Once the toy company agrees to license a new toy idea, the parties must then enter into an agreement specifying how the company is to acquire rights to the idea. Assignments, on the other hand, convey all the inventor's intellectual property rights in the invention to the assignee.
Licenses are by far the more common arrangement between inventors and toy companies.
Such agreements take into account the inventor's desire to retain rights in his idea, and the company's desire to exploit the product without having to pay for ownership. The former grants a toy company the sole and exclusive right to exploit the new product idea in the defined territory for the defined period of time. The exclusive grant is clearly desirable for the toy company, as each additional licensee dilutes the potential markets for the company. For example, a multinational manufacturer might be equipped to exploit a grant of a worldwide license. Smaller, domestic manufacturers, on the other hand, would be hard-pressed to do so.