You will never get the license agreement your technology deserves. You get the license agreement you negotiate. With this in mind, it is important for inventors, licensing professionals and intellectual property lawyers to constantly hone their negotiating skills.

Below are some pertinent considerations.

Stay Away from the Negotiating Table A general principle in negotiations is that if you wait to commence negotiations until you reach the negotiating table, you will have already squandered leverage. Much of the framing of the negotiations can be accomplished away from the negotiating table. Inventors intent on approaching large companies to license their inventions should realize that they are negotiating anytime they try to influence potential licensees.

Inventors can increase their potential licensing value before approaching licensing partners by further developing their technologies; conducting competitive intelligence into the potential licensees in order to determine how the technology can best meet their targets’ financial and strategic goals; and, by generating buzz for their technologies by gaining press attention by publishing (as licensing professionals monitor articles dealing with technologies they seek) or speaking at conferences.

A few specific examples of how value can be created away from the negotiating table emanate from Fred Smith, the founder of Federal Express. Many years ago, Smith wanted to acquire Flying Tigers, a struggling Asian carrier that had far more assets than upstart Federal Express. Before the negotiating began Fred Smith had his minions voice his steadfast resolve to keep his workforce union free. He derided unions as a plague on air carriers and proclaimed that he would never want to acquire a unionized carrier. Flying Tigers was unionized. Thus, the management of Flying Tigers was preemptively trying to determine what concessions they could grant Smith to compensate for the fact that they had a unionized workforce. More recently, Smith was in Eastern Europe discussing his aversion to the bureaucracy that exists in that part of the world. In doing so, he was planting the seeds for Eastern European governments to make concessions to Federal Express.

Just as many generals proclaim that battles are won or lost before they are fought, shrewd negotiators realize that they should avoid fair fights at the negotiating table. Rather, they should have the cards stacked in their favor before reaching the negotiating table. Consider the negotiations that ensued when Donald Trump identified the site to build Trump Tower. The owner of the property was Leonard Kandell. Kandell was also a savvy real estate mogul who preferred to retain ownership of the land and to lease it out on a long-term basis. Trump preferred to lease the land rather than own it outright. One would think that an agreement between Trump and Kandell could be reached relatively easily since there was an alignment of interests. However, Trump knew that going into negotiations with Kandell without leverage would not lead to the optimum results. Thus, before Trump began negotiating with Kandell he negotiated the purchase of air rights from Tiffany & Co. During these negotiations, Trump realized that Tiffany had an option to acquire Kandell’s property at fair market value. Trump arranged to have this option included in the air rights deal. As a result, Trump had a stick in the form of an option to acquire Kandell’s property if favorable leasing terms could not be negotiated.

How to Approach a Potential Licensee After the battlefield has been set, thought should be given as to how the licensee is approached. You have the least leverage if you approach the potential licensee directly. When inventors call licensing executives directly, their image in the eyes of the potential licensee deflates from being a successful inventor to that of a salesman.

There are advantages of an intermediary approaching the licensee on behalf of the inventor. First, the intermediary likely has a relationship with the right people at the various targeted licensees. Even if the intermediary does not have a relationship at the licensee, they are more familiar with preparing the documents that the licensee will request to review. Finally, licensees will take some comfort that the intermediary has vetted the technology and would not want to damage his reputation by presenting an inferior technology.

Perhaps the way to obtain the most leverage with the licensee is to gain the support of an internal champion. Among the best internal champions are marketing professionals who stand to make healthy commissions on related products and subject matter experts from the research ranks. An internal champion will be much more effective in convincing his colleagues to strike a license agreement with your company than you will be if you simply contact a licensing professional at the target. Since most of the discussions to be held by the targeted licensee about the possibility of in-licensing will be conducted without the participation of the inventor, it is imperative that the inventor benefits from the consistent application of internal pressure.

William Cotreau of DuPont makes a further refinement to the issue of identifying an internal champion. If the technology is more pie-in-the-sky (e.g. earlier stage), technical people have more sway as compared to when the technology is ready to be reduced to practice. In the latter scenario the business people will hold more clout as the in-licensing of the technology will affect their operating budgets.

Developing Walk Away Points A fundamental principle in negotiating is that you should never enter into negotiations unless you have the ability to walk away with reasonably good alternatives. Even during the negotiating process, one should continue to develop his walk away options. Thus, under such guidance, you should approach a non-ideal but accommodative licensee before you prospect the ideal licensee. The logic being that you can secure a walk away option when generating the interest of a secondary licensee which can be parlayed into leverage when negotiating with the ideal target licensee. Licensees often place a higher value on a technology when their competitors stand to be deprived of it.

While it is usually prudent to develop walk away points, there are some risks when applying this sequencing strategy in the