inst having his
patent tied up is to bind the parties to do certain things in the way of
pushing the sales, making the necessary tools at their own expense, and
commencing its manufacture within a reasonable time, paying an advance
royalty, or annexing some such condition to the agreement by which they
will be the loser should they fail to push the inventor's interests.
Unless it cannot be otherwise arranged, the patentee should not transfer
his rights merely in consideration of receiving a certain sum on each
article sold, as however sterling the character of the manufacturer,
there would be no certainty of the sales being pushed. The patentee
should endeavor to get the manufacturer to guarantee that the royalties
shall amount to at least a certain pre-stipulated sum each year, or
within a period of time, and that such sum shall absolutely be paid to
him by the manufacturer, irrespective of sales. This insures that the
manufacturer will be obliged to push the sales of the article, and do it
justice, since if he neglects his duty purposely, or from lack of
energy, he is out of pocket, and the patentee is sure of a certain
income, with the addition of a possible fortune that unprecedented sales
may yield him. However, manufacturers are not always willing to agree to
this condition, unless the guaranteed amount is exceedingly reasonable;
they will usually simply agree to do their best, and if the sales do not
reach a certain figure each year, the patentee shall have the option of
cancelling the agreement, and receiving back the patent free and clear.
Royalty licenses can either be exclusive or non-exclusive; that is, with
an exclusive contract the manufacturer has the exclusive right to
manufacture the article, excluding all others; non-exclusive is simply a
shop-right, in consideration of which the manufacturer agrees to pay the
patentee or owner of the patent a stipulated price or percentage upon
each article made or sold. The license can also be exclusive in a
certain section, county, State, or a number of States, as may be agreed
upon.
Any number of conditions that may be agreed upon may be annexed to and
form a part of the contract, and such an agreement should be drawn up in
compliance with the terms and conditions agreed upon by a competent
attorney, or one skilled in matters of this kind.
[Sidenote: Manufacturing and Forming Companies.]
If the patentee has a really good invention, often he cannot do bette
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