Patent Attorney and Founder
Hi everyone I’m JD Houvener and welcome to the boat today’s show were you the adventure or business owner get your daily dose of inspiration so fact you made it here and happy Monday everybody last week we talked about all the different ways of making money and so I wanted to follow up this week with an even more of a deep dive I felt like there was enough interest I’m in the videos and in the discussion last week that it warranted a deeper dive so this week we’re gonna be talking about licensing specifically all we can take a deep dive into what it means to actually make money and how to do that contract at each step of the process because even this is a big win for you the inventor having this goal in mind I’ve actually feeling to make money on your invention is needs to be very real as I love painting this picture for all of our clients and all of you listeners it’s wonderful so please put in the comments below any question do you have you want to make sure I get to if you don’t hear me talk about them today I’m excited to get to this first step so today we’re going to talk about the very first part of the agreement when a licensee and a license or come together and form the license agreement this first step is called the upfront payment believe it or not is part of a royalty agreement that might come in monthly or quarterly based on sales there is a lump sum usually cash that comes along with that to incentivize the contract to sort of you know spit down the hands and get the handshake alright you know make sure everyone’s feeling good and energized from that first contract this is the the typical way it goes okay for a company that’s already existing has a revenue and can put up a certain amount of cash to that that licensee which is the one giving up rights okay and usually you the inventor the license or like I said is usually in a good position to give up this cash if they’ve been in business a while or if they have cash it’s not always the case that they have that ability and so a small company that has you know startup group of inventor or inventors or business people they maybe in position where cash is just not around but they’ve gotten a huge you know upswing they’ve got a lot of leverage and they’re the ability to grow a company and so instead of be able to give up cash they can give up stock in their company in exchange for this cash and so something that has it’s willing to license the rights to them the invention to them they can accept a form of stock and it’s a decision whether to accept the common stock or preferred stock common stock is sort of the run-of-the-mill stock that you get when you become a shareholder in any company that’s or the default share type and common stock actually has quite a good a lot of good principles and in between the two common stock is gonna be the one that’s preferred over preferred stock if you don’t mind me saying common stock is going to serve the the party better because that is going to increase at levels that can go all the way up to however the company’s performing preferred stock is called preferred stock because you get first in line if ever the company needed to liquidate or if they had to sell that preferred stock owners would get paid before the common stockholders well the only issue with prefers docume you’re usually capped in the amount of percentage interest return so if you want to really you know gamble a little bit and if you really believe in the business that you’re licensing your invention to you want to see if you can take that right all the way up see if they are you know become unicorns or if they make it really big in the market and get a big exit so we’ve wrapped up upfront payments this is the first section of diving deep into that that transaction that can take place that begins with two parties coming together the inventor giving up their invention at least one of those four rights in making using selling or importing to the license or and as front payments so if anybody has any questions about licensing or dis inventing in general please give us a call at
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