After an inventor patents his product he begins the journey of getting his product to the consumer. Some inventors will do this by manufacturing the product themselves. However, not all patent holders have the ability or desire to handle the many aspects of product manufacture and marketing.
This is when a manufacturing license agreement can come into play. Both sides negotiate for the best deal, and the specific terms of the contract. Reviewing the basics of obtaining or award a manufacturer license will help you navigate this process in the best way for your business.
A manufacturing license agreement (MLA) is an agreement between an inventor and a manufacturer, explains the University of Washington's Office of Research. The agreement allows a third party to produce and use the inventor's product for payment in royalties or a specific lump sum. There are no specific regulations regarding MLAs. Instead, both parties are free to negotiate the terms and conditions of the agreement in an attempt to get the best deal possible. The licensor will attempt to get the most money possible for the use of their design, while the licensee will try to keep costs as low as possible.