License or Proprietary?by Neil S. Siskind, Esq. Owner & Pres., The Siskind Law & Consulting Firm When looking to enter a market or grow market share, one consideration, among many others, is whether to develop and sell products under your own proprietary brand, a brand name and trademark that you own, or license the name of a more well-known trademark to place on your products. Developing and selling a proprietary product means investing not only in the product itself, but in marketing the brand name so that consumers have an idea of what they are buying. If you have a new product, retailers will often require that you engage in a certain amount of mass media advertising before they will place the product on their shelves. Smaller retailers will be less stringent in this requirement. There are several advantages to using a proprietary name. First, it is yours. As the product becomes successful, the value of your brand rises. You own it forever and don’t share the profits with any third party. You also have the further option of leveraging your brand name onto a line of other related or non-related products. Because your original product has gained awareness, additional products will, hypothetically, be easier to sell. On the other hand, when you license a name that already has consumer awareness, you will have an easier time getting that product line onto large retailer shelves. You will certainly have an easier time getting it onto small retailer shelves. Again, hypothetically, since the brand name is already known by consumers, your sales to retailers and end-users will likely ramp up far faster then if you use a new name that lacks market traction. The risks in a license are several. First, there is an upfront cost as well as guaranteed payments due to the brand owner in most cases. Second, a brand owner has its own set of standards regarding to whom they will license their valuable name. Last, you don’t own the brand name, and any goodwill you gain can end up accruing to the brand owner in the long run, not to you. Leveraging will be more difficult because you need the permission of the licensor to enter into a new category of products. There may already be a licensee in the category you desire. Also remember, licenses come to an end and a licensor may not permit you to renew. In deciding whether to launch products under your own proprietary brand or under the name of a larger more well-known brand, you have to weigh the cost of developing your own name vs. using one already well-know, the short term costs and long term benefits of each method, and the requirements of retailers and licensors whom you will have to work with in your product distribution strategy. Contact the Siskind Law & Consulting Firm to determine the best product distribution strategy and the best methods for putting that strategy to work. |
$100.00 Flat Membership Fee
Phone: (646) 530-0006
Phone: (646) 530-0006