Invention Marketing And Licensing For The Inventor



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​ http://www.uspto.gov/)

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​ can.

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 library.

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.





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