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Licensing

What Is Product Licensing?

 

Product licensing is a streamlined way to turn an idea into a product that’s ready for sale. Here’s how to license a product:

  • Come up with a great idea.
  • Protect your intellectual property through the United States Patent and Trademark Office (USPTO).
  • License a company to manufacture and distribute your product.
  • Collect royalties.

Product licensing is one of the easiest ways for inventors to bring their ideas to life. Inventors simply rent, or license, their ideas to a company, which manufactures and distributes the product quickly and easily. This process tends to be faster, more affordable, and more lucrative than other options, such as starting a new company to sell an invention.

You can increase the chances of making product licensing part of your business plan if you cultivate a culture of creativity. Research growing markets and find avenues to develop products where there’s established demand.

 

Why Is Product Licensing Important?

 

Product licensing offers an ideal balance of risk and reward. This process can enable inventors to earn 20 times their initial investment. It also enables large companies such as Proctor & Gamble to reduce their internal research and development costs while partnering with outside entrepreneurs.

 

Reasons to Consider Licensing a Product

 

  • You don’t have the resources or the business plan to start a new company or to dedicate time to research and development.
  • You don’t know how to get your product into a retail market, or your company isn’t large enough to work with major retailers.
  • You have many ideas for inventions but not enough time or savings to produce them.

 

Reasons to Consider Not Licensing a Product

 

  • You want to start a business to have total control over your product manufacturing, distribution, and sales.
  • You think you have a good chance of being selected for a crowdsourcing platform such as Edison Nation.

You found a company like OXO or Ikea that wants to buy your intellectual property outright. If you can make a reasonable deal, it could be in your best interest to sell instead of license.

 

Not every product is ideal for licensing. Fewer than 10 percent of inventors successfully license their products. A licensing deal can require extensive negotiating and effort. Also, you may have to invest some of your own money up front to complete your product and make it worthy of licensing. Try pitching your product to retailers to gauge interest before seeking out licensees.

To license a product, you’ll have been persistent and tenacious. You’ll have to know your market like the back of your hand, since you’ll be working hard to sell it to licensees. You’ll also have to understand market demand and know how much risk your product brings. Be prepared to pitch your product and licensing deal professionally, with a multimedia presentation and prototypes if possible.

Always do your research to learn as much as possible before pitching to a licensee. One that already has manufacturing and distribution in place for your category of product could be a good fit. If you know enough, you may be able to tell the company how it can make and distribute your product efficiently.

  • Submit an I-140 immigrant petition before your fifth visa year and you can renew every one to three years until your petition has been considered.
  • If your I-140 petition is approved but you can’t yet receive your Green Card, you can extend your visa by three years.
  • If you work for the defense department, your visa can last up to ten years.

When you license an invention, you’ll have little control over it. Do your research to make sure the manufacturer is reputable. Also ensure the distribution plan is strong before agreeing to a licensing deal.

Many inventors seek out a patent before licensing a product, as this gives you the rights to your invention. Many licensees won’t work with you if you don’t have this level of protection. Take care not to file too early, though. First, find out if you need one. Then complete your idea as much as possible before filing, since you may have to refile if the final version changes the idea too much.

File form WH-4 with the DOL Wage and Hour Division if you have not been paid fairly. Complaints about employer fraud go to the Office of the Inspector General.

Product licensing requires extensive negotiation. Be ready to compromise. Remember that there is no standard agreement for licensing. If you want to work with a company, try to find an internal champion who will want to sell colleagues on your product and make the deal happen.

Many inventors receive numerous negative responses before signing a deal. Pitch to several licensees to increase your chances of finding a worthwhile business partner, even if you have one ideal partner in mind.

Like any business contract, licensing deals can be complicated. Have an attorney review or create a licensing agreement to make sure the terms, time frame, and royalties make good business sense. You should also have an attorney review any confidentiality agreements before signing.

Frequently Asked Questions

The L-1A and L-1B visa are both visas that allow a foreign citizen to come to the U.S. to work at their employer’s U.S. offices or to open a new U.S. office.

 

L-1A Executive or Management

This category L-1 visa specifically allows a company to send an executive or manager to the U.S. to run or start a subsidiary company of the business.  

 

L-1B Specialized Knowledge Staff

This category of L-1 visa covers employees with specialized knowledge in a company’s products, services, research, systems, proprietary techniques, management, or procedures. The L-1B visa is initially granted for three years but can be extended for a total of five.

 

L-1 Blanket Visa

This L-1 visa is a special provision for companies that frequently use the L-1 visa program and are large multinational organizations.

Under this provision, a company only needs one approval from USCIS to transfer a set number of managers, executives, and professional employees.

 

 

Difference Between L-1A Visa and L-1B Visa

Who’s Eligible

The major difference between an L-1A visa and an L-1B visa is that different types of employees are eligible for them. The L-1A is for executives and managers. The L-1B is for employees with specialized knowledge.

 

Length of Stay

Another difference between the L-1A and the L-1B is the maximum length of stay between the visas. The L-1A allows the visa holder to stay in the U.S. for a maximum of seven years. The L-1B visa allows the visa holder to stay in the U.S. for a maximum of five years.

 

Eligibility for Permanent Residency in the U.S.

L-1A visa holders may file for permanent residency and a green card in the EB1 category. The EB1 category means that the L-1A visa holder can avoid completing the Permanent Labor Certification. This can speed up the green card process so that the L-1A visa holder has their green card within a year.

L-1B visa holders may apply for permanent residency or a green card in the U.S, but they must complete the Permanent Labor Certification. This means that the L-1B visa holder’s green card application is filed under the EB2 category. This type of permanent residence application may take years to process.

 

Conversion from L-1B to L-1A

An L-1B visa holder can apply and petition to change their L-1B to an L-1A visa. The application must be approved before four-and-a-half years of the L-1B visa’s five-year maximum stay has been completed.


L-1A Visa and L-1B Visa Similarities

The many similarities between the L-1A and L-1B visas include the following:

  • L-1 Visa Dependents

The spouse and children under 21 of an L-1 visa holder may accompany them to the U.S. L-2 visa holders may apply for authorization to work in the U.S.

  • Allow for Dual Intent

Dual intent means that an L-1 visa holder can have the intent to keep his L-1 visa status while applying for permanent residency. The green card application will not jeopardize the L-1 visa holder’s status as an L-1 visa worker.

  • Approval from Department of Labor

The Department of Labor doesn’t have to approve of L-1A or L-1B workers working in the U.S. because both types of L-1 visa holders are specialized workers.

 

  • Temporary Work Visas

Both the L-1A and the L-1B visa are temporary work visas. The L-1 visas aren’t the same as the H-1B visas.

Some temporary workers are hired under H-1B visas. There are many similarities, but also many differences between the L-1 and H-1B visa programs.

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