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The average royalty for licensing an invention is 3 to 6 percent of the product's wholesale price, which is the price the company charges the consumer. If you have a profitable product and choose the right manufacturer, a licensing agreement can be a great way to make money from your invention.

A patent grants its proprietor the right to exclude others from utilizing the patented invention, while a patent license reflects utilization rights obtained by an investor for that patent. By granting a non-exclusive license, the patent proprietor basically guarantees to not sue the licensee for patent infringement.

Licensing the right to make, use, or sell your product is usually the most profitable route for inventors. As patent holder, you retain ownership of the invention and earn royalty payments on future sales of the product. You can grant an exclusive license to one company or several companies.

A patent grants its proprietor the right to exclude others from utilizing the patented invention, while a patent license reflects utilization rights obtained by an investor for that patent. By granting a non-exclusive license, the patent proprietor basically guarantees to not sue the licensee for patent infringement.

Patents, trademarks, and copyrights are all forms of intellectual property that can be licensed. For example, patent licenses can be used for mechanical devices and systems, healthcare products and services, electronic hardware, computer software, chemical compositions, and business methods.

A licensing agreement allows one party (the licensee) to use and/or earn revenue from the property of the owner (the licensor). Licensing agreements generate revenues, called royalties, earned by a company for allowing its copyrighted or patented material to be used by another company.

A typical software license grants the licensee, typically an end-user, permission to use one or more copies of software in ways where such a use would otherwise potentially constitute copyright infringement of the software owner's exclusive rights under copyright. Grants rights for noncommercial use only.