K: Knock-Offs
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.
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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."
M:
Manufacturing
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).
N: Networking
"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.
O:
Originality
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."
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