 When You Have Sufficient Bargaining Power ..........................................................172 Disclosing to Employees and Contractors ................................................................174 Disclosing to an Attorney ..................................................................................................175 8 The Key Elements of Your Agreement .....................................................................177 From Handshake to License ..............................................................................................178 Identifying the Parties ..........................................................................................................179 Describing Your Invention and the Licensed Products .....................................180 Specifying Which Rights Are Granted .........................................................................185 Defining the Territory ..........................................................................................................192 Setting the Length (Term) of the Agreement ........................................................194 9 Money: It Matters ................................................................................................................205 Some Basic Royalty Definitions ......................................................................................207 Ways to Get Paid ...................................................................................................................209 The Mysteries of Net Sales and Deductions .............................................................214 How Much Do You Get? .....................................................................................................216 Royalty Provisions ..................................................................................................................220 10 Negotiating Your Agreement ........................................................................................231 What, Me Negotiate? ...........................................................................................................232 Documenting the Important Contract Elements ................................................235 Letter of Intent ........................................................................................................................238 Option Agreements .............................................................................................................244 What If the Licensee Wants to Proceed Without a Written License Agreement? ........................................................................................................................252
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