Development - Option - Licence Options

[Ice]

I am looking at the end goal of licensing an invention.

However any licensor would have to go through a few stages before deciding whether or not to finally take a licence. Namely a prototype would need developing fully and testing, market researching, mass production etc.

How do I tie a potential licensor in so that each stage is covered and subject to certain requirements on both sides the end goal is reached?

There appears to be something of a dilema in so far as any interested party would not pay to licence the technology until they can be sure a market exists and money can be made, but to obtain this status investment needs to be made in developing prototypes and testing which the potential licencee would not handle without knowing they will directly benefit from it via a licence at the end of the day.

I have some experience of option agreements but seek advice regarding this and maybe some form of development licence.

I need to be sure that any potential licensee firstly can be assured a licence is available to them and secondly that they will have to take it provided certain steps or markers are reach.

[Ice]

Thanks for the correction Steve I just posted in a rush half asleep oops.

I agree with everything you say however the cost of product design or final prototyping and market analyisis can be considerable we are potentially looking at $300K.

Unfortunately you cannot determine that all is well and that the market is indeed what you have predicted without this expenditure and therefore an investor is required. Clearly though a risk is present in that the invention may not meet the expectations either in testing or in the market research and the investment would be lost.

In addition what can you offer the potential investor if not some form of license or perhaps sale of the patents for his investment (risk).

It appears to be something of a chicken and egg situation.