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Negotiating a licensing agreement

Assuming the company has evaluated your invention and wants it, the next step is negotiating a licensing agreement.

You must have professional representation if you are not confident of your own negotiating abilities or if any licensing agreement is likely to be complex - for example, if it covers several countries. Ask your patent attorney for advice on representation.

Most licensing negotiations take a long time to complete - often many months. They can also become a source of conflict as you and the company will almost inevitably disagree about the value of your invention.

To be a good negotiator you must be able to:

  • Know at all times what you want from the negotiations.
  • Understand the company's position.
  • Demonstrate personal and professional integrity.
  • Find the courage to end negotiations rather than accept poor terms.

You must be prepared to be flexible . For example, there is no point insisting on financial terms that the company simply cannot afford. Most licensing agreements emerge from a process of compromise during which both parties find mutually acceptable ways of getting what they want.

However, negotiations can be psychologically complex. If the human chemistry is badly wrong, there may be no possibility of an acceptable agreement. You should therefore plan what you can do to remain in control. Ultimately, the only way to keep control may be to withdraw from negotiations if you see no advantage in continuing them. (There is a lot of truth in the saying that ‘He who can walk away from a deal controls it'.)

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