Don't Rely on Others to Sell Your Invention
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Q: I have a product that's very unique and marketable. It's patent pending, and I'm now looking for someone to market and manufacture this great idea. I'd like to know if you can help me in pursuing this matter.
A: I can help you help yourself.
The success of an invention is directly tied to the determination and tenacity of the inventor, not the reliance on someone else to make the invention a success.
I have at least a dozen inventors pose almost identical questions to me every week, and I usually provide the following advice:
- As the patent sits pending, it has absolutely no value, and the idea is not great until you prove it to be. In other words, the fact that an idea has or may have a patent doesn't create value.
- In order to prove the value of an invention to a prospective licensee-the company that would pay you royalties-you have to show a competitive advantage over what already exists (how it will be cheaper to make, how it will steal market share from a competitor, that it will cost less to ship, that it has a higher profit margin, that x,xxx units can be sold and so on).
- You'll need to roll this up into a concise executive summary to present to licensees, and then you'll need to begin making contact with targeted companies to present your package to them yourself.
First, nobody is more excited about your invention than you are. That means nobody else will take the attitude of "doing whatever it takes" to get your idea through the front door of Company XYZ.
Second, even if you can find an invention-licensing agent who convinces you he or she can license your idea, be prepared to pay out-of-pocket fees (for copying, research costs, travel expenses, phone calls, etc.) of about $1,000.
Third, be prepared to give away that agent between 35 to 50 percent of all money your patent could earn over its 20-year life. This is the industry-average commission rate that invention-licensing agents charge (and this is on the 5 percent royalty you'd receive if the agent succeeds). Most inventors think this is highway robbery-unless they've done the work themselves; then it may seem like a deal.
Finally, invention-licensing agents have more inventions coming to them than could possibly be licensed, so they'll go the path of least resistance. If they have seven automotive product inventions they're trying to license, your sporting goods product will not get the proper attention. So be prepared for months of no apparent activity-and be prepared to have your product idea slip so far down the ladder that the licensing agent will probably forget he or she is supposed to be working for you.
Recognize inventing is a business, not a simple process where one can dream up great ideas with the hope that someone else will come along to make them succeed. Understanding what it takes to fail is one of the best ways for you to begin to understand what it takes to succeed.
If you believe your idea is marketable, do the market research and prepare a marketing plan and competitive analysis. Develop the financial figures that will tell you (and a prospective licensee) this product idea can be profitable. Once you complete this outline, you'll either learn that the great market opportunity you envisioned doesn't exist, or that there really is a good market and business opportunity, and you'll have the data to back it up.
If that's the case, it's relatively easy to begin making presentations to licensees yourself. Further, they'll respect the work you've put in to discover how they can profitably market and sell your invention. The next step would be to sign a licensing deal.
One well-respected invention scout for a major company once told me, "If you want to play football, you have to get on the field." If you want to play ball by sitting on the couch with a remote control, you haven't even entered the game.
Time to begin practice...then play ball.
Andy Gibbs is president and CEO of PatentCafe.com Inc., a leading intellectual property information and resource Internet portal. He is an inventor with seven issued and pending patents, and an entrepreneur who has started seven companies ranging from product development to low- and high- technology product manufacturing. He speaks to inventors, entrepreneurs and venture capitalists on intellectual property, marketing research, competitive strategy and sales development. Visit http://www.patentcafe.com.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.