Tuesday, June 23, 2009

Can a NonProfit Be an Invention Licensor?

Dear Rich, I have a question. I have invented a very useful tool and have a patent pending. Also I have an arrangement with a nonprofit and some principals. The nonprofit will operate the business of selling the tool to generate revenue. The principals provide funding and agree to use their retail outlets for the sales. Can we license a manufacturer to manufacture only and license the nonprofit to sell the product? The short answer to your question is that we're not sure. Yes, I know that the Dear Rich Staff is packed with lawyers, but more information is needed. For example, we're concerned about maintaining your nonprofit tax benefits, and the value of your patent pending status, and we're not sure what you mean when you say you want to "license a manufacturer to manufacture only"? Do you mean versus manufacturing and selling? We're also not sure who controls the rights to the invention, you or the principals? In a situation like this -- when you're mixing investors, inventions, and 501(c) tax issues -- you're best off bringing an attorney to the table. 
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