馃攳
Everything You Need to Know About Licensing Agreements - YouTube
Channel: inventRightTV
[0]
(energetic Spanish guitar music)
[6]
- Stephen Key here, guess what?
[8]
We're on our next adventure to,
[9]
Lake Titicaca?
[10]
Am I pronouncing that correctly?
[12]
I'm not quite sure,
[13]
but it's gonna be a great time.
[15]
Please, join us on this adventure.
[25]
Hey, Stephen Key here,
[26]
and Janice,
[27]
and guess what?
[28]
We're on our next adventure,
[29]
heading off to where?
[30]
- We're at Lake Titicaca,
[32]
an amazing name to be sure,
[34]
and we're going to visit
the Floating Islands today.
[37]
These islands are built
completely on reeds
[40]
and they float on the water.
[41]
We're going to meet the
indigenous people who live there.
[44]
See some local customs and eat local food.
[48]
- Clearly Janice does this
much better than I do.
[50]
- Of course.
[51]
- So, stay tuned.
[52]
(energetic Spanish guitar music)
[60]
Alright, here are a few fun
facts about Lake Titicaca.
[66]
It's a hundred miles long,
[67]
and how wide?
[68]
- 37.
[69]
- Well, that's a big lake,
[70]
and it's how high?
[72]
- I believe we're above 13,000 feet.
[75]
- Hah!
[76]
- Which makes it,
[77]
the highest navigable lake in the world.
[80]
There are other lakes,
[81]
maybe up in the Alps,
[82]
or you know, high mountains,
[84]
but,
[85]
they're small.
[86]
They're just little Alpine lakes,
[89]
and this one is very large,
[91]
and so, it can be boated on,
[93]
used for transportation,
[95]
- And.
[96]
- Fishing, all that stuff.
[97]
- And, very cold too.
[98]
- Definitely.
[99]
(energetic Spanish guitar music
[107]
- Okay, Stephen Key here,
[108]
and today I want to talk about
[110]
how to negotiate a winning
licensing agreement,
[114]
and of course I'm at Lake Titicaca,
[117]
in Peru.
[118]
(energetic Spanish guitar music)
[125]
Okay, you've done everything right.
[126]
You made that sell sheet.
[128]
You created a great product
that a company wants,
[131]
and now you're waiting for
[132]
that licensing agreement to
[134]
come on over to you so
you can start negotiating.
[137]
But, I'm here to tell you negotiation
[139]
starts way before you get the contract.
[141]
Most people don't understand that.
[144]
Let me try to explain.
[145]
Number one, the way you file
your intellectual property,
[149]
and the way you structure
your intellectual property,
[151]
has a lot to do with leveraging
[154]
a winning licensing agreement.
[156]
Also, your marketing material
is extremely important too.
[159]
How it looks and how it feels,
[161]
and if you've taken away,
[163]
well, not taken away but let's say
[164]
you've got a strong point of difference.
[166]
And the third thing is,
[167]
identifying the right
company to reach out to,
[169]
and making sure you're
in the right category.
[172]
Which, there are a few,
[174]
hopefully more than a few,
[175]
inventor-friendly companies.
[178]
So, you negotiating licensing agreement
[180]
starts very early on.
[182]
Not when you actually get
a licensing agreement.
[184]
(energetic Spanish guitar music)
[191]
People ask me all the time,
[193]
how did I learn to negotiate so well?
[196]
Well, first of all,
[197]
as you know, I started my career
[200]
selling things I made at street fairs
[203]
and county fairs, and state fairs,
[206]
all through California.
[208]
And I learned a lot about people.
[209]
I learned a lot about how to negotiate.
[213]
The other thing I wanted to mention,
[214]
people are always asking me,
[215]
"Well Steve, how did you learn to deal
[217]
with these big companies
[218]
now and licensing agreements?
[222]
"Especially when they're so large,
[224]
and technically you're a little
bit smaller than they are?"
[227]
I tell everyone it's called,
[229]
Survival 101, trying to get paid -
[232]
that's how I learned.
[233]
Most of all about people.
