How to license an invention
A company that already sells to your customer makes and sells your product and pays you a share of every sale. You need something that works, one page that explains it, and a list of companies that will look.
What the company carries
You keep ownership and grant the right to make and sell the invention, usually for a set term. The company carries the tooling, inventory, sales and returns. You give up control and most of the margin, which is the trade against paying a factory yourself.
Do you need a patent?
It depends on the company, and some say so outright. Lifetime Brands calls a patent helpful and optional:
“While not required, any patented ideas, market research, CAD drawings and prototypes will greatly enhance our ability to evaluate your idea and explore the opportunity with you.”
Emson asks about patents “if any”. Every line on the subject is collected on selling an idea without a patent. A provisional application is the inexpensive way to be able to say “patent pending”.
What they ask to see
Start with something that works. It need not be pretty, as OXO’s president told an inventor-education site:
“It doesn't have to look good and it doesn't have to look like a final product -- just prove the function works."”
Emson’s request is typical of the rest:
“Here’s the information we request when you submit: Product Samples or Prototypes Patent Information (if any) Images and Video”
Add a one-page sell sheet and a short video of the product doing its job.
Who to send it to
Start with the companies with a door anyone can use. Then go to the store aisle where your product would sit, because every brand there already has the buyers and the factory. Inside a company, look for product development, licensing or open innovation. Relationships count, as Spin Master’s Ben Dermer said:
“Ben Dermer: "Ninety five percent of the ideas for new products that we deal with come through personal relationships.”
Read the submission agreement
Most portals make you accept terms first, and those terms are the deal you are making before anyone has read your idea. Whirlpool’s is one example:
“Whirlpool may use or redistribute the Submissions and their contents for any purpose and in any way on an unrestricted basis by way of you granting a perpetual, global, royalty-free, unrestricted license to any intellectual property rights related to the Submissions;”
Read what you are agreeing to before you send anything. Other companies’ terms are collected here, and each company page shows its own. If the terms give away more than you can afford to lose, file first or ask a patent professional.
The deal itself
The rate gets the attention, and the terms around it decide whether you are paid. Above all, get a date by which the company must launch and a minimum it must pay, with the rights returning to you if it misses either.