Con: It cost you, You are the best one to communicate your idea, How do you find an agent that is as passionate about your Idea as you are? Pro: an agent may make you get organized enough to answer the questions and comb your hair, but if you practice your presentation in front of friends and family you will get better results from yourself because the family critics are tough!

Good question and answer, I was wondering do the agent get paid a flat fee upfront or do he get a commission of what you get long term?

Be careful with agents. I can’t speak for all, but I know this applies to some. Some so-called agents do the exact same thing as the invention submission companies. That is, they take your money, act real busy, spin their wheels to put on a good show for you, and at the end of the day do absolutely nothing for you.

In researching various agencies on the Internet, most seem to charge an “evaluation” fee that is refunded if they choose to represent you in securing a licensing deal where they share a percentage of the royalties. While the fees are relatively nominal, my concern is — given the volume of hopeful inventors — these upfront fees could become the primary source of income for the agent and ultimately his/her sole motivation. Has anyone in the forum had positive experiences?

Agents vary with the industry they specialize in. Most charge an upfront reviewing fee of about $150 to $350 per idea they review. Lets take a toy broker/agent.
They charge a fee for the review.
If the review is favorable they will tell you that you need to get your idea ready for review by the toy company. Depending on what you have they will have you get a presentation made, patent, prototype and any other things they say the prospective company wants in order to submit to them. All of this costs a lot. Just like using a invention submission company yo may be broke by the time they even attept to show it to a company.
Now comes the other part. If the company says they are interested the broker gets from 40% to 50% and in some cases higher of your royalty percentage.
If the company says No and the broker wants to present it to a different company that has a different set of criteria to review you will be paying for a new presentation.
Rule number one make sure you read and reread anything they give you before you sign and spend money. They also have clauses in the contract that say that if you find a company on your own you will still owe them the percentage.

Sheesh! Not pretty. Thanks for the heads up, Roger.

Yep. It’s the homepage illustration from my website www.GavinCurtis.com .

As with any agent you need to know up front what your expected costs are before you sign anything. Do not be satisfied with the " Oh its not that much." or “I’m sure we can work something out” Know what you are getting into from the start.
The trap most Inventors fall into is that once they start paying money they feel that they can’t get out now they have to much invested and don’t want to lose the cash they have already spent. This just falls right into what they want you to think. It keeps you dealing with them and paying out the nose. Not all Agents are bad. Just like not all Invention submission companies are not bad. The hard part is finding the good ones. That is where doing your homework forst comes into play.
You are paying for a service. Know what their service is and what you get for your hard earned cash.

Roger, I was in a really nice kitchen store in Highlands NC, and saw your pizza scissors. There were only 2 left on the peg, so people are buying it. I hope in a few years you can post and say you saw my invention across the aisle from yours!

Thanks for the kind words Holly. It is really exciting to first see your product on a store shelf. I hope that happens to you really soon. I would be honored to have our products side by side.

I am constantly amazed by the talent I see among you all…the artistic abilities, the inventiveness, the brain power! I am truly impressed!

gavin, as i have posted before, i had a good experience with the agent/company i signed up with….you got to do your homework and find what works for you…i am starting to realize that everything i do in the invention journey is a gamble….EVERYTHING…you just have to minimize your risk, and to minimize your risk, you have to be a smart consumer….

Roger…you have more experience than me in licensing, but doesn’t a “good” agent get you the highest royalties that you could not get yourself generally?

I made a big mistake with a company once that cost me 2 1/2% projected royalty payments on a slip of the tongue. Stupid. The deal was never signed anyway, but could have been a big costly mistake.

Also Roger, doesn’t a good licensing agent have the much “bigger” contacts, ones you can’t generally reach?

As you know the toy industry is mostly open only by invitation to experienced toy inventors; an agent might negotiate a pretty good deal with say Mattel where you couldn’t get through the door in the first place.

Could the agent get you triple or more royalties that you could have got yourself therefore justifying even the highest percentage 50-50?

I thought licensing agents would be the safest to work with in the inventor’s world because generally they make money only when you do. I don’t mind paying a few hundred for evaluation as they have to weed out the screwballs but I would NEVER pay anymore! You’d be a fool to if it works on a percentage deal.

Ron Komorowski
Inventor of Handi-Straps
www.handi-straps.com

Ron,
It has been my experience that you get the same percentage either way. the tough part as you said is getting in the door. Traditionally they pay 5% so you split that with the agent. Basically you are paying them for the introduction or if you can’t travel to the toy company they are acting as your rep in your place. It is a win-win for them. They get paid by you and any other Inventor they have in review. They pitch your idea as well as the others. If they bite on one, that Inventor gets a license agrrement and the Agent gets their split. If they turn them all down the agent still got the review fee from all those they presented.
My experience with one toy company was interesting. I pitched a toy idea my son amd myself created. They liked the idea and paid us a $5,000 advance on the license. They later decided to go in another direction with thier line of toys and dropped our idea. We got to keep the advance and they released the idea back to us. This allows me to pursue this product with other companies. All I sent them was a presentation sheet like the ones on my profile page under photos. They later asked for a crude prototype which I made for under $48. So, other than my time and the $48 my return on investment was high even with having the product drop prior to completion of the product.

Quite enlightening! Roger, do you usually get an attorney to either negotiate or review your licensing contracts?

