14 Licensing Products & Receiving Royalties – Product Developer Sef Chang

Sef Chang develops products and licenses them to companies. Many people are unfamiliar with the option of licensing their intellectual property. In this interview with the Patent Professor®, Sef defined what licensing is in the product development industry, discussed his start as a product developer, and more.
The word licensing can be an unfamiliar term when you associate it with product development. Licensing is renting. Think of your intellectual property as real estate property. When you buy real estate, your name is on the deed; Therefore, you own that property. You have the right to rent out the property for additional income or sell it to make a profit.
It’s a similar concept of having tenants at a property that you own. A patent is a document similar to a deed because it identifies the owners of intellectual property. You can license your intellectual property to companies. As the intellectual property owner, you can revoke companies from selling your product if they do not pay royalties.
Licensing is a business model that is not specific to a product. An idea like a logo, design, song, or artwork can be licensed and considered intellectual property.
Sef discovered licensing products after graduating college. He submitted many product ideas to a novelty company. The company was interested in a licensing deal for a miniature keychain back scratcher. The back scratcher sold 180,000 units and kicked off his career as a product developer.
Product developers are valuable to corporations because new products launch annually to produce revenue. Corporations like Honda Civic and Apple need product developers to construct the latest consumer goods.
As the corporate world is evolving, research and development departments are downsizing staff, leaving internal teams overworked and unable to deliberate fresh, innovative ideas. To continue progressing with the most current products, corporations work with more independent contractor product developers and inventors. As a result of this challenge, there are more opportunities for individuals to enter the industry.
In a business deal, inventors and companies discussed negotiation and royalty percentages to determine how to move forward. Three components inventors and contractors contemplate in the licensing negotiation process are years of a licensing agreement, exclusivity of the deal, and innovative advancement of the product.
Sef believes that it is best to gauge companies’ interests, calculate quotas and costs before discussing specific royalty percentages. Understanding your product’s value and knowing what you want will help contracted product developers dictate what deals to proceed with and what deals not to take.
Sef wants inventors to switch their perspectives and recognize the value that they bring to businesses and corporations to expand open innovation. Some inventors think that companies have all the weight and fail to realize their importance. Inventors and independent product developers save companies money because corporations gain a fully-developed product without spending money on the trial and error process. As mentioned before, overworked internal product developers can hinder companies from developing fresh ideas. On his YouTube channel, Sef share and teach others what it is like to be a product developer and the process of licensing products.
If you have questions about licensing, you can email Sef at Sef@houseofroyalties.com.
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