Back in 1992, Michael Miller decided the time had come to strike out on his own. Miller was 30 and had nine years of corporate experience under his belt. What he didn't have was an idea for a business.
Miller got that final piece of the puzzle from an inventor he was associated with. The inventor (who wishes to remain anonymous) had come up with a mechanical device that takes weeds and roots out of lawns and gardens. Miller liked the invention, called the Weed Hound, and felt the inventor was really onto something. Miller test-marketed the product at several lawn and garden shops. The response was favorable, and Miller knew what he wanted to do: "When I demonstrated the product to people, they said, 'Wow, that is really great.' I knew then the product was a winner, and I decided to license it." In 1994, Miller launched his company, Hound Dog Products Inc., in Edina, Minnesota, to do just that. Since that time, he's added a variety of different items to the Hound Dog line and expects sales to grow from $5 million in 1999 to up to $6 million this year.
Explore Your Options
The moral of the story? Most of the people or companies that actually license products are not established companies, but rather start-ups or individuals wanting to launch businesses. So, as an inventor, you need to explore all your options when trying to license your idea-don't spend all your time courting established companies. They're overwhelmed with innovations from myriad inventors and don't have time to evaluate everything.
Instead, you can often make much more progress in licensing your idea if you expand your options. For instance, if you consider your invention a unique opportunity for someone looking to start a company and manufacture a new product, you can then list your invention on Web sites that compile business-for-sale ads. Some good ones to start with are the Business Resale Network, MergerNetwork and the US Business Exchange.
Another avenue is to talk to people in a distribution channel who would be able to carry your product, such as manufacturer's sales agents (independent contractors who sell products for anywhere from three to 20 manufacturers) and distributor salespeople. These contacts have experience in the market and might be interested in starting a company based on your invention. To find leads, read through trade magazines that target retailers, distributors and manufacturers in specific industries. You can find some titles in Gale's Source of Publications and Broadcast Media, available at your local library.
Contact the publishers of every trade magazine related to your product and ask to be put on their mailing lists. Look in the magazines' ads and new product sections; start requesting information on every product you see that's even remotely similar to yours. Often, the literature you receive includes the name of the local representative and/or distributor-that's the person you need to contact and try to convince to license or buy your idea. Sometimes, those distributors are even willing to partner up with you to help launch your invention.
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Patent attorneys are expensive-it's not unusual for the patent process to cost inventors $5,000 to $15,000. If those figures seem a little sky-high, consider PatentWizard software from PatentWizard Inc. The program, which can be ordered at www.patentwizard.com or www.patentcafe.com, guides inventors through a series of questions and then produces a provisional patent application that can be submitted to the U.S. Patent and Trademark Office. PatentWizard costs $249 (street) and allows you to prepare your patent application in less than a week. Applying for a provisional patent is an ideal, low-cost tool for those who want to do more market research on a product yet be able to advertise that the idea is patent-pending.
At only $75, provisional patents may seem like a great bargain, but they have a big drawback: You must apply for the more expensive utility or design patent (applying for a standard utility patent costs $355) within one year of submitting your provisional patent in order to get standard patent protection. Otherwise, you'll lose your patent rights.
State of The Market
What do potential licensors look for in inventions, anyway? After eight years in business, Hound Dog has reached the level where it prefers to work with in-house products rather than take outside submissions. In the early days, however, Miller had strict criteria he used to weed out the good ideas from the bad. The first thing he wanted to know is whether the product would fit his market: unique tools used outside the home in a suburban yard. Inventors who want to succeed with licensors have the best chance of hitting a hot button when they describe their product in terms of the same narrow market opportunity their contacts already operate in. So the next time you talk to a potential licensor, concentrate first on finding out what market they target. Next, explain how your product fits that market. Whatever you do, don't talk about how your product can be sold in dozens of markets-your contact will just end up thinking you sell to a different market than they do.]
Miller, for one, uses several guidelines-applicable to every invention-when evaluating new ideas. "First and most important," he says, "the product has to have a 'wow' factor." All inventors must ask themselves the key question of whether their products are innovative enough to make it in the target market. The truth is, an invention with just a few minor improvements will be considered a "me, too" product or a product-line extension-not a true innovation. Small improvements alone aren't enough for you to succeed as an inventor.
One way to generate that "wow" factor is to meet a significant need or desire consumers share. Miller explains: "I want to know what my target customers' problems are. I'm going to get everyone's attention when I provide a product that solves a problem."
Miller's next criterion is that the product has to be the best of its kind by a significant degree. Retailers and distributors are reluctant to carry products from inventors or small businesses not only because of the work involved in adding a new vendor, but also because small companies are less likely to stay in business. They do, however, like to carry new products that are superior to the competition. If your product immediately stands out to consumers, retailers and distributors, they're much more likely to consider it the best product on the market.
Miller's final criterion for prospective products is this: "There [must be] nothing I can do to break it. We offer a lifetime guarantee, and I won't sell a product if I can figure out how to break it." Product quality may be important to consumers, but it's even more important to retailers. Many large retailers fear that if they buy from a small business, they'll get stuck with product returns due to quality problems if the supplier goes out of business. Retailers will feel more comfortable about carrying your product if you prove to them it simply can't be broken.
Chances are, there's someone out there willing to license your innovative idea. Unfortunately for inventors, it's not immediately obvious just who that person might be. You may approach 100 people before finally finding the right one. Inventors must be both persistent and innovative when looking for the right licensing candidate. So take every approach possible and don't give up. Remember, the right contact might just be the next person you talk to.
No takers on your tech invention? Try intellectual property management firms.
Inventors frequently search for established businesses to help them license their products. Generally, though, established licensors are hard to find and very selective about the products they handle. A better approach is to check out intellectual property management firms, which license products, especially tech products with huge sales potential. To get more information about licensing agents and intellectual property management agents, check out the Licensing Executives Society. This trade association publishes a magazine and a newsletter in addition to several publications related to licensing agreements. For details, call (703) 836-3106 or log on to www.usa-canada.les.org.
Don Debelak is a new-business marketing consultant and the author of Think Big: Make Millions from Your Ideas (Entrepreneur Press). Send him your invention questions at email@example.com.