Product Licensing: Getting Started

Product licensing, when done right, can indeed lead to fast new profits for both the Licensee (a marketing or manufacturing company) and the Licensor (an inventor or product developer). By saving the time, energy and expense of research and development, and envisioning new products while shepherding them through the initial stages of realization, licensing allows the manufacturer to acquire innovative items and bring them to market more quickly than otherwise possible. Resources that would have been spent on early stage development are now available to maximize marketing and advertising efforts and to stake out and solidify market share ahead of competitors.

For the product developer, licensing to an established firm greatly compresses the time required to realize a return on investment. By taking advantage of an existing company's marketing clout, manufacturing capability and distribution system, the independent product developer can continue to focus on what he or she does best, i.e. product innovation. The best licensing agreements are therefore, strategic alliances wherein each party contributes its strengths and sidesteps its weaknesses, leading to faster and more certain profits for all concerned.