The product can be patented, which means that the invention is protected and cannot be copied. A: A product licence fee is a royalty paid by a licensee to a licensee for the rights to produce, use or sell a product. This product could be anything from ice cream to a medical scanner for disease detection. Royalties are generally paid as a percentage of the revenue generated by the product. All types of intellectual property are dedicated to product development, such as know-how, patents, trade secrets and technology. These types of intellectual property can all be granted and licensees must pay royalties to donors for their use. Before entering into an agreement with a licensee, certain preparations must be considered. If you own the rights to a product, there is not always an automatic way to make money without its manufacture and sale. You can do it yourself; The easiest way to achieve this result is to concede it to another organization that does this on your behalf for a portion of the turnover. In addition, a company may want to expand and diversify by expanding its product line to absorb excess production or marketing capacity, cross-reference seasonal values and maximum values, or simply increase profitability with a proven product. Companies may not have the internal skills, time or money to develop their own new products, so it can be very attractive to quickly get a licensed product.

The U.S. Internal Revenue Service has developed definitions of what is considered intellectual property and oversees the regulation of intellectual property royalty payments. Among intangible assets that are considered intellectual property, you can ask a company to sign a confidentiality agreement before submitting your product. According to Entrepreneur magazine, you have a 50-50 chance of getting a company to sign an agreement so as not to use your idea or another similar idea. The reason for this reluctance is that many companies feel that they have an idea in factories that is like yours, and that they do not want to be prevented from pursuing their own idea. You can document your meeting, whether or not you have a confidentiality agreement, and this documentation could help your case if you think the company has accepted your idea. In parallel with the question of the royalty structure, the royalty rates, i.e. the amount of the dollar or the percentage to be applied to the agreed valuation base, should be determined. The guiding principles for setting the licence rate are that the rate is based on “economic fairness” to both the licensee and the licensee and reflects the “value” the licensee receives from the licensee during the term of the licence agreement.