Scott Thieman
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As a member of EN, an inventor, entrepenuer and part of the inventing community I thought I would share. Yesterday, I recieved a first draft of my licensing agreement. In fairness to them, this is not their first time dealing with inventors, nor their first licensing agreement, my patents protect product ideas (and proven products) that fit their industry ideally, and in their own words “my products would be their new showcase products”.
Anyhow, I bowed out of the Innovation Fund due to the excitement these guys still show about my products. I’ve been told that it’s a great product by the vast majority of everyone that see it, purchased it, and use it. Including them… and three other business entities that have have effectvely bankrupted me.
The licensing agreement that now sits on my desk is in essence an “assignment”. It will shut down my business, take my IP, exclude me from any future business relating to the current and future product line and pay me ZERO. In return, I will recieve HOPE that they are honest, hard working, and will effectively manufacture, market, and distribute my products. It would also give them the right to sublicense, cutting my royalty in half should they sublicense. The licensing agreement was written with the intent to ensure they get everything, including my inventory and an potential ideas, and protect their “investment” if they fail to perform.
I would not recieve any initial payment, no performance clause, nor is there any statement of what they intend to price the product at when distributing. Although they did include the fact that I can continue to keep my website, they neglected to include that I can market and sell thru Ebay or Amazon (my best distribution points today). There is no ensurance that they would even use the trademarked name of “Holeyrail” so potential customers would not come to my website.
I’ve told them I have recieved the agreement and have concerns. I stated nothing else. Of course I haven’t signed anything. But I do not think I even want to communicate with them now. I just dscovered a newly launched crowdsource fund, and if that doesn’t pan out. Perhaps I sell the home, cash out, and launch the business the way I should have done in the beginning.
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Scott Thieman
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Thanks Jane, always looking forward to hearing from ya.
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Jane J.
457,250
Insider Points
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Scott, I am really pulling for you after seeing the ups and downs for your really wonderful product over the past year or so. I hope you finally see the best case scenario!! Crossing fingers, sending good thoughts.
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Scott Thieman
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Jerry, thanks. I’m in production on a small scale. I’ve devoted time to marketing, sales, manufacturing. Now I need distribution and financing, and experienced help. The guys I’m working with appear to have great enthusiasm, resources, and referrals. The contract just was written to protect their interests and would leave me very vulnerable. I have a huge support network that has a great deal of experience. If I ask for input, they have my best interest in mind. They have a good understanding and can see things with no emotional attachment.
The phone call allowed us to share quickly the concerns. Now we just need to clean up the verbage. This afternoon I’ll get feedback that might send the product launch into hyperdrive. I have contact info and interested retailers that once into mass production and fulfillment can be achieved, I believe that this could be in major retailers store in as little as 60 days.
I might be able to do this alone with more time, but that could be a nightmare also. Small scale, I’m doing OK, and I don’t have to license to be successful. One concern that still remains, this guys can take it up one level from where I am. To really go big, might take a major corporation to get involved.
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Jim Hacsi
482,000
Insider Points
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Be careful, because playing ‘chicken’ with a potential licensee can leave you with nothing! This may be the time to consult a patent agent/broker and let them decipher the situation.
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Jerry Arsenault
39,000
Insider Points
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Hi Scott, Your Holyrail is great! I have had shops for 30 plus years and would use the holy rail without a question. Its very unique and solves a storage problem. Anyhow, I can feel your pain on the license deal. My product is approaching 3 years in development with a company that seems to drag its heels at every chance. My product is an injection molded assembly complete with L.E.D lighting but not very complicated. Thing is, they are hemming and hawing on the license deal! We had previously (18 month mark) signed a royalty agreement and it was quite lucrative thanks to my licensing agent I use. My royalty is satisfying enough where my agents percentage still gives me a great deal. But the company has been so slow about signing to the point I’m ready to walk out on them. We have already proven the product will sell at a number of stores and HSN that are interested. Its due to be released in August.
A good question for Roger that every inventor should know, hello Roger? At what stage in a new product development should a license agreement be signed?
Scott, in your case it sounds like your product is already being produced? Do you need marketing? or manufacturing? I would take Eric’s advice and seek a lawyer to go over your agreement, I’m using my agents attorney since she has as much an interest in my product as I do.
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Scott Thieman
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I’ve talked with them on the phone and expressed my concerns and why. They’ve agreed we need to adress those concerns and that to show the products to interested retailers can proceed. We’ll rewrite the agreement until both parties are satisfied (and) to the mutual benefit of both parties. They really want to distribute the product, just needed to be made aware of the risk that I was not willing to subject myself to as the contract was written.
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Howie Rosenshine
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Scott, I would have to agree with Eric. If you can get over the adrenaline and disappointment, you would appear to be in the driver’s seat, so to speak. You have done due diligence by informing them that you have concerns about the licensing agreement. So let them go to Pep Boys and wherever else they like. The more retailers they have drooling, the better position you are in to negotiate favorable terms. And if they haven’t been truthful about (their) retailer interest, you have lost nothing.
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Eric Huber
702,500
Insider Points
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Someone else. This is why working with EN is great, their agreements are much more fair to the inventor. For me EN is always my first choice… I seek deals elsewhere only after EN has evaluated my product.
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ginger valentino-virga
163,500
Insider Points
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Are you talking about a licenseing agreement from EN or someone else?
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Eric Huber
702,500
Insider Points
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Scott, First of all congratulations, I know you have been working a long time on this product. Having gone through this recently, I understand your situation. Rest assured that neither party expects the first draft of the agreement to be signed. In fact, my experience is that if you don’t “negotiate” they will loose respect for you. If they are not willing to add performance milestones (try they may) then make the contract short term with renewal clauses. You should be able to negotiate a “sales commission” for your direct activity that does not interfere with their efforts. If this is your first agreement I would definitely use an attorney. There are a lot of liability issues that you need to be aware of…especially with a product like yours.
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Scott Thieman
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And I should add that they claim to have already shown it to two retailers (very interested) and are now enroute to Pepboys today to show this and other products to them. I should and probably need to let their VP who drafted the agreement, that there is no way I will sign the agreement “as written” so that they can save face in front of Pepboys.
If I hadn’t been burned so many times by others, perhaps I would trust them and everything turn out OK. But… that would put me in a position that I’m willing to “risk experiencing” today. Perhaps I’ve learned a lesson.
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