A company saying yes to your invention is the start of a negotiation, not the finish line. The signed agreement usually comes weeks or months after that first yes, and the terms decided in between shape everything an inventor earns and keeps. Trevor Lambert, an owner of the Champlin, Minnesota product development firm Enhance Innovations, has guided inventors through this stretch since 2010. We asked him what actually happens after a manufacturer expresses interest.
The first yes is a soft yes
“When a company says yes, they almost never mean a finished deal,” Lambert said. “They mean they see enough to keep talking. That is a real milestone, but inventors treat it like a contract, and then they are surprised when the next email asks for more information instead of a check.”
What follows, he explained, is due diligence. The company confirms the patent status, checks that the design can be manufactured at their cost targets, and looks at whether the product fits their existing line. “They are answering one question,” Lambert said. “Can we make money and avoid risk with this? Everything in this phase serves that question.”
The term sheet comes before the contract
The first written step is usually a term sheet, a short document that outlines the shape of a deal before lawyers draft the full agreement. Lambert describes it as a handshake on paper. “It names the big items. Is the license exclusive or not. What is the royalty rate. Is there an upfront payment. What markets are covered. You negotiate the term sheet, and the formal contract follows its structure.”
He urges inventors to slow down here. “This is where people give away the most, because they are excited and they do not know the norms.” The U.S. Patent and Trademark Office’s guidance on using legal services encourages inventors to involve qualified counsel before signing licensing terms, precisely because early language sets the ceiling on later outcomes.
What the company will ask for
Lambert listed the requests inventors should expect. A clean patent position comes first. “They want to know your application is filed and what it covers.” Manufacturing-ready design files come next, which is where a virtual-first package earns its keep. “If you have CAD and photorealistic renderings, you can answer their engineering questions fast. If you have a foam model and a sketch, you cannot.”
At Enhance Innovations, that CAD model and rendering set are produced digitally as the core deliverable, with physical prototypes scoped only when a specific project needs one. Lambert says that readiness changes the tone of due diligence. “When you can send a real model the same day they ask, you look like a partner. When you go quiet for three weeks to build something, you look like a risk.”
Royalty structure, minimum guarantees, and sublicensing
Three clauses decide most of the economics, Lambert said, and inventors routinely overlook two of them. The royalty rate gets all the attention. The minimum annual guarantee, a floor the licensee pays whether or not the product sells well, gets less. Sublicensing rights, which govern whether the company can license your invention onward to others, get almost none.
He is careful about expectations. “I will not tell an inventor what their invention will earn. Royalty rates vary widely by industry, and published surveys show that range is real, not a rumor.” He points inventors to independent data rather than promises. University technology transfer offices publish licensing outcomes through AUTM’s annual licensing survey, which documents thousands of active license agreements across US institutions each year and the wide spread of terms within them.
The timeline inventors do not plan for
Asked how long the stretch from yes to signature takes, Lambert refused a single number. “It depends on the company and the product. Some move in weeks. Some take the better part of a year because the product has to fit a seasonal buying cycle. The mistake is assuming it is fast and spending against income that has not arrived.”
That last warning is his firmest. He will not let an inventor treat a soft yes as money in hand. “A yes is permission to keep going. It is not a payment. Plan your time and your spending as if the deal could still fall through, because it can.”
Where an inventor gains an edge
The inventors who do best in this phase, Lambert said, are the ones who arrive prepared. A filed patent application, a manufacturable design, and a clear one-page pitch answer most diligence questions before they are asked. Enhance Innovations offers licensing representation on a contingency basis with no upfront fee, which Lambert frames as aligning the firm’s interest with the inventor’s during exactly this negotiation window.
“The company has done this a hundred times,” he said. “The inventor has done it once. Closing that experience gap is the whole job after the first yes.” For inventors handling it alone, the Small Business Administration’s intellectual property resources outline the basic protections to confirm before signing anything.
This article is educational and is not legal or financial advice. Consult qualified counsel before entering a license agreement.
