Who do I get royalties from? 12 Answers as of March 05, 2014

I have an electronic device which is not usually in a product that a company produces. They told me they would buy my product if I could find a manufacturer for it that will provide the customer service. Now who do I ask for royalties from, the parent company who will ultimately sell the product or the manufacturer of the electronic device?

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Law Office of Robert M. White, PLLC
Law Office of Robert M. White, PLLC | Robert M. White
Royalties, in general, are received from the individual or entity who actually sells the product to the consumer. The manufacture, in this case, is paid by you to produce the product that will be sold eventually by the vendor. There are a multitude of considerations to keep in mind in this kind of arrangement, such as non-disclosure agreements and agreements with vendors to not sell competing goods, and it is advised that you contact an attorney experienced in negotiating and drafting appropriate business agreements.
Answer Applies to: North Carolina
Replied: 3/5/2014
Banner & Witcoff, Ltd. | Ernie Linek
Typically - anyone who (1) makes, (2) uses, or (3) sells your patented invention - should pay you a royalty based on a license agreement to the invention. One exception to the general rule is any person to whom YOU sell your invention. They pay you the "asking price" for the invention - and they receive an implied license to use your invention as they see fit - with no more payments to you. NOTE - they cannot build your invention (make it - or likely even repair it) - but they are free to use and sell it after purchase from YOU. You need agreements with BOTH the manufacturer and the ultimate user. See a licensing lawyer and get the required agreements. here.
Answer Applies to: Massachusetts
Replied: 2/7/2014
Webb IP Law Group
Webb IP Law Group | Jason P Webb
Either, but not both.
Answer Applies to: Utah
Replied: 2/7/2014
Freeborn Law Offices, P.S.
Freeborn Law Offices, P.S. | Steve Freeborn
Unless you have a patent on your product, you don't have the right to get anything. You should talk with a patent lawyer.
Answer Applies to: Washington
Replied: 2/7/2014
Gates' Law, PLLC | Thomas E. Gates
You need an patent law attorney, immediately. Without legal protection you could lose ALL rights to your product.
Answer Applies to: Washington
Replied: 2/6/2014
    Mark S. Hubert PC
    Mark S. Hubert PC | Mark Hubert
    Not quite sure what you are asking here buckaroo. If a company said they would buy your device if you had it made by someone who would provide support for the product. GREAT! Now if the manufacturer strikes a contract with the company to build and support the device then they would collect the money for each sale directly and you would have a licensing agreement with the manufacturer. However if the manufacturer just wants to deal with you then you have pay the manufacturer for making the devices and you have to to arrange for the transportation, packaging and sales to the company. Obviously you keep all the profit and there are no royalties. The only time there are royalties is when someone else is making money from selling or using your device. In that case they have to pay you a percentage of the profit -IF THEY ENTER INTO A LICENSE AGREEMENT WITH YOU. Otherwise it is potentially a patent infringement issue and you will have to sue them to find out if they infringe and if they owe you any money. Now here is the kicker! You don't say that you have a patent on your device. So how can you say it is your device? Do you have anything to prove your ownership? How did you get the rights to the device? Certainly you don't think that just because you invented the device that you own all the rights to it without filing a patent? If you don't have a patent and you have showed it and offered it for sale to the company without a patent you have some very big problems. If this was done more than 12 months ago then you don't own anything and never will because you lost your rights to potential ownership due to your failure to act in time. You see - you cant just get a patent on your invention at any time you want. There are restrictions and time frames.
    Answer Applies to: Oregon
    Replied: 2/6/2014
    Fluhr & Moore, LLC | Steven S. Fluhr
    You would be selling the product directly to the company and paying a different company to manufacture the part and stand behind it. You should structure the deal so that you make a profit on every piece bought by the company.
    Answer Applies to: Missouri
    Replied: 2/6/2014
    Eminent IP, P.C.
    Eminent IP, P.C. | Paul C. Oestreich
    It is not clear from your statement of the question and background detail whether or not you have in place any/all/none of the following: (1) nondisclosure agreements with either the parent company and/or the manufacturer of the electronic device, (2) whether you have some sort of license, joint development, technology transfer, or royalty agreement with either the parent company and/or the manufacturer of the electronic device, and (3) whether you have enforceable patent rights that cover the "electronic device" in question. The more of the above you have in place, the better your position to enforce some sort of royalty agreement. However, if you have none of the above, you may have no rights at all. A nondisclosure agreement (NDA) is usually put in place to protect you from third parties (such as the parent company and/or the manufacturer of the electronic device) to whom you wish to disclose your "electronic device" so that they can determine whether they want to use your devices. The NDA provides you a breach of contract action if they subsequently fail to honor their part of the agreement. The subsequent license, joint development, technology transfer, or royalty agreement (or any other final agreement) would be put in place after both parties have negotiated the final deal and want to move forward under the terms of the agreement. And finally, patent rights give you the right to exclude others from making, using or selling, an "electronic product" covered by one or more claims of the issued patent. If you are patent pending, you cannot enforce your rights until the patent issues. Let us assume that you have some sort of agreement in writing with either the parent company and/or the manufacturer of the electronic device. That agreement should clearly state what your royalty arrangement is, for example, how the royalty is calculated, who is paid, when it is paid and who pays it. Patent rights would give you an additional legal action in patent infringement if either the parent company and/or the manufacturer of the electronic device, irrespective of any contract action. Thus, without more information it is impossible to answer your question in any sort of meaningful way. You would be well-advised to seek the advice of competent patent counsel to fully explore your particular facts and business objectives to determine and execute a legal strategy to achieve your business goals.
    Answer Applies to: Utah
    Replied: 2/6/2014
    Sebby Law Office
    Sebby Law Office | Jayne Sebby
    From the information you've provided, it doesn't sound like you'll get royalties from either one. You'll need to pay the manufacturer for the cost of making the product and the company will pay you for each item it purchases. Royalties are usually paid on copyright licenses.
    Answer Applies to: Nebraska
    Replied: 2/6/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Need the details and you need counsel and a written contract.
    Answer Applies to: Michigan
    Replied: 2/6/2014
    Microtechnology Law & Analysis | Daniel Flamm
    You should have a written agreement that specifies the terms and conditions for royalty payment and other things. You should retain an experienced patent attorney to draft this agreement. If you anticipate receiving substantial royalties, having a contract you can rely on should be worth far more than an attorney's fee. Oh yes, I would suggest to have royalties paid by the company producing the product.
    Answer Applies to: California
    Replied: 2/6/2014
    Law Office of Kirk Buhler
    Law Office of Kirk Buhler | Kirk A Buhler
    Since I don't know your patent, the patent claims, the parent company or who "they" are any answer will probably not be accurate. In general you would collect royalties from whoever would be infringing on your patent. People that are not infringing do not owe you a royalty. You could have a method patent, a process or a product patent. You should seek royalties from everyone associated with making, using and selling the product, if you can.
    Answer Applies to: California
    Replied: 2/6/2014
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