Invention Marketing and Licensing for the
There are a lot of less than forthright
organizations that allegedly help individuals sell their inventions to
industry. In all my years of working as a patent lawyer, I have never
come across a single person who ever used one of these organizations to
effectively market or sell their invention. However, I have met several
who successfully marketed their inventions themselves.
Before you take any steps to market your invention, you should take a
few preliminary steps.
Preliminary Patent Search - A preliminary patent search is generally a
good first step. A preliminary search of various patent offices can be
conducted for a reasonable fee (just contact a patent agent/lawyer), and
it is even possible to conduct one for free (see the US patent office at
Patent Application - Don’t publically disclose your invention until
after a patent application is filed. Publically disclosing the invention
before filing a patent application can potentially ruin the chances of
ever being granted a valid patent. In fact, many Companies will not even
talk to you until you have filed a patent application.
Prepare a Formal Information Package - You should prepare an informative
and concise information package describing you, your invention and the
potential market your invention reaches. The package should include
color photographs of the invention, and a one page executive summary.
Prototype - It is a lot easier to sell a product if potential buyers can
see, touch and feel the product. Building a working prototype is often a
key step in selling your invention. Of course, some products are
difficult to prototype, in which case a non-working mock-up may have to
do. In any event, create the most professional prototype or mock-up you
Obtain Financing - Building prototypes and filing patent applications
require funds. Finding that initial start up funding is often difficult;
however, there are two tried and true methods, namely partnerships and
incorporations. A signed partnership agreement is one way for a few
people to pool their financial resources into a project. If several
investors are involved, then an incorporated company is a better method.
Essentially, the company takes ownership of the invention and the
investors contribute money to the company in exchange for shares. The
number and price of the shares can be tailored to suit the particular
needs of the project.
Now that we have dealt with some of the preliminary issues, let us look
at the mechanics of selling your invention to a company. The actual
steps in the process are as follows:
1. Compiling a List of Potential Buyers - Finding a company that is
willing to buy the invention is the most challenging part of the
process. It begins by generating a list of companies that may be
interested in the invention. You can use a business directory to
generate that list. Business directories list companies by the products
they manufacture (or services they provide) and include basic
information about these companies such as their address, phone and fax
number, and the name of the president (CEO or owner). Suitable business
directories may be found in the business section of the local reference
2. Contacting Potential Buyers - Your list of potential buyers may
include literally hundreds of companies. You simply call up each company
on the list and ask them if they would be interested in receiving a
solicitation for a new invention. Then get the contact information about
who in the company to send your information to.
3. Presenting the Invention to Prospects - After you have thinned out
your list, your next step is to submit your information to each of the
companies on the list. This may involve calling the people identified to
be the “contact” for new product ideas and telling them that you are
sending them an information package about your product. Your package
should include a cover letter and a one page synopsis of your product
(including a picture). The information must be clear, concise and it
must appear as professional as possible. Don’t try to overwhelm the
recipient - you want to impress them, not burden them.
4. Follow Up - Do not expect the prospect to come to a quick decision
concerning the invention. It may take a prospect many months (even a
year or more) to make up his/her mind on a project. You have to be
patient. It is important to periodically follow up with the company but
do not “pester” the prospect. Remember, the people considering your
invention are probably quite busy with several other projects - annoying
them may do little to speed the project up and may cause them to drop
the project altogether.
5. Negotiations - If you find a company that is interested in picking up
the project, then be ready to negotiate the terms of the sale. The key
here is to be reasonable. From my experience, nothing kills off a
potential licencing deal faster than an unreasonable inventor.
Realistically, the most you are likely to get is a good return on your
investment. Asking for a smaller signing fee together with a modest
royalty is far more likely to generate a signed agreement than holding
out for a big payoff.
6. Royalty Amount - I am usually asked the question “how much can I sell
my invention for”. I don’t know the answer; however, here are a few
rules which can help you figure out a reasonable royalty rate. First of
all, try to negotiate a royalty which is broken down in to two parts, an
initial signing payment and an annual royalty payment. The initial
payment should cover most of your costs of the project. The annual
royalties should represent an amount which is sufficient to represent a
good return on your investment without being a burden on the
manufacturer. The general “rule of thumb” is to ask for a small
percentage (1% to 5%) of the net sales of the product. It is also
possible, and in some cases advisable, to fix the annual royalty payment
to an easily calculated amount (e.g. $1.00 per unit sold).
Selling your invention to a manufacturer is possible but it is not easy.
How successful are you likely to be? From my experience, individual
inventors are far more likely to successfully sell their invention by
themselves then by going through some invention promotion organization.
Like any business, the chances of success are a function of your
determination, knowledge and willingness to take risks.
Article Source: http://www.articledashboard.com
Elias Borges is a lawyer and a registered patent &
trademark agent with Borges & Rolle LLP in Toronto, Canada.