We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Are the Different Types of Product Licensing?

By R. Kimball
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Product licensing generally is leasing an idea or product to a manufacturer. The manufacturer is responsible for producing, distributing, advertising, and ultimately selling the product. In return for giving the manufacturer an idea or product, the inventor receives a commission or royalty payment for each item manufactured or sold. Product licensing terms vary by agreement and industry.

Usually, product licensing is completed for an idea or product. This idea or product may be new or could be a variation of an existing product. New ideas may be licensed to any business, as there are no preexisting rights to take into consideration. Variations or improvements to an existing product must be licensed to parties with the rights to the existing product in order to protect preexisting rights.

Individual inventors or manufacturers approach a consumer brand to pitch a product to be created using the brand’s characters as part of the consumer product. The consumer products might include apparel, toys, electronic appliances, books, home decor, and outdoor gear, among other things. Consumer product licensing may also be completed in a reverse process, where the character or name of a major brand is licensed to the manufacturer to be included on a consumer product, rather than where an idea is licensed to a manufacturer

Scouts help match inventors with manufacturers. Product scouting companies are paid by the manufacturer to help with the manufacturer’s product licensing program. These parties are looking to find commercial, industrial, and consumer products in order to expand their customers’ product lines. Commercial and industrial products might include those used by government agencies for maintaining government property and equipment.

Impulse purchase items that may be sold for a small amount of money are priority items for many manufacturers for product licensing. Impulse purchase items that may be sold at kitchen shops, retail stores, and home and garden stores allow a manufacturer to expand its product offering without risking as much capital as with a higher-priced item. Generally, these are simple products.

Each manufacturer and inventor must decide how the idea is to be protected. Some inventors choose to file a provisional patent while working toward product licensing. Certain manufacturers will only license fully patented products. Specialists in product licensing suggest that inventors invest as little as possible in an idea until a licensing arrangement has been arranged, but make sure that the idea is protected during negotiations with a provisional patent and confidentiality agreements.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.