So your product is a success. The next inevitable step in the process? Fighting knock-off artists. "If you have a money machine, someone's going to want to get in on it," says Gibbs. "And they'll get in on it even if they do it willfully and blatantly. To protect yourself, get intellectual property insurance, which costs about $1,200 to $1,500 per year and will provide about $250,000 in attorney's fees. "The minute there's an infringement, the insurance company attorney knocks on their door and says 'OK. We're ready to go to court.' And at that point, the infringer suddenly becomes a very willful licensee."
L: Licensing vs. Going Independent
There are two basic things you can do with your patented product: Create a business to manufacture and distribute it yourself, or license your product to other companies and let them handle the details. Since creating your own venture requires substantially more work and risk, the benefits are higher. "The venturer not only gets to keep the profits from their enterprise; they often have the opportunity to sell it for a substantial gain within a few years," says White. In contrast, the licensor-inventor gets a small royalty (often about 5 percent of the manufacturer's, not retail, sale price) for a few years until the licensee drops the product.
So why would you want to license your product? Simply put, you perhaps don't want the work and risk of putting the product out on your own. You just want to have some money coming in so you can continue to invent, and royalty fees from license agreements fit that bill.
When searching for licensees, Lander advises to go against your instincts: Don't approach a mousetrap maker with your better mousetrap. Your product competes with their current line. Instead, approach the rat poison company. "They have a marketing program in place to distribute rat poison, but they don't have a mousetrap in their line," says Lander. "So you don't always go to the guy who's in the business. Sometimes you go to a complementary company."
If you're licensing your invention, it's highly unlikely that you'll ever have to deal with this side of the business (though you'll still need to know how much your production costs will be; see X for more information.) "I would say that 95 percent of all licenses are to corporations that either have their own manufacturing facilities or prefer to do their own subcontracting in order to control the production quality," says Lander.
But if you distribute your product yourself, say hello to your newest partner: "In most cases, the venturer secures or provides the funding for a subcontract manufacturer to create manufacturing tooling and also pays for the manufacturer to produce production runs of the product, maybe including assembly and packaging," says White.
As for finding your manufacturer, Gibbs likens it to finding a needle in a haystack. Start searching the Thomas Register, ask people in similar fields (protoypers, CAD designers) for their recommendations, and search online (PatentCafe.com has a manufacturing center and directory).
"Networking is a key to success," says Hayes-Rines. "Start with inventors groups and industry groups. For example, if your product is toy-related, get connected with the toy industry. It's just like anything else you're trying to do well. If you love golf, you read golf magazines and you go to stores to learn what's new. Same with inventing--get connected with the community of independent inventors." This will be especially crucial when you begin to "assemble your team"--no inventor goes it alone, and referrals to attorneys, patent agents, prototypers, manufacturers, etc. will be a lifeline when you're in need.
Your first major step after you get that burst of lightening will be to determine if it really is an original idea. "First, understand what problem your idea solves. Then thoroughly search the marketplace for solutions to that problem," says White. "Do not just look for your invention; look for all competing solutions so you can compare the user benefits of your solution against them. Start with keyword searches on the big Internet search engines. Then visit appropriate stores and ask the clerks if they carry any solution to that problem. Search catalogs and ask experts in the field, too. It may be disheartening, but 90 percent of the time, a new inventor will often find their 'invention' or a better one is already on the market."
The next step is to start doing patent searches on the Internet using the USPTO site and its links to foreign patent search sites. "Searches take four to eight hours for simple things and [sometimes] considerably more. Manual searching at the nearest Patent Trademark Depository Library is also highly recommended," says White. "An inventor who spends 15 minutes to a half hour doing keyword searches is only fooling themselves--and that counts for nothing when the Patent Office does its prior-art search after patent drafting and filing costs have been paid."