[235]
In the United States, people
are really not comfortable
[238]
with negotiating any type of,
[241]
contract,
[242]
or even,
[245]
doing a little bartering back and forth,
[247]
at a flea market.
[248]
They're just uncomfortable with it,
[249]
but you have to learn to
have a good sense of humor.
[253]
You have to learn to
leverage your strengths,
[255]
so you can get the best possible deal.
[257]
And most people, are
just not good at this,
[260]
but I'm gonna give you a few tips,
[262]
to make it easier for you.
[263]
(energetic Spanish guitar music)
[273]
Here's the first tip
I'm going to give you.
[276]
And, we see this actually all the time.
[278]
When a licensing agreement does come over,
[280]
it has the company's name,
[282]
the licensee,
[283]
but the licensor, which is you,
[285]
is actually sometimes in your name,
[287]
and should never be in your name.
[289]
It should be in some
type of business entity,
[291]
and I prefer a LLC, personally,
[294]
because you need to
protect your own assets.
[296]
Okay, a licensing agreement
is gonna take a long time,
[299]
and some of the issues are
pretty straightforward.
[302]
And, if you're working with a company
[303]
that's done a lot of licensing agreements,
[306]
it's a little easier,
[306]
let's put it that way.
[309]
If you're working with a company
[310]
that's never done a licensing agreement,
[312]
it's gonna be a little more difficult.
[315]
Here's a tip,
[316]
if they ask you the licensor,
[318]
the inventor,
[319]
to supply a licensing agreement.
[321]
Tell them no.
[322]
It never works out well,
[324]
because they really need to know
[326]
what they need to be successful.
[328]
So, the licensee needs to
write their own contract,
[333]
and it's gonna be awful.
[336]
When the first one comes over,
[338]
and most likely it's
going to be a boilerplate,
[340]
they're kind of testing you
to see how much you know.
[343]
And even though you've
talked on the phone,
[345]
or even if you've gone through email
[346]
on some of the issues,
[347]
when you first see that boilerplate
[348]
it's gonna be so ugly
you're gonna want to run,
[351]
but it does get better.
[353]
With a little bit of time,
a little bit of experience,
[355]
you can change most of
the terms in your favor,
[359]
or at least get it balanced.
[360]
(energetic Spanish guitar music)
[369]
There's gonna be many
hard issue to negotiate,
[373]
and I'm gonna go through
with just a few of them.
[376]
I think one of the hardest
things to negotiate,
[379]
or, basically comes up
in a lot of contracts,
[381]
and we're seeing a lot of it lately,
[383]
is that company wants to own
your intellectual property,
[386]
in exchange for a royalty rate.
[388]
And then, later on in the contract,
[391]
they want to be able to control
[392]
the filing of that intellectual property,
[395]
but also in that contract it states
[397]
that they don't have to file at all,
[398]
if they don't want to.
[399]
Well, that's a big conflict,
[401]
because here they're saying they want
[403]
to own the intellectual property,
[406]
but then they're saying
[407]
that they're gonna take care of it,
[408]
and then they say,
[409]
basically we don't have to do anything.
[411]
That's huge problem and you need to
[413]
negotiate out of that situation,
[415]
or you're gonna end up,
[416]
maybe with intellectual property,
[418]
of course, that you don't own,
[419]
and guess what?
[420]
They don't do anything with it.
[421]
And, guess what?
[422]
You don't get paid.
[423]
Alright, here's another issue
that comes up all the time.
[425]
Improvements,
[426]
there's going to be improvements.
[428]
I can guarantee it,
[430]
and most of the licensees want
[432]
to own all of those improvements.
[433]
Here's the problem.
[434]
If they own those improvements,
[436]
and for some reason
the contracts breaches,
[439]
and you get it back.
[440]
You're gonna have to either license
[442]
those improvements from the company,
[443]
and that can present a big problem.
[446]
Alright, here's another issue.
[448]
Let's say, somehow,
[450]
someone,
[452]
infringes on your intellectual property,
[454]
and some of these contracts
[456]
your licensee wants you to defend it.
[461]
You never want to be able to,
[462]
or have to,
[463]
or be required to defend
any type of lawsuits,
[466]
that could get extremely expensive.
[468]
It should be balanced.
