How Much Is Too Much?
This story appears in the February 1998 issue of Entrepreneur. Subscribe »
Q: What are the guidelines for charging shipping and handling fees to a customer?
A: This question has an interesting answer. After several calls to various agencies, including the U.S. Postal Service and the Federal Trade Commission, the answer is: There are no guidelines. Companies can charge whatever they want for shipping and handling with impunity.
This explains why many companies collect a shipping and handling charge that's more than 10 percent of an item's purchase price. In fact, I noticed a piece of exercise equipment being sold on television with a $75 shipping and handling charge. The advertisement provided a 30-day money-back guarantee, less shipping and handling, of course. This high charge covered the cost of the item as well as the actual shipping and handling charges!
Q: Is there an independent and affordable group or organization that will evaluate an idea and provide a written report?
A: Yes, there are several. Here are two of my not-for-profit favorites: The Innovation Assessment Center at Washington State University's Small Business Development Center in Pullman is designed to assist inventors and small businesses by evaluating a new product, process or service for its potential commercial success. Three evaluators (from a pool of more than 400) are selected to measure your idea against 33 business variables, such as consumer safety, competition and demand. The cost is $350 for the evaluation and a written report. For more information, contact Stuart Leidner at (509) 335-1576.
My second pick is the Wisconsin Innovation Service Center in Whitewater. This center specializes in feasibility assessments and market expansion opportunities for new products. The expert staff uses a variety of resources to analyze the product in four areas: technical feasibility, degree of competition, estimate of need and demand trends. A fee of $495 buys a written report and an online patent search, delivered in 30 to 60 days. For more information, contact Milissa Guenterberg at (414) 472-1365.
For inventions specific to the fields of energy and sports, there are two resources you can tap to receive a free product evaluation: The Energy Related Inventions Program (301-975-5500) and NordicTrack's Inventor's Network (800-967-2113).
Q: My idea has been developed to the point where I have a finished product complete with packaging. How do I get it on the market?
A: Books have been written and countless consultants hired to try to answer this complex question. The best advice I can give you is to sit down and identify your potential customers. Are they companies or consumers? Pinning down who your customers will be makes distribution choices much clearer, and hopefully more profitable.
Q: What's to prevent a manufacturer from stealing my idea once I show it to them?
A: You should never talk to a manufacturer or any vendor about an unpatented idea without first having them sign a confidentiality nondisclosure agreement. Every vendor I have worked with has signed one. If a vendor refuses to do so, that's a red flag, and I suggest you go elsewhere.
That said, let's think practically about manufacturers. They are in the business of making stuff. The more stuff they make, the more money they get. Hence, they want you to be a success because it means more business for them. Vendors that accept contract work rarely have their own sales force. Therefore, even if a contracted vendor were to make your idea without your permission, they would still have the same challenge you have in trying to sell the product. Most of these companies want to fill the order and ship the product to you.
Q: What does "patent pending" mean?
A: When an inventor labels a product with these words, it means he or she has filed a patent application with the U.S. Patent and Trademark Office (PTO) and is awaiting the issuance of a patent. This notification puts the public on notice that this product is probably going to receive a patent.
An unfortunate truth about patent-pending status is that it provides no protection to the inventor. Only when a patent is issued does the inventor have protection. Therefore, a word to the wise: Never reveal your patent filing date while in patent-pending status. Since the PTO generally takes one to two years to issue a patent, a potential competitor who knows your filing date will be able to calculate how long it will be before you receive patent protection. With this knowledge, he or she can market your idea without consequence. It is only from the date of issue that he or she must stop selling your idea or begin to suffer consequences.
Q: Are there any Web sites you can recommend to help inventors and entrepreneurs?
A: The U.S. Patent and Trademark Office's (PTO) Web site, http://www.uspto.gov, offers everything you need to know about patents and the PTO. For example, it has a listing of PTO fees and news. This site allows you to do an online patent search on all patents issued since 1976. Unfortunately, it does not provide the drawings included in a patent issuance. However, for a nominal fee, you can order an actual copy of the patent from this site.
You can also go to the IBM Patent Server at http://www.ibm.com/patent to search for patents. The advantages to this site include the ability to conduct a Boolean search (that allows you to input specific search parameters), see patents as far back as 1971 and view a patent's drawings.
Sponsored by the National Inventors Hall of Fame, Inventure Place at http://www.invent.org is a great site for inventor trivia. It sponsors inventing contests and has a collection of linked sites.
Known as the Internet Invention Store, http://www.inventing.com, sponsored by Impulse Communications, showcases inventions from inventors worldwide. It also has a fairly comprehensive list of inventing-related books.
If high-tech inventing is your bailiwick, http://www.thetech.org/revolutionaries is a great site for you to check out. Sponsored by The Tech Museum of Innovation and the San Jose Mercury News, this site has online interviews with the leading-edge pioneers of the Silicon Valley. Interviewees include Michael Hackworth, president and CEO of Cirrus Logic Inc., and Al Shugart, CEO of Seagate Technology Inc. (See next month's "Bright Ideas" for more on how to get inventing help on the Internet.)
Q: Are there ways to protect my idea without the cost and frustration of filing a patent application?
A: Not really. In an earlier article ("Bright Ideas," February 1997), I wrote about keeping trade secrets. Really, the bottom line is this: If you're serious about your idea, you need to get into the game. You can't gamble without first placing a bet. The same holds true with ideas. You must invest in a patent and take risks if you ever hope to hit the jackpot.
Q: For many reasons, I don't have the resources to develop my idea. How do I go about selling it?
A: If you decide to try to sell your idea to someone rather than develop it yourself, you will be traveling a very tough road. Most large companies you might pitch your idea to have research and development departments, so if you go to them with a great idea, you are pretty much saying this department didn't do its job because it failed to discover your brilliant idea. And many times your idea will be evaluated by this department, which has a vested interest in turning it down.
What you want to receive in payment and what a company wants to pay are usually worlds apart. The company will be doing most of the work, so it feels it should not have to pay as much as you feel your "child" is worth. You, on the other hand, are looking for a road to retirement paved with big dollar signs. Unless compromise is made on both sides, there can't be a winning solution.
Finally, most companies that invest in ideas want to know that it will be a hit. Unless you have developed your idea to a point where it has been test-marketed, most will not be interested enough to talk with you.
There is one industry that welcomes ideas from inventors: the toy and game industry. Many successful toys and games were developed by individuals, then sold to large toy companies. G.I. Joe and Trivial Pursuit are two examples. In this industry, there are toy developers who act as your agent to the toy companies. For a percentage, they will pitch your toy or game idea to the top brass and try to get you a contract. These developers are mostly located in New York City. To find their names, call a toy company and ask which developers they like to work with.
Tomima Edmark is the inventor of the TopsyTail and several other products and is author of The American Dream Fact Pack ($49.95), available by calling (800) 558-6779. Questions regarding inventions and patents may be sent to "Bright Ideas," Entrepreneur, 2392 Morse Ave., Irvine, CA 92614.
Contact Sources
NordicTrack Inventor's Network, http://www.nordictrack.com
U.S. Patent & Trademark Office, Crystal Park 2, #0100, Washington, DC 20231, (800) PTO-9199
