The Licensing Game

[CarrieW]

I finally got a package for my one idea I posted about in a thread on the inside. Its not so much a package as it is a one page non confidential release form for unsolicited idea submissions. Idk if I want to go this route or try to get someone to get in the door so its not an "unsolicited" idea. Thoughts?

 

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[TedM]

I finally got a package for my one idea I posted about in a thread on the inside. Its not so much a package as it is a one page non confidential release form for unsolicited idea submissions. Idk if I want to go this route or try to get someone to get in the door so its not an "unsolicited" idea. Thoughts?

Usually, those are to protect the company, in case you are a bad person who just wants to make troubles for the company by claiming they infringed on your idea, etc. - instead of being a legitimate product developer (which you are), but they aren't meant to lay claim to your idea.

In the end, your intellectual property protection (PPA or whatever) should make you feel comfortable about signing.

I spoke w/Andrew about this once - he suggested just google the company and see if anyone has ever complained about them ripping IP off...

 

[GuestUser113]

I finally got a package for my one idea I posted about in a thread on the inside. Its not so much a package as it is a one page non confidential release form for unsolicited idea submissions. Idk if I want to go this route or try to get someone to get in the door so its not an "unsolicited" idea. Thoughts?

provisional patent.

 

[CarrieW]

Its a design n not eligible for a ppa I could do a full design patent but that's expensive right now for me to be a viable option. Thanks Ted that's what I figured. I am finishing it and going to submit it to the lady there with this release I think. Its a huge manufacturer I don't think they are going to try to rip me off. The lady was most concerned with creating the paper chain before she looked at or discussed anything with me.

 

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[TedM]

The lady was most concerned with creating the paper chain before she looked at or discussed anything with me.

And you do the same! Keep your emails...the last thing a big company wants is bad PR. They always look to reducing risk.

 

[Vigilante]

Why do you say this? If you are licensing to a manufacturer - who has the retail distribution in place already - as long as they understand the technology, would they really need a working sample? Let's say your invention is based on injection molding - and their core lines are based on injection molded products. They should be able to evaluate the manufacturability better than you.

I was talking about the opposite... when I am licensing a brand or intellectual property FROM a brand holder. I do the manufacturing.

 

[Vigilante]

Ted is right. Big companies seldom want the exposure from stealing from the little guy. One article in the Wall Street Journal is all that is required to open up a can of worms larger than your small inquiry.

I am extremely conservative in nature, and I trust nobody. All of my decisions come from that paradigm.

And Ted's point here is not to be construed as legal advice (nor is mine). None of us have any idea if you might get screwed or not... so proceed with caution.

 

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[Vigilante]

Its a design n not eligible for a ppa I could do a full design patent but that's expensive right now for me to be a viable option. Thanks Ted that's what I figured. I am finishing it and going to submit it to the lady there with this release I think. Its a huge manufacturer I don't think they are going to try to rip me off. The lady was most concerned with creating the paper chain before she looked at or discussed anything with me.

To reiterate Carrie's point for those following along :

Provisional applications for patent may not be filed for design inventions.

http://www.uspto.gov/patents/resources/types/provapp.jsp

 

[CarrieW]

I am understanding ppas are only for utility patents not design ones. Idk what to do at this point lol I have no issue filing the ppa but for this certian idea I don't think it would be helpful I could be wrong though. Have to do more research it seems

 

[CarrieW]

I think the only way I won't get an agreement will be if they really actually have the idea in the pipes or they hate it. Both are extremely doubtful. my only issue since its not protected is how far do I take it before I send the proposal to the next co? I was planning on going one at a time vrs hitting the 3 big guys at once....

 

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[TedM]

before I send the proposal to the next co? I was planning on going one at a time vrs hitting the 3 big guys at once....

why wait?

