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A Big Picture Overview of Product Licensing Strategy
Stephen, would your approach work for domain specific/niche products? Product targeted to a specific group of specialized users, like software engineers, data scientists, digital nomands, etc.
You could license an idea to a niche group/small audience of users, but look at the number of units you could possibly sell. Once you calculate the estimated wholesale price and the standard royalty rate it might not be worth your effort. I always say do the math first. Please note licensing is not to users, but mainly to manufacturers that sell to the general public, as well as some big industries (hospitality). You could license an idea that only businesses use but again, I'd say do the calculation first.
Great article, and I can't wait for more. I tried following the two links (at least they looked like links) but they didn't seem to have a URL attached to them. Obviously Google exists, and I can probably find the content that way, but I wanted to let you know.
Thank you for alerting me!
Good article on the merits of evolutionary innovation (price / feature innovation). However what are the challenges to licensing and what is the best approach?
I understand some producers are adverse to licensing design pitches as it can expose them to legal risks if the pitch relates to R&D they already have in development. For designers this may also be a risk.
Re: NDAs, no. The strategy I've developed and relied on uses the filing of provisional patent applications to establish perceived ownership. NDAs can be useful, but I would not rely on them solely.
Thanks, After doing a lot more research as well as checking out your youtube channel. I have answered a lot of my questions.
Re: partnering. Typically brands, but contract manufacturers sometimes also license. Mid-sized companies that are hungry for market share and looking to grow/differentiate themselves are usually best bets for partnership.
The challenges are 1. getting the strategy right. Most industrial designers would have a tendency to get into too much detail before showing an idea to a company. That can and up wasting huge amounts of time. 2. Believing it can be done. There aren't too many people doing this right now so you have to really go off the beaten path and believe that a successful outcome is ahead of you. 3. Experience is everything when it comes to licensing. making mistakes and learning from them takes a great deal of humility and patience
Absolutely. Different ideas require a different strategy, especially when it comes to IP.
Thanks great advice! What do you mean by too much detail? I imagine it would be good to get it looking finished to a marketable level. However I don't think it would be sensible to refine for manufacture when the potential licensees would each have their preferred manufacturing technologies.
I'm going to be detailing the challenges at length here. Licensing is really finding a partner, and partnerships take trust. Knowing who to trust, how to establish it, discerning well-meaning actors from bad, how to keep a relationship from derailing — those are challenges. You're right, some companies are wary of OI for that reason. What if they already have a similar idea in development? That is one of the main reasons some companies don't open their doors and why many others won't sign a non-disclosure agreement (and for you to have protection on your own). So yes there’s risk. Alex Lee, OXO President, told me re: this subject, that despite the risk, “We still remain open-minded, we want people to feel comfortable with us. We have to track carefully what receive because we don’t want to shut off that conversation.”
Thanks for your reply. When searching for a partner, is it more about finding the best brand match for your product (where it would likely be a once off addition to there small range) or to find a sourcing manufacturer with good retail connections who is looking for anything good to pitch (building a long term relationship with multiple products licenses)?
Looking forward to more posts on this topic
Is a NDA the primary IP protection at the point of pitching?