Q: Mfrs offered a license agreement for my utility patent, 18% royalty but want me to pay them 8K to rep. Is that normal?
Non-exclusive, 2yr contract. They claim it is because they are taking all the risk. I already have product inventory, cads, engineering designs.
A:
Your question is actually beyond the pure practice of acquiring patents. This is licensing (a form of contracts) and you should hire competent counsel that has negotiated a number of patent licenses. I would be leery of putting up money as you don't know if they will earn it. You may want to offer them a credit against some of the royalties that they would pay you. So maybe they pay you a 9% royalty until they have paid you 8K in royalties (as they would have paid you 16K for those sales at 18%) then the rate goes back up to 18%.
What you are willing to concede to get them to work with you is a function of their track record of performing in the past and how unique their skill set is.
They may want money for plastic injection molds. If so, then you can pay for the molds but then you would own the molds. I would try to find a way to avoid paying them money before they do something. If they won't accept that sort of deal then you need to consider whether they are serious about this.
Good luck but don't do this without an attorney.
Kevin E Flynn
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