 

[CarrieW]

Its not patented or protected. I want a yes or no before I hit the next guy. I'm open to thoughts on alternate ways of moving forward if anyone has thoughts on this

 

[CarrieW]

Vigilante can you send me a message please. I have a dilema and need advice privately if you have a few minutes

 

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[CarrieW]

well I ended up going with my gut. right or wrong its done now.

I have a letter I am sending out today, I will let you guys know what if anything happens

 

[Joe Cassandra]

Listened to this interview today.

BLEW MY MIND!

I have a simple license idea that I've wasted time talking with manufacturers on Alibaba about and Brandon has a SIMPLE way to get a mockup of your idea to start pitching companies. All for under $50.

I won't give it away, you need to listen:

 

[insearchof]

First off what an unbelievable thread!! I've gone through the entire thing twice with the second time taking notes to refer back to. I have to admit though, that I got myself all bas-ackwards when i clicked the link for the Keys' method of licensing. One arena you PAY a royalty and the other you GET PAID a royalty if I understad it correctly. I love both methods and have more "study" infomration coming along with other threads on this forum queued up to start learning how to source the product.

Using Vigilante's method, how involved do you actually get in the day to day manufacturing and running of the business? Do the orders for whatever product you are working with at the time actually come to you then you send the order to the factory to go into production? Does this method basically put you into the driver's seat of a "widget" factory?

You mentioned several times that working with the larger sports entities (NASCAR, NFL, MLB) is very restrictive and quite expensive in the beginning. Is it possible to go to a specific althlete/driver directly and forgo dealing with the "governing" body they play or drive for?

For example, if you wanted to make a Mike Trout jersey with his name and number on it and NOT put MLB or Angels logos on it, can you directly to Mike Trout and work out a licensing deal?

 

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[Vigilante]

All of the big sports names not only have agents, but then are under contract with their respective sports brands. For example, when we did Dale Jr., we needed 2 deals... one with him and a separate one with NASCAR. Two contracts. Two license royalties. Two deals that were intertwined, but separate.

With Mike Trout, I am not sure but you might need a deal with MLB, with him, and with the Angels. The best way to find out would be to contact his agent.

When you do a license deal where you license someone else's intellectual property, everything is you. Sales, marketing, manufacturing, distribution. All you.

Steven Keys method is the reverse. Create an idea, protect it, and then sell the idea for an ongoing %.

 

[insearchof]

I'm quickly learning why you have mentioned several times that the big sports programs are difficult to work with....lol. On top of that, there is apparently several more hands in the cookie jar waiting to be paid. So when structuring this type of deal I will need to be certain there is plenty of sales to take all of that into account.

Just curious if you have ever done any work with bottling/brewing companies (Miller Brewing, Budwieser, Coca Cola, Pepsi) and what they are like to work with.

Thanks Vigilante for the quick response!

 

[Papillon]

Vigilante ~ just want to say a MASSIVE thanks for this thread...particularly for your MARVELLOUS post #10!

I been scratching my head about how to contact a high profile individual ~ the product idea I have would be a good fit with one of of his companies and its BIG here in the UK.

This business man has his fingers in a lot of pies, most of his companies are private, additionally hes on the TV, (I don't have a TV just watch the reruns of this biz program on YT) so I contacted the TV studios but no luck...

Anyway did a Google search and found this ASTONISHING thread and something in your post #10 hit my brain AND done it!

I found the company and called, spoke with his PA and asked if I sent a proposal to this address, would he 'the high profile individual' receive my idea and be able to review it? ...She said YES!

Well I sent the letter and sample, two days later I got an email thanking me and that his team would now be reviewing it and would contact me if they want to move forward on my idea.

The other amazing discovery on this thread is the use/licencing of other companies 'branding'

This has got my head BUZZING with ideas!

I certainly didn't know about this, a couple of years ago I read Stephen Key's 'One Simple Idea' that I borrowed from the library ~ in fact I'm ordering it now for a re-read. So all my knowledge on licencing is basically around this book.

Anyway I'll keep ya folks informed how I get on...

