Key Takeaways

  • You can license a product without a granted patent by leveraging a provisional patent or using non-patented IP assets like trade secrets and copyrights.
  • A compelling executive summary, proof of concept, and NDA are crucial to protect your interests when pitching an unpatented product.
  • Licensing involves evaluating market demand, crafting licensing agreements, and negotiating royalty structures—even without a patent.
  • Various license types (exclusive, non-exclusive, co-exclusive) can apply, even for non-patented innovations.
  • Licensing can reduce manufacturing risk and provide recurring revenue while maintaining ownership.

Licensing a product without a patent can be done if you know how to do it correctly. One approach is to get a provisional patent, where you'll pay a specific fee and complete a form. When you show it to possible buyers, you'll put the words "patent pending" on the item. You won't have to go through a complicated process of getting a patent this way and are still able to protect the invention from potential competitors who might steal your idea.

Invention Submission

Another way to sell a product without needing to get a patent is to work with an invention submission company. There are many companies out there that offer help to inventors for a fee. A variety of services are offered, and some help you just get a patent while others will help you with possible sales. You'll want to check that the company has a strong track record before agreeing to sign with them.

You can also submit your idea online, as various websites have programs and contests that let you send in your idea for customers who might need them. If your idea ends up being picked, you'll pay a fee to the customer. While there is a fee, you'll be able to get more creative and profit off it as well.

An additional option is to go to a company to sell your idea to. While you won't be the one making the product, you'll sell the idea that the business will then market efficiently. If you do this method, you'll need to have the business sign a document that states you were the one who gave them the idea or has a provisional patent. This will keep you protected if the company wants to sell the idea later down the road.

Licensing Without a Patent: Additional Resources

If you're wondering how to license a patented product or one without a patent, you’re not alone. Here are tools and resources to assist your journey:

  • USPTO Provisional Application Tools: Helpful for filing and understanding protections.
  • Licensing Executives Society (LES): Offers best practices and events for IP licensing professionals.
  • Inventor Support Platforms: Such as InventRight or Edison Nation help independent inventors connect with licensees.
  • Legal Marketplaces: Platforms like UpCounsel can match you with attorneys experienced in licensing negotiations and agreements.

These tools support inventors through every stage of licensing—whether or not they have patent protection.

Steps to License a Product

There are several steps to take when you want to license a product. First, you'll need a physical product that you can show. While you can get a quality drawing with a confidentiality agreement or NDA, a real item is preferred since it's more impressive and will help your sales. Second, get your product protected with a patent-pending. You can still have a company interested in your product without one, but you'll decrease your position's value significantly. Having a strong position is preferred over having a weak position.

Third, once your product or idea is evaluated, you'll want an executive summary for your presentation. This should be high-quality so it's convincing.

How to License a Patented Product Without a Patent

Even if your product isn’t patented, you can still license it by following strategic steps to protect your intellectual property and attract potential licensees. Here’s how:

  1. File a Provisional Patent Application (PPA):
    This is a cost-effective way to secure "patent pending" status for one year, giving you time to approach potential licensees while maintaining some protection.
  2. Use an NDA (Non-Disclosure Agreement):
    If you don't have a patent or PPA, always require a signed NDA before sharing product details. This helps protect your idea from being copied or disclosed.
  3. Leverage Trade Secrets:
    If your product involves proprietary methods or formulations that are not easily reverse-engineered, you may license the rights to use those trade secrets.
  4. Develop a Proof of Concept or Prototype:
    Visuals or working models can significantly enhance credibility when licensing a non-patented product.
  5. Prepare a Strong Pitch:
    Include market demand, competitive advantage, and potential profits in your pitch materials to persuade licensees.
  6. Find the Right Licensing Partner:
    Look for companies already operating in your target market with the capacity to manufacture, market, and distribute your product.
  7. Negotiate the Agreement:
    Even without a patent, you can negotiate terms around royalties, duration, territory, and exclusivity.

What Are the Typical Categories That Should Be Included in an Executive Summary?

There are 10 normal categories that should be covered. There should be solid research that's done on them and a summary should include the following:

Show what the competitive advantage is of the product compared to current ones on the market.

  • What the price is compared to the competition.
  • How it will take the market share from competitors.
  • If it will be less expensive to ship than competitors' products.
  • What is the size compared to the competition?
  • Will there be a higher profit margin for the retailer and buyer?
  • What's the predicted volume of sales each year?
  • What's the ease of manufacturing and how much will it cost?
  • Is the quality higher or the same?
  • What's the shipping information and lead times?

Advantages of Licensing Ideas

Licensing ideas you have is a good way to work with other businesses, create relationships, and make a profit all at once. Entrepreneurs often build their wealth and success on their ability to find employees who have unique ideas that stand out. However, many leaders and innovators don't know what to do once they have an idea. Companies are starting to understand that great ideas can result from anyone and anywhere. They know that any collaboration benefits outweigh what the potential risks are.

Due to this, they've started looking at ideas that are produced outside their company. Licensing ideas are a good way to improve the company by giving it a secondary stream of revenue. This also creates strong relationships with other players in the industry that are mutually beneficial.

Key Clauses in a Licensing Agreement

Whether or not your product is patented, a strong licensing agreement should include these key elements:

  • Grant of Rights: Clearly state what rights are being licensed (e.g., use, manufacture, distribute).
  • Payment Terms: Define royalties, upfront fees, or milestones.
  • Duration & Termination: Set timelines and termination clauses.
  • Exclusivity: Specify whether the license is exclusive or not.
  • IP Ownership: Reinforce that the licensor retains ownership of the product or concept.
  • Performance Obligations: Include sales targets or milestones.
  • Confidentiality: Protect proprietary information disclosed during the relationship.

These clauses offer protection and help ensure that the licensing relationship is mutually beneficial.

Types of Licensing Agreements

When licensing a patented or unpatented product, several types of agreements can be used depending on your goals:

  • Exclusive License: The licensee has sole rights to use the product in a defined market. You, the licensor, give up the right to license the product to others.
  • Non-Exclusive License: You can license your product to multiple companies, increasing your revenue opportunities.
  • Co-Exclusive License: Only a few licensees receive rights, often segmented by geography or market.
  • Field-of-Use License: Grants rights to use the product only within a specified industry or application.
  • Sublicensable License: Allows the licensee to further license the product, often used in large-scale distribution arrangements.

Each type can be customized for patented or non-patented products, but legal counsel is critical to ensure enforceability and clarity.

Frequently Asked Questions

1. Can I license a product that hasn’t been patented yet? Yes. You can license a product based on a provisional patent, trade secret, or NDA protection.

2. Do I need a patent to collect royalties on my invention? No. Royalties can be collected as long as you have a licensing agreement that defines payment terms.

3. What if someone steals my idea during negotiations? Use an NDA before sharing your concept. A signed agreement offers legal protection even without a patent.

4. Is a provisional patent enough for licensing? Often yes. It signals to licensees that the idea is protected and lets you market your product with “patent pending” status.

5. What are the risks of licensing without a patent? Your idea may be less protected, and licensees may be hesitant. Using NDAs, clear documentation, and legal counsel can mitigate this.

If you need help with licensing a product without a patent, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.