I do my own reviewing and negotiating. Part of my job at (WSRC) Westinghouse Savannah River Site was justifying the completion of “Milestones” to the(DOE) Department of Energy. WSRC is a nuclear facility contracted by DOE. One part of my job was to justify the completion of work to DOE in order for WSRC to receive payment for that work. These Milestones involved hundreds of thousands to a few million dollars. If you failed to justify and show completion of work through various paperwork and databases WSRC would not recieve payment, So, I became very adept at reading, reviewing and looking for loopholes in contracts.
I also had the opportunity to get involved with the sites patent and marketing department. I had patented two ideas through them and they were a little slow to get things moving to find outside companies interested in licensing those products. After 18 months of them supposedly trying to find a licensee I asked the head of that department if I could try. They agreed, but stipulated that if I found an interested company they would have to do the final paperwork to close the deal.
Within two weeks I had the Vice President of an outside company fly in for a demo of the product and to sign a licensing agreement for the product. The patent/marketing group said that they had never had a contract/license go through that quickly. I succeeded where they had failed due to doing my homework first. The company I contacted was the first one I contacted on my list.
Today, if I got a contract I did not understand or had legal questions I would seek out a licensing lawyer. I have been fortunate not to need that service just yet. : )

But Roger…(I’m a pain in the a** ain’t I?) You have all confidence in what you do. I have negotiated with a few of the biggest U.S. companies (no deals got done yet) and sat down at a bunch of round tables in corporate conference rooms pitching.

I am still worried of a licensing agreement because you have a pile of corporate lawyers who probably will be looking to squirm out of the deal for many years to come for some stupid it seams reason. This is a big company tactic. Small companies are many times safer I would say. they don’t want to mess with you, you can go to a bigger company and squash them back!

A friend of mine collected royalties for a few years and then they started playing games with the license over missing terms. Started “jabbing” him with this and that which this and that would have been very expensive to satisfy for them. I don’t think he is collecting anymore.

I still say atleast have an expert oversee your licensing agreement. Also advance against royalties is hard to pull off and for a fair amount. you should try and research what other advance against royalties have been and use that in your negotiations.

An additional comment, these are some of the reasons some should go with Edison Nation. They surely can be trusted to do you good because one ripped off person can make alot of noise so I think you can’t be safer than with them.

Ron Komorowski
Inventor of Handi-Straps
www.handi-straps.com

Ron, below is a portion of one contract I had that addresses what your friend could have done. Plus, I think this is good info for new Inventors to see what some of the verbage in a contract can look like. I changed the name of the company to The Toy Company to protect their identity.

Audit Rights.

(a) The Toy Company shall keep true books of account containing accurate records of all data reasonably necessary for the determination of the royalties payable hereunder and shall permit an independent CPA selected by LICENSOR to examine such books of account of The Toy Company and sublicensees, if any, at a mutually agreed upon convenient time, at the offices of The Toy Company, for the purpose of verifying royalty statements and earned royalties no more than twice each calendar year. Such examination shall be made at LICENSOR’s sole expense, except as specified below. LICENSOR and its appointed CPA shall have free and full access to all such records for such purposes and may make copies thereof.

(b) In the event that such inspection reveals an underpayment by The Toy Company of the actual Royalty owed LICENSOR, The Toy Company shall pay promptly the difference, plus interest calculated at the rate of one half of one percent (0.5%) per month. If such underpayment be in excess of one thousand United States Dollars ($1,000.00) for any Royalty Period, The Toy Company shall also reimburse LICENSOR for the cost of such inspection.

© All books and records relative to The Toy Company obligations hereunder shall be maintained and made accessible to LICENSOR for inspection at a location in the United States for two (2) years after termination of this Agreement.

(d) LICENSOR or his representatives shall not disclose to any other person, firm, or corporation, any information acquired as a result of any such examination, except as necessary to enforce the rights of LICENSOR under the terms of this agreement.

Thank you Roger. I do know about that part but it is very good to post here.

Here is one you may be able to enlighten us that we all should know.

You don’t need a patent to license and should a patent not be granted you can still collect royalties for the specified time but this must all be stated.

This is popular in the toy industry as a hot toy has come and gone usually before a patent issues.

What about other industries? I know situations can be similar. Most important is the jump on the market share for the company so this is why a licensing agreement would be signed with an inventor reguardless of patents; it is a contract not to tell another company; a company wants the chance to establish the market.

Some big companies on certain products don’t even care much about patents as they know many ideas can be easily got around. Jump on market and branding is all they care about…secure shelf space.

Also, do you know about trademarks in a deal. I would try to have the product named before and hold the rights to the trademark indefinetly so I may always collect some royalties or get the rights back. I have not heard much on this. Who owns, licenses etc. the trademark.

Do you know anything about this? Is it standard that you hand over all rights to the trademark?

Always been curious how this works in the real words, out of the books you read that say this all happens.

Ron

In publishing, authors usually use agents to negotiate those pesky contract points with editors (the publisher’s representative). I know using a literary agent as intermediary often preserves the creative relationship between author and editor. With product and toy licensing, however, it would seem no such relationship exists. Licensing means you are handing over your concept to a manufacturer’s R&D department. Is there precedence to draft a level of creative control into the licensing contracts?

AS with any industry nothing is written in stone. Each contract is unique unto itself. Depending on the company they may want you to have no involvement once the contract is signed other than they send you a check. Others want to to help get the items presense out on the market if you have a talent in that area or better contacts than they do. You can also be in on the design stages to look over what they consider improvements to your original design or different use of materials to help reduce cost and production costs. You have to feel each company out to see the levelof involvement they like to have from the Inventor.

Hi Roger, I have a contract with a licensing agent that my patent attorney referred me to. I am not sure I am happy with them. My contract is up soon. I want to start working on my own but am not sure if they get a prcentage if I have any success on my own before the contract is up. My lawyer has never gotten back to me on this. Would you be willing to look at my contract? Is this somrthing I should do? I am new here and I am unsure about which way to go. Thanks for any input you may have a lot of experience. My idea is patented. I paid 5000 dollars for two years and think I may have made a big mistake.