I've been a member here for nearly a year, this is my first post so...I've BUSTED me cherry!

 

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[maleek]

I just wanted to say, because of this thread, I TOOK ACTION!

I reached out to a celeb's agency. Now we've emailed back and fourth a few times about how we're going to design the product, and other legal things involving the license. All of that to say, is take action! My deal may even work out, but the point is that I took action, and already reached far beyond what I would have thought was possible.

 

[maleek]

Just wanted to post an update,

I spoke with the agent today on the phone, the conversation lasted aprox 3-4 mins. Always have your numbers ready! The agent asked me my cost, ROI, time to market, distribution channels, target audience etc. She asked for a formal proposal, which I will prepare and email to her in a few days time. I'll post an update at that time. Take action guys!

 

[Vigilante]

Vigilante ~ just want to say a MASSIVE thanks for this thread...particularly for your MARVELLOUS post #10!

I been scratching my head about how to contact a high profile individual ~ the product idea I have would be a good fit with one of of his companies and its BIG here in the UK.

This business man has his fingers in a lot of pies, most of his companies are private, additionally hes on the TV, (I don't have a TV just watch the reruns of this biz program on YT) so I contacted the TV studios but no luck...

Anyway did a Google search and found this ASTONISHING thread and something in your post #10 hit my brain AND done it!

I found the company and called, spoke with his PA and asked if I sent a proposal to this address, would he 'the high profile individual' receive my idea and be able to review it? ...She said YES!

Well I sent the letter and sample, two days later I got an email thanking me and that his team would now be reviewing it and would contact me if they want to move forward on my idea.

The other amazing discovery on this thread is the use/licencing of other companies 'branding'

This has got my head BUZZING with ideas!

I certainly didn't know about this, a couple of years ago I read Stephen Key's 'One Simple Idea' that I borrowed from the library ~ in fact I'm ordering it now for a re-read. So all my knowledge on licencing is basically around this book.

Anyway I'll keep ya folks informed how I get on...

I've been a member here for nearly a year, this is my first post so...I've BUSTED me cherry!

Update?

 

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[Vigilante]

Just wanted to post an update,

I spoke with the agent today on the phone, the conversation lasted aprox 3-4 mins. Always have your numbers ready! The agent asked me my cost, ROI, time to market, distribution channels, target audience etc. She asked for a formal proposal, which I will prepare and email to her in a few days time. I'll post an update at that time. Take action guys!

Post any questions you have here. AMA

 

[maleek]

Post any questions you have here. AMA

I'll give a general background about the situation, in case people are wondering.

The artist I'm pursuing for this specific deal, is a rapper. The merchandise I'm looking to license is based on his catch phrase. Because the artist has an upcoming CD, I pitched the merchandise to be sold as a novelty item, to be sold at his stores (he owns clothing stores in the states), and at his concerts. However, the agent called me out of the blue this morning and left a voice mail, and asked if I would be able to get it into major retailers. I haven't responded to her yet, and I don't want to say no.

So here are two questions for you Vigilante:

-Since I really hadn't planned on taking this to big retailers, I haven't looked into buying agents for bigger stores. Best buy, Walmart, Target, etc will be the ones they are looking to get into. Not really sure what to do there. I'm sure I could contact somebody cold over at Best buy but if not, I sincerely hope my deal doesn't fall dead in the water because of it. I realize getting into retailers is a whole different beast on it's on, and perhaps negotiating with them as well. So feel free to point me in another direction if this is beyond what you would like to discuss.

-If they would like you to pay to use the celeb's brand upfront, what determines the amount paid? The size of the brand? How known the celeb is? Length of contract perhaps? Because of the rough estimate numbers I provided her, I'm going to try to go for a zero upfront, and higher royalty.

