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   Author  Topic: royalties  (Read 748 times)
avi h.
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royalties
« on: Jan 21st, 2005, 12:28pm »
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hi,
 
I invented a furniture-type product and about to file a patent application and license it. this product is quite simple and requiers very little further work before manufacturing. according to the sales of similar products it has a big commercial potential.
 
here are my two questions;
 
1. what range of precentage can I expect for a royalty?
 
2. I have a business partner that takes care of all the administrative actions (contacting potential buyers, negotiating, handling finnacial matters, etc.) and may invest some money if requiered (for flight tickets, lawyer to represent us, etc.)
how should we divide the royalty income between us?
 
avi
 Wink Wink
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Penner
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Re: royalties
« Reply #1 on: Jan 21st, 2005, 5:56pm »
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Avi,
 
It would be very difficult to give you a pertinent response to such a question as royalties and licensing agreements are very complex and consider many factors.  To answer this question would require intimate knowledge of both the invention and the market into which you plan to license.  
 
Hopefully, your business partner has previous experience in this area and perhaps he could give you an idea of what he is expecting, else why take him on as a partner?
 
As for your partnership if it is a true partnership I've always favored the methodology of attemptingto figure out relative contribution to both the invention and its development to arrive at an equitable percentage.  However if he is really more of a marketing guy  than a true business partner then perhaps you should decide up front what percentage of your overall net income he should get.  You see if the patent is in your name only then he has no claim to it but he is providing a service much like a technology marketing company and you should have a contract in place up front.
 
Also he will be entitled to more if he does become a financial backer of sorts also if he is working for a percentage of future profits he will likely take a larger percentage than he would have required had he been a company/marketer who worked for an up front fee.
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avi h
Guest
Re: royalties
« Reply #2 on: Jan 22nd, 2005, 6:54am »
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hi,
got it on the first one.
this partner of mine is also a very good friend, but I found out that no matter the nature of partnership, it is always best to divide the hats and clearly define the business agreement between us. I can't tell who contributes more as our work is so different and can't be compared. without my invention there is nothing to sell and without him carring it through to a closed deal there is also no income. he is also taking a small risk of investing some money there (not much).
is there any way to measure our relative contribution?
avi
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Isaac
Senior Member
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Posts: 3472
Re: royalties
« Reply #3 on: Jan 22nd, 2005, 8:24am »
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No, but you had better come up with something and put it in
writing.  In many (most?) jurisdictions, the default arrangement
is sharing 50 per cent for a partnership, and a partnership
(or perhaps a joint venture) is what you have without some
other arrangement.
 
Also, without some agreement in writing, the default
for what happens if the two of you dissolve the arrangement
may not be to your liking either.
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Isaac
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