Often inventors and innovators will come up with a way to make a better mousetrap. Often they will find others hold patents to a critical component to make this better mousetrap innovation or invention. Therefore they need to make a deal with the company or individual holding the patent so that they can use this technology to make their invention and sell it. One way to do this is to offer to pay them a per unit royalty on each unit made or sold. And most savvy companies who agree to this will want audit rights to check the books on how many items were built and/or sold by the better mousetrap maker. Recently I was asked by a innovator and think tanker; “I need more insight on the audit rights you talked about?”
Well if you started selling them and were going to give them a per unit stipend then they would need to be sure you told them of “ALL” actual sales; That makes sense right?
“Is it possible that they might offer the seed money to put together a prototype?”
Yes, if I were an executive of that company holding the patent, I would put you in contact with my engineers and sit at a table and listen in on the meeting, then take notes, prepare and agreement, think on it for a day, discuss options and have my lawyer draw it up and have the whole thing done within two days, give you parts and make some renditions.
If my company is to fund your project with you, we would want to make sure the product sells well, since we are wholly invested with our technology and now capital in your project. And we would need to sign a deal or I might even consider putting you on and keeping you on the company payroll.
You see either way, whether you make it for them, for yourself or they make it for you or for themselves. The company may consider various options if you have a good business plan and innovation using their technology. Indeed the better mousetrap builder should know who they will be dealing with and should learn everything they can about the company before approaching them. Think on this in 2006.