[469]
You should have the option if
you want to defend it or not,
[472]
or they should have the second option
[474]
if they want to go forward or not.
[476]
So, don't get boxed in
[477]
that you have to defend
your intellectual property.
[480]
It could be extremely expensive,
[482]
and you're not gonna like it.
[484]
(lively pan flute music)
(rhythmically playing drum)
[496]
Here's another thing I see
[497]
in licensing agreements all the time.
[499]
The company, of course,
[500]
wants you to file intellectual property,
[503]
and they list all the countries
[504]
they want you to file it in.
[506]
And, you're required to file it
[508]
in all those countries.
[509]
Holy smokes, that can
get extremely expensive.
[512]
What you want to do,
[513]
is stay away from this contract,
[516]
this licensing agreement.
[518]
That really states,
[519]
that it's all about patents,
[520]
it's all about claims.
[521]
You want to make it broad enough.
[523]
It's really about your product.
[524]
You want to license your product,
[525]
not your intellectual property.
[527]
Indemnification, this
is really interesting.
[529]
Typically both sides want
to indemnify each other.
[532]
In other words,
[533]
the company is going to indemnify you
[536]
over any type of loss,
[538]
or any type of exposure financially,
[540]
and they should because they're doing
[541]
all the manufacturing,
selling, and distribution.
[544]
But, when they want you to indemnify them,
[547]
if there's a third party lawsuit,
[548]
that's asking quite a bit.
[550]
Especially, because you're
only collecting a royalty.
[553]
So, you have to negotiate
around that term.
[556]
(lively pan flute music)
(rhythmically playing drum)
[568]
Audit clauses, I see 'em all the time.
[570]
Sometimes they're pretty vague.
[572]
There needs to be more clarification.
[574]
Typically you can audit them once a year,
[576]
but if there is a discrepancy
they usually pay for it,
[579]
then they'll pay for the audit,
[581]
and sometimes they'll even pay
the interest on that money.
[586]
So, make sure you have an audit clause
[588]
that specifies all these little details.
[591]
Don't make it too vague,
[593]
because they try to make it very vague.
[595]
Insurance, they have to have insurance,
[597]
and you want to be named on the policy.
[599]
It's pretty standard.
[600]
All retailers require insurance.
[602]
So, if there's no product
liability insurance,
[604]
make sure it's in there,
[606]
and you're on the policy,
[607]
and make sure it's in
the millions of dollars.
[610]
(lively pan flute music)
(rhythmically playing drum)
[630]
How do we get the highest royalty rate?
[632]
I hear this all the time.
[634]
You can, but you have to
have a few things in place.
[637]
You have to
[638]
take a little bit of risk away to
[640]
negotiate a higher royalty rate.
[642]
But, there's one thing I
heard from Richard Levy, the
[644]
famous toy inventor,
[645]
and he told me one of the best ways
[647]
of getting a higher royalty rate is:
[649]
Just ask.
[651]
Minimum guarantees.
[652]
Yes, you need a performance clause,
[654]
to make sure they're selling your product.
[657]
It has to be in there.
[658]
If you give someone an inclusive,
[660]
which all the companies want,
[661]
and there's no minimum guarantees.
[663]
Guess what?
[664]
They don't have to sell one unit,
[665]
they completely own it
without selling one.
[668]
So, you have to negotiate
minimum guarantees.
[671]
Most companies hate this.
[672]
There is a strategy to this.
[675]
(sighs)
[676]
It takes a little bit of time,
[676]
but make sure there's
[678]
some type of performance clause,
[679]
and I prefer minimum guarantees,
[682]
and that's related to sales.
[684]
(lively pan flute music)
(rhythmically playing drum)
[700]
Bankruptcy clause.
[702]
Oh geez, if you're dealing
with a company potentially,
[704]
especially a small company that can,
[707]
or potentially can go in bankruptcy.
[709]
You better have some
good language in there
[711]
that states if they go into bankruptcy,
[713]
they have to give everything back to you.
[716]
That breaches the contract.
[718]
So, you don't get caught up in court
[719]
with some licensing
agreement with some company,
[722]
that you can't get it back.
[724]
And here's one of the last things.