**As a side note, my item is literally small enough to fit inside the CD packaging, and I had already pitched that to her as being sold with the CD as a collectors item. She wasn't having it, so I find it extremely odd they want me to chase big retailers, since she mentioned that they hadn't even designed the Album cover yet. (Merchandise in question would be designed after the album). Perhaps this is a test to see if I can handle it?!**

And finally to the readers out there, I know it seems I'm running into obstacles from the get go. And I am. It's not easy. But the take away is this: I'm in business negotiations with a known celebrity because I:

A) Had an idea, which by the way already exists
B) Made a phone call, that initially did not last for more then 5 minutes.

Finally, Vigilante, Thanks for the thread, and the AMA.

Take ACTION guys!

 

[Vigilante]

A. We always answer the questions as YES, and then we figure out how to make things happen because NO is not in our vocabulary

B. As long as the artist is currently trending, the retailers have "open to listen"

C. You get the license deal done first, and then you work the retailers. No need to talk to the retailers until you have something to sell them.

D. You might want to use reps to sell the retailers

E. You might want to use distributors to sell retailers

F. Retailers will want to make 60%+ margin on this. Make sure there is enough room

G. The dirty secret about retail is that if THEY are in retail (i.e. the artist's cd's are on their shelves) it is much easier to get in. If his CD's are NOT on their shelves, then doubt it will happen. Those things usually go hand in hand, and you can literally ride in on their coat tails.

H. Just like law is based on law, license agreements are usually based on other license agreements. When we did NASCAR, they knew what they wanted because they knew what they had before. And, the answer to your question is it is like a well played poker hand. Some times you are bluffing, some times you hold cards. Theres no set formula answer to your question (unfortunately.)

Your job is to pay as little as possible. Their job is to get you to pay as much as possible. You swap no upfront money for higher license %. You swap no annual commitment (or small annual commitment) for higher %. It's all relative, and... by the way... it all can be renegotiated when Wal-Mart says YES. Wal-Mart may say "we'll take a million units, but at $4.00). Then, it all pushes back to working backwards against the big retailers cost requirements. If it costs you $3.00 to manufacture, and Wal-Mart wants to buy at $4, there's not much room. Thus, the negotiations begin again.

So, YES you can sell the big retailers, assuming the royalty % keeps the retail price reasonable.

And, it's not likely a test. The only answer a rapper understands about your deal is he wants MORE. MORE is his license %.

And, if you sell units on eBay, they know you can sell 1,000. If you sell to Wal-Mart, you might sell 2,000,000. That's why they are asking NOW how big you can scale this.

And, the only thing bigger than who we are is WHO WE SAY WE ARE because... you can become. You can do this. If the product and price are right, you can sell Best Buy.

I have a distributor I will connect you with when you are ready. They will front the cash, and sell Wal-Mart for you. They probably do $400m with Wal-Mart alone. And they will take an egregious % from you. But it's a super shortcut to the hundreds of thousands of units.

Length of contract will rarely be beyond a year from launch date, with the possibility of renewal. And, if the celeb is on the downward slide do NOT do the deal, as you can't be what helps save them.

For example, today I would do Pharrel, Gwen Stefani, Miranda Lambert, Blake Shelton, Maroon 5. I would look for A list celebs, or artists rapidly moving from the B list to the A list.

I would not do Celo Green, Snoop Dog, or anyone moving from the A list to the B list. Even with high name recognition, retailers won't buy inventory on declining brand names.

We caught Susan Komen a little too late on a deal I did recently. We shouldn't have done the deal, although on the upside we did raise a TON of money for breast cancer research, so from that standpoint it was awesome. However, we should have done it while the brand was peaking, not after it was past the crest and on the downward slide.

 

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[maleek]

Vigilante,

What a Killer post! Thanks so much! Unfortunately for me, I became blinded by celebrity. Because he was a artist whose music I personally enjoyed, my initial thought was "It would be cool to work with him!" However, I never really took into account that he certainly caters to a small demographic, which in the grand scheme, wouldn't be worth bringing to retail (even though is album did reach stores, and he is somewhat well known).

