Product License

Priyanka Sanyal
Apr 10, 2023
3 min read

Written by Priyanka Sanyal, Student

What is Product License?

A product license, usually referred to as a brand license, is a contract that must be followed by licensees of branded goods and a licensor. They set down terms for royalty payments and safeguard the licensor's intellectual property rights. The person who owns the brand is a product licensor, while the company that makes branded goods is a licensee.

How Does a Product License Work?

A company must continuously release new items to replace ones that are losing market share. A business may also want to vary its product line to counteract seasonal highs and lows, use up extra manufacturing capacity, or increase profitability.

Some organizations can swiftly acquire an evidence-based product through licensing because they lack the resources needed to create new items on their own. By enabling you to capitalize on the success of an existing company to market your product, licensing strikes a balance between risk and profit.

Examples of Licensed Products

We encounter licensed products all the time, sometimes without even realizing it. A key marketing goal for licensed items is to make the connection appear and work as naturally as possible. Otherwise, customers can become confused. Examples of products with a license include:

1. IBM computers sold with Microsoft Windows as an example

2. Ralph Lauren permits their logo to appear on goods made by other manufacturers.

3. Authors get paid for books that are published.

4. Music licensing fees are paid by radio stations.

5. There are various licensing alternatives available for cable and satellite television.

Advantages of Product Licensing

The various advantages of product licensing are as follows:

You get access to the expertise and experience of the organization that created the product. This company can be a lot bigger than you and have development resources you cannot afford.
With this new product, you get to enter a new market while still benefiting from the knowledge you've gathered there.
It is less expensive than purchasing a whole firm;
You are not responsible for financing time- and money-consuming research and development;
You don't pay the costs of development in advance; the moment you start producing sales, you pay royalties; and
In the event that the product is unsuccessful in your target market, you won't suffer significant losses.
Being a tiny business with few resources makes competing easier.
You reduce your expenses and dangers.

How Much Does It Cost to Get a Product Licensed?

The range between two percent and ten percent is a decent place to start for royalty fees, which vary by business. Payment-governing royalties must be advantageous to both the licensor and the licensee. When effectively implemented, they benefit both the manufacturer and the licensor.

The cost of producing a product must be taken into account by the maker. A manufacturing contract can be used to specify the details of this aspect.

How do you get a Product License?

By creating a unique product, safeguarding your intellectual property, and commercializing it, you can obtain a product license. Additionally, you will need to cultivate connections with other professionals in your field.

Here are the top five essential measures to follow in order to obtain a product license:

STEP 1: INVENT A PRODUCT

Spend the necessary time prototyping, documenting, and sketching out your invention. An improvement to an existing product can be made. To ensure that you make wise business decisions, write a business plan.

STEP 2: COMPLETE A PATENT SEARCH

To check whether someone else already has legal rights to your patent, use the USPTO's online patent database. If required, think about submitting a provisional patent. When time is of the essence, submitting a provisional patent application is wise.

STEP 3: FILE YOUR PATENT APPLICATION

Go back to the USPTO website once more and submit a patent application there. Up until the patent is issued, cooperation with the examiner is necessary.

STEP 4: CONNECT WITH LICENSEES

Find licensees in your market and get ready to pitch them. Before locating a licensee, you might need to network, run sponsored promotions, or contact numerous. Spend some time getting to know possible licensees and being acquainted with their procedures.

STEP 5: SIGN YOUR PRODUCT LICENSE

A product licensing agreement should be signed once you've found the perfect business partner. Do not be reluctant to use intellectual property attorneys to review and alter it for legal protection.