You’ve been pitching your IP to a large company who seems interested. You’ve spent months going back and forth in discussions, presentations, and demonstrations. Each time they tell you they’re very interested and will get back to you after speaking with someone else in the company. Months go by and you don’t hear from them. Then when they do contact you, they tell you there’s been a management change, a refocus on global strategy, or everything is on hold pending a merger with another company.
Don’t get caught in the licensing runaround with a potential licensing partner. When you’re pitching or negotiating a deal with a single company, sometimes it can drag on forever with no results. Here’s how you can avoid getting caught in the licensing runaround.
First, develop a licensing plan, with a list of targeted licensees that are potential partners for your licensing deal. Research them and determine if your IP is right for their capabilities. Next do some research to find out who the right contact is at each company. Keep in mind it’s not always a straightforward process. Sometimes it’s a marketing executive, other times it’s someone in charge of R&D or business development. The most important point is to make sure that you are talking to the right person.
Your next step is craft a very concise introduction to the company about your IP and what problem it solves for them. Remember your IP is a solution and you need to focus on that in your first contact with them. Will it increase their revenues? Does it lower their costs? Is it a new breakthrough product that addresses a big need in their marketplace? Is it a breakthrough technology that will revolutionize their industry? Whatever it is, this is what you want to hit them with on your initial communication. The goal is to find out if they’re interested and confirm who to speak with about your IP and licensing.
The third step that is to contact several potential licensing partners simultaneously. Many things are happening inside of the companies you’re approaching. And you never know which one is seriously interested until they’re ready to do a deal. While it’s exciting to think a very large company might be your licensing partner for your new invention or product, keep in mind they have many many different product development initiatives going on simultaneously. In some cases, while they really like your IP, for any number of reasons, they aren’t focused and responding to move the deal forward.
One of my client’s experienced this very issue. They invented a new patented process for the hair color industry. They had been pitching and discussing a possible licensing deal with one of the biggest companies in the industry for almost two years. But the company always came back with a reason why nothing was moving forward.
Timing is everything, so it’s important to engage several potential licensing partners simultaneously. By presenting and negotiating with several partners you will always be moving closer to a licensing deal. Now this is not to say that you should be pitting one potential licensing partner against the other – that is not good business. But you can let them know that you are presenting your IP to other companies and the reasons why you think they are a good fit as a licensing partner.
Remember, the best way to avoid getting caught in the licensing runaround with a single company is to keep your IP out there and in play until one of your potential partners makes the decision to commit to your licensing deal.