[726]
A lot of these contracts
don't have definitions,
[728]
and I don't really like that.
[729]
Definitions really make it very clear,
[732]
what the words mean.
[733]
So, if you can, make sure
your licensing agreement
[736]
has definitions with all the terms.
[738]
(energetic Spanish guitar music)
[748]
As I said this before,
[749]
this is not easy to do,
[750]
and I've been doing it for over 30 years.
[752]
So, you're going to need someone.
[753]
If you need us, contact us,
[756]
but make sure you have someone
[757]
that knows the business terms.
[759]
Before you sign any licensing agreement,
[762]
make sure you have a
licensing attorney review it.
[765]
I believe you do that at the very end
[766]
so you can save some money,
[767]
but you're gonna need
someone that can help you,
[770]
because this is not easy.
[771]
Like I've said,
[772]
I've been in it for over 30 years,
[773]
and it's still difficult for me.
[774]
I'm currently writing a book on this,
[778]
it's called One Simple Idea:
[779]
How to Negotiate a Winning
Licensing Agreement,
[782]
and if you're interested
when that comes out,
[784]
please send me your email
[786]
and I'll make sure to notify you.
[788]
It's gonna take a little bit of time.
[789]
There's a lot of topics,
[790]
and I'm gonna cover every
topic in every category,
[795]
and how to negotiate around
those difficult terms.
[798]
So, you can come out on top,
[800]
or at least make it a
[802]
pretty balanced licensing agreement.
[804]
(energetic Spanish guitar music)
[822]
Incredible, I'm on a floating island.
[824]
Where there's five
families that live here,
[827]
and they explain how they
build these floating islands.
[830]
I'm completely blown away.
[833]
(sighs)
[834]
What a great experience.
[836]
(energetic Spanish guitar music)
[842]
I cannot believe I am
here on Lake Titicaca.
[845]
I started my career doing
arts and crafts sculpture,
[849]
and I saw this wonderful piece,
[854]
of a young lady on one of
the boats that they make,
[858]
and I just fell in love with it.
[859]
And here is the artist, here,
[861]
and I just have to bring it home.
[863]
What a treasure.
[866]
(energetic Spanish guitar music)
[883]
(group laughing)
Janice and I
[883]
are taking a little boat ride.
[896]
Okay we're heading home.
[897]
We've had a great day on the lake,
[899]
and we found a lot of things.
[901]
First of all, we visited,
[904]
an island,
[905]
and we got to meet some amazing people,
[908]
and also.
[909]
- Well we had lunch on a different island
[911]
and it's called Pachamanca,
[913]
and it's where they cook
the food in the earth,
[917]
with hot stones, and
they cook it in layers.
[919]
So, there were potatoes,
on top that was chicken,
[922]
followed by fish, followed
by bananas, that were cooked,
[926]
and it was delicious .
- But Janice, just getting
[927]
to the restaurant,
[928]
we had to walk through a farm,
[931]
and kind of a cow patty
situation going on.
[934]
- Well we we're stepping around some,
[936]
significant items that you
wouldn't want to step on.
[938]
- But, the food was fantastic,
[940]
and then we ended up going
[941]
to this wonderful floating island.
[944]
Spent some time with
[946]
five families on that floating island,
[948]
and then we got in this,
[950]
kind of special little boat
[952]
that we took a little ride in.
[953]
- Absolutely, and we saw how they made
[956]
these floating islands
out of cutting reeds,
[960]
and stacking them.
[961]
How they made their boats.
[963]
How they use them to hunt birds,
[966]
and collect eggs, and
of course go fishing,
[969]
since they live in a lake.
[971]
Very different lifestyle,
[972]
but they do have solar panels now.
[974]
- And, I think they have a cell phone too.
[976]
- I don't know, but there were light bulbs
[978]
inside their little tents.
[979]
So, it was an unusual mix
of technology and nature.
[983]
- So, we had a great day on Lake Titicaca,
[986]
what a name,
[987]
and we're heading back to the hotel.
[988]
So, thank you everybody
for watching this video.
[992]
(energetic Spanish guitar music)
Most Recent Videos:
You can go back to the homepage right here: Homepage