Richard Gottlieb

Tribes for Toy Nation: The Inventor Agents

Some of the most frequently asked questions I receive are about toy and game agents. People want to know what they do, how they are paid and how to find them.   In order to find out, I contacted Michael Kohner, the scion of a famous toy family.  Michaels father founded Kohner Brothers, originators of the classic games, "Trouble" and "Headache" and developers of the "Pop-o-matic" feature.  Their company was a major player in the mid 20^{th century.}

Michael is today a major game agent.  With a powerful history in the industry, contacts all over the world and a portfolio of well known products, Michael is uniquely positioned to fully understand and appreciate the industry’s past, present and future.  Here is my interview with Michael:

Richard: What does a toy and game agent do?

Michael: A toy and game agent represents inventors in seeking opportunities to license to manufacturers or otherwise generate income from the respective inventions/concepts of the Inventor. 

As the Agent, the first step is to sign an Agreement with the inventor for the protection of the Inventor and their heirs as well as those of the Agent.  An Agreement calls out the agreed upon split of royalties that might be generated if the Agent is successful in granting the rights to an inventor’s invention.  It is generally the responsibility of the Inventor to supply prototypes (better than renderings) which the Agent uses to submit the concepts to prospective licensees around the world or to one of the major players who may seek global rights. 

If a manufacturer adopts an inventor’s concept it is up to the Agent to negotiate a reasonable royalty Agreement with the licensee usually calling for an advance against royalties so there is some cash flow and a financial commitment on the part of the license.  A good Agent keeps the Inventor informed of the negotiations and will have the Inventor as a signatory to the Agreement, providing a copy of the fully executed copy of the Licensing Agreement for safekeeping in the Inventor’s files. 

The Agent will follow up on the development process right through to the manufacturing stage and receive samples from initial manufacturing, some of which are given to the Inventor for reference and to enjoy seeing their baby come to life.  The Agent is responsible for royalty collection from the licensee and accounting to the inventor preferably by accompanying payment with a copy of the actual royalty statement for credibility.

Richard: Why would an inventor need an agent?  Can’t he or she do it themselves? 

Michael: I find most large companies prefer to deal with Agents (or only deal with Agents) probably because they know that they are dealing with professional, knowledgeable, reputable industry people who will not burn their bridges with them with erroneous lawsuits claiming they stole their ideas long after they may have been rejected and have come out with some concept that vaguely reminds them of their own idea,  Furthermore, most while not true of all Inventors, don’t know who to approach (which firms are right for their product or even the correct person within the firm, how long to leave a submission without action one way or the other, or how to negotiate a fair deal for themselves if there is interest.  This is not to say manufacturers are out to harm inventors but it is human nature for anyone to make the best deal they can for their company. 

But, yes, an Inventor can certainly try to go for 100% if a company will accept unsolicited outside submissions but it hard to say that they would do themselves justice and would probably not do as well as with an Agent

Richard: How does the agent typically get paid? 

Michael: The Agent collects royalties from the licensee (usually on a quarterly basis) and keeps his agreed upon share

Richard: Is doing a deal in Europe different than doing a deal in the US?

Michael: Doing a deal in Europe is basically the same as doing a deal in the USA but in Europe one must be knowledgeable these days in whether to do a Pan European deal (all of Europe) with a firm that has sales and marketing capabilities in each country or to isolate the territorial grant of rights to specific countries in Europe so that once the product is manufactured it is free to license to other companies in other countries. 

Richard: How does an inventor go about finding an agent?

Michael: The best sources today are the book called THE TOY AND GAME INVENTOR’S HANDBOOK by Richard C. Levy and Ronald O. Weingartner and on the Internet, PHILIP BLOOM & ASSOCIATES website, THEBLOOMREPORT.COM.

Richard: Thank you Michael.

Posted by Richard Gottlieb on July 24, 2009 | Comments (2)