Design Firm Projects/Licensing Question, HELP!

Hello, I have a question for you all, and i hope i can get as much help as my last legal question!

Here it is:

When a design firm works with a very large company/association/client, etc on the development of a new product, how does this work??

For example, I know that Gad Shaanon design created the new JFK Air Train, and another design firm worked on the MTA subway cars.

Does the design firm ever get royalties on the final product? Is there a licensing deal? Is there simiply a consulting fee? How is money exchanged?

What happens when you are trying to introduce an idea to a large company or client that is 75% developed, although there is no working prototype? How can you convince them to hire you to develop the product, or for them to invest money in the idea?

I know this is a broad question, but I have a project that is now being funded for further development. I have a “team” of business students who are trying to put together a business plan for this product, and we are trying to figure out how this stuff works!

My product/project involves the airlines- and we are trying to figure out if we would go to the manufacturer or the airline itself. I know airlines often commission designers to work on their interiors, seats, tablewear, etc, and i was trying to compare this instance to the work of another design firms who have worked on a project that is comparable.

Any help or insight would be greatly appreciated!

Regards,
Sondra

Hi Sondra,

My opinion on part of your question…

Almost all constancy based work is done on a straight fee for service basis. Royalties are more common in the furniture and housewares business because a high degree of a products attractiveness is based on the “style” or design. Furthormore, a cautious designer would probably only agree to a royalty based project with a company that has a proven marketing and distribution chain in order to ensure that the products will actually make it to market.

In the design of a more complex product there are many other factors other than the industrial design that the design consultancy has no control over and therefore it doesn’t really make sense to design on a royalty basis.

For example- you could design the best interior of a plane ever but if they have lousy fuel consumption, constantly break down, or a lousy marketing plan and you have designed this for a royaly - you don’t make anything.

Hope this helps.

Guest 2,

"In the design of a more complex product there are many other factors other than the industrial design that the design consultancy has no control over and therefore it doesn’t really make sense to design on a royalty basis.

For example- you could design the best interior of a plane ever but if they have lousy fuel consumption, constantly break down, or a lousy marketing plan and you have designed this for a royaly - you don’t make anything."

Yes, this is a more complex product- it involves both a new product, and a new system for implementation. in this case, rather than a royalty based deal, what would typically be done?

Thanks for you help!