Keeping A Secret

A great idea is only the beginning. Now you have to find ways to protect it.
Magazine Contributor
6 min read

This story appears in the December 1997 issue of Entrepreneur. Subscribe »

Q: As the owner of an automotive company, I invented mechanical devices and created improvements to enhance race car performance--many of which are now commonly used in the industry (none were patented). Though I'm now retired, I continue to create inventions in a variety of product categories. What steps should I take to find out if any are marketable? Should I see a patent attorney? I'm looking for legitimate channels to get a concept to market.
A.M. Davis
Oxnard, CA

A: Ted De Boer is founder and president of Inventors Assistance League International Inc. (IAL) in Glendale, California, and a patent attorney:
You're not alone; most inventors don't know where to go for help. They rush to a patent attorney, unaware of the other methods available to them for protection. They prematurely disclose the secret of their invention. Or worse, they forfeit their idea and their savings to unscrupulous operators. All this without an inkling of whether the idea had any commercial value in the first place.

These problems inspired the formation of IAL, a nonprofit educational/scientific charitable organization, which offers a program that teaches inventors how to get their ideas in the manufacturer's door and determine their marketability. It's a process I call "pre-patent protection" that hopefully leads to obtaining a preliminary royalty agreement. If you enter into an agreement with a company, it's pretty certain your invention has commercial value. But how do you get there?

1. Learn the rules of the game. By doing so, you keep your secret safe. You avoid paying upfront fees to unscrupulous operators--who scam $250 million a year from unsuspecting inventors--or applying for a patent prematurely. You simply cannot disclose the secret of your invention to anyone without operating under controlled conditions.

2. Protect your idea under the First-to-Invent provision. You need to protect your idea before you attempt to market it. Of course, a patent is a necessary legal document--at the right time. Just as a pink slip on a car is useful only if the car is driveable, a patent is necessary only if the invention is going to market. Before you disclose your idea to a manufacturer, protect it under the First-to-Invent provision of patent law--a rule every corporate research and development department plays by.

Because they don't benefit from doing so, patent attorneys are not quick to divulge this First-to-Invent provision to their clients, even though it's been on the books in the United States since 1790. This provision provides a way to establish "priority as defined by patent law"--simply put, it gives your idea a priority date, which legally establishes when an invention is created and by whom. It's almost like patent-pending status. However, you can't just slap a patent-pending label on your idea and go out selling. Protection is only 2 percent of your problem. The idea is 8 percent, and marketing is 90.

3. Discover your idea's commercial value. Corporations know how to evaluate the commercial value of their inventions--in a secret manner the First-to-Invent provision allows. At IAL, we coach inventors on how to follow big business's example by presenting an idea without giving its secret away. In your quest to determine commercial value, the first clue is a manufacturer's interest in the concept. Receiving a first and second interview with an executive is a sure sign the manufacturer perceives the invention to have potential commercial value. If you get to the preliminary financial arrangement stage, the process of finding a place to license your invention is well underway. Let's look a little closer at this all-important interview process:

*Walk into an interview prepared. If you've pitched your idea to a manufacturing company and have been granted an interview, research the company and its product line. Then sell the executive on what the product can do, not on how it's engineered or designed.

This way of selling a concept protects your idea and allows the executive to better imagine how the invention might fit into the company's product line. At IAL, we used to help the inventor create a model to display at the interview. But we found that if the model didn't look just as the executive envisioned it, the idea would get shot down. Most executives are more interested in a product's benefits and profitability than in how it works. After all, it's their company that may license, design, make and market this new product.

*Move toward a preliminary financial arrangement. If the executive shows interest, suggest meeting again a week later to discuss a preliminary financial arrangement that clearly defines how you can work together. Go over the agreement line by line on such issues as legal ownership, sub-licensing, infringement, arbitration, minimum royalties, the company's exclusive license for U.S. and foreign markets, minimum royalties, and advance royalties, which will help pay for the international patent application. Include statements that both parties will agree to conduct themselves so that patents can be obtained in all countries, that both parties understand this is a preliminary financial arrangement only (not a binding contract) and that either party can ask for revisions.

4. Find out what your options are. Don't put all your eggs in one basket. Approach several companies with your idea and get bids. This way you'll learn what your options are, your idea's commercial value, and who the right executives and companies are who can help. Only when you know what your options are can you decide to license with a company or to make and market the invention yourself. As I hinted at earlier, if you go with a manufacturer, your earnings under the royalty agreement will pay for the international patent application.

5. Let the manufacturer file the patent application. Licensed companies know when to file and when to market.

6. Understand the patent process. Any inventor who attempts to go through the patent process without using a manufacturer should first query a patent attorney by phone. Ask about hourly rates; the cost to conduct a search in the patent office; the cost to write and file a utility patent; the cost to put the patent application in the order the examiner wants and will allow; the cost to write amendments; how much the patent office charges to issue a patent; and what the maintenance fees (taxes) will be over the years to keep the patent in force.

These maintenance fees are no small matter, considering amendments are written three to four times over a number of years to obtain the broadest coverage the law allows . . . and about 40 percent of inventors can't afford to pay these rising fees.

7. Get smart, not discouraged. If you get discouraged and feel that only the big guys get their inventions to market anymore, remember this:
73 percent of the revolutionary inventions that started new industries were created by independent inventors. The automatic transmission, jet engine, color photography and penicillin weren't invented by their respective industries--they were conceived by independent inventors like you. Pursue your dreams, but always abide by these rules. And take advantage of the legal provisions available to you.

Contact Source

Inventors Assistance League International Inc., 403 S. Central Ave., Ste. A, Glendale, CA 91204,


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