The upside here was I didn't put my eggs in one basket, and when I did my brainstorming on who I would like to reach out to, I had a list of compiled celebs that I would like to work with, some of which are indeed A-list. Even better, is that I already have contact info for said celebs. I plan on calling/emailing first thing Monday morning.

Here's my small take-a-ways for people stepping in:

1) IF you have an idea, and have validated it, pick up the phone and make calls. The worst that can happen is they say no.

2) Be prepared for them to ask you NUMBERS. ROI, your cost, time to market, distribution channels, target audience, royalties etc. Initial contact is only a few minutes long. In my small experience, don't give them your long winded story about who you are, what company you're apart of etc. They don't care. They get a million proposals a day. State facts and be ready for a yes or no. If yes, be prepared to send over a proposal.

3) Do NOT put your eggs in one basket. As you can see what happened here, I was 'celebrity blind'. You may think the person you want to work with is great, however like Vigilante said, Be sure they are not declining in popularity.

4) Don't be afraid of getting rejected. I actually have learned more in the last week, then I have in any of my successes.

5) Last point, but I think the most important for all you independent entrepreneurs, especially in the licensing game: Don't think that your first deal is going to workout smoothly. As I said earlier, I wasn't sure this was ever going to work, and I probably won't be pursuing this artist anymore. Am i discouraged? Nope. This was a great learning experience, which I plan to start all over Monday morning, bright and early!

I'm glad Vigilante stepped forward and posted what he did. Without him, I could have been in some serious hot water, and stuck with a non selling product. Thanks a million Vigilante. Like I said before, I already have some A-list celebs written down, and products to go with them. So expect an update rather soon guys!

 

[Vigilante]

Great post and great learning curve. You are getting a street education you couldn't buy from a book.

 

[maleek]

Nvm,

Figured it out! school of hard knocks here I come

 

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[Papillon]

Update?

I haven't heard anything from the company in 3 weeks, so today I called 'the high profile individual's' PA, unfortunately she was in a meeting and i was told to email her which i have done.

As i haven't heard anything i assume they are not interested in my product..?

Let me back up a bit...and tell you what my product is:

Its an amazing totally unique Spicy Salad Dressing.This was discovered where i vacation every year in the Far East.The small family restaurant that supplies this is the only one ~ and they would NOT disclose the recipe!

After much research i developed my own - which is even better! Their is no vinegar or olive oil present, it really is a unique taste, in fact when friends or family have tried it i always say: i got this new Salad Dressing from the supermarket as the regular one had sold out, i think the new one is crap, what do you think? When they taste it they all want more...then the kicker, I tell em...its my recipe!

I have contacted a couple of other companies they are not interested, including 'heinz' as they do not take outside ides/recipes.

Anyway, if this company isn't interested, then I could ask to use/licence their branding. But before i do, looks like I'll have to do a lot of research on the manufacture and distribution channels etc...


BTW, THIS SHOULD BE TATTOOED ON EVERY Entrepreneur's FOREHEAD!

A. We always answer the questions as YES, and then we figure out how to make things happen because NO is not in our vocabulary.

Brilliant!

Thanks... Vigilante!

 

[Vigilante]

I just got off the phone with an A+++++list actor's agent.

Steps :

1. Googled him along with the word "agent"
2. Found a statement by his agent about a recent incident
3. Googled his agent, found the firm
4. Called the firm and asked for the agent by name
5. Got to the agent's office (assistant) and gave her the pitch

6. She asked for an email summary of the proposal. Sent, along with a rendering of the item idea.

Now we wait. Might work. Might not.

On this one, I suspect their license fees may be out of the stratosphere due to his status. When they are hot, they are hot. It also, however, sometimes can depend on how much they believe in the project.

I need zero annual commitment, and zero up front fees on this one. Unlikely. But... was it worth a phone call and an email? Absolutely. Total time invested so far is 15 minutes... including this post.