Think Fast
This story appears in the August 1999 issue of Startups. Subscribe »
Vic Pella spent six years in the film industry, ran a part-time promotional products business with a partner in Hong Kong, then started a pool-cleaning business. But in late 1996, the entrepreneurial bug struck again, and the 30-year-old inventor decided to take advantage of the surefire market opportunity the year 2000 represents.
Pella's Studio City, California, company, Idea Express Inc., makes a line of products for the year 2000, including a baseball hat with an LCD panel on the front that flashes "Happy 2000"; a teddy bear that shouts "Happy Millennium" when you squeeze it; and the "Countdown Candle," which burns down during the last seven days of the millennium, revealing a solid "2000" at its core.
Fads, onetime events or current events like Desert Storm or former pro wrestler Jesse "The Body" Ventura's election as governor of Minnesota are often great opportunities for fast-moving entrepreneurs. You can profit, too, by following the same steps Pella did: 1) Get a trademark, design patent or copyright if applicable; 2) have a manufacturer lined up in advance; and 3) use trade shows to set up an instant distribution network.
Don Debelak (dondebelak@uswest.net) is a new-business marketing consultant who has introduced new products for more than 20 years. He is the author of Bringing Your Product to Market (John Wiley & Sons, $19.95, 800-225-5945).
Protect Yourself
Before you spend too much money on an idea, be sure to protect it. Otherwise, a larger competitor can come into the market and take your business. Trademarks, patents and copyrights are the three methods of intellectual property protection under U.S. law.
Trademarks, which encompass names, slogans and visual images, are the most common form of protection you'll use when bringing a product to market fast. What makes trademarks so valuable is that they can be registered with an "intent to use" classification. This means you don't have to have a product developed and ready to sell; you just need to say you intend to use the trademark in the future. People started registering trademarks such as "Y2K 2000" and the "Official Millennium Candy" back in 1995 and 1996, long before anyone was ready to start making and selling a product.
Trademarks cost $245 each and can be obtained quickly--usually in a few months. Trademarks typically belong to the first person who registers them. Visual images can be trademarked, such as McDonald's golden arches, but in the case of onetime events, trademarks are typically done for phrases, such as "Countdown to the Millennium."
When Pella decided to move ahead with his product line, he did a trademark search to see which trademarks related to the year 2000 had been registered. Then he looked for catchy phrases like "Countdown Candle" and "Happy 2000" to register. He wouldn't have gone forward with his product if he hadn't been able to trademark a few good names or slogans.
Design patents, too, can be quickly obtained. Design patents protect a product's look, not its mechanical features. For example, Pella got a design patent for his baseball hat. The patent consists primarily of a drawing of a baseball hat with the Happy 2000 logo. A design patent would have also worked well for the foam "tomahawks" sold when the Atlanta Braves played in the World Series. The tomahawk had no unique mechanical features that could be patented, but it could get a design patent for its look.
A third way to establish property rights for a product you want to market fast is via a copyright, which protects works of literary or visual art. For example, a caricature of Jesse "The Body" Ventura could be copyrighted and used on T-shirts, stickers and gift items.
Registering domain names on the Internet is another profitable way to take advantage of a short-term event. Everything2000.com (http://www.everything2000.com/) is a Web site capitalizing on the millennium. The site chronicles activities related to January 1, 2000, and will probably make a bundle of money as the end of the year approaches. Register domain names with Internic (http://www.internic.net/cgi-bin/domain). The cost is $35 per year; you pay for two years upfront.
Got It Made
To take advantage of short-term marketing opportunities, you must be able to manufacture the products quickly. This requires an agreement with a manufacturer. If you develop relationships with manufacturers in advance, you may also be able to get the manufacturer to help finance the large volume of products you'll need to capitalize on the fad.
Pella developed an alliance with a manufacturer of promotional products in Hong Kong. Six years ago, he started scouting around for promotional product opportunities this company could make. For example, he might have suggested they make a hairbrush with a J-shaped handle for a company whose name started with the letter "J." Basically, he served as an informal matchmaker, presenting opportunities to the manufacturer. He got some orders and didn't get others, but he did build a relationship. As the millennium approached, Pella was able to set up an agreement quickly to get his products manufactured.
You can find promotional products manufacturers in two key magazines: potent!als (Lakewood Publications, 800-328-4329) and Wearables Business (Pimedia Intertec, 913-341-1300).
Tricks Of The Trade
Hot promotional items can quickly generate sales at trade shows that cater to retailers, distributors and manufacturers' sales agents looking for new products. Among the shows Pella attended were the Advertising Specialties Institute (ASI) show in Las Vegas, the Premium and Incentive Show in New York City, The Variety Merchandise Show in Chicago, the California Gift Show in Los Angeles and the Transworld Party Show in Chicago.
These shows are expensive (Pella spent $5,000 to $10,000 per show), but they are all buying shows where the people who attend usually place orders either at the show or soon after. Pella hasn't spent a dime on advertising. He's concentrated his efforts on trade shows, where he generates the greatest return on his marketing dollar.
You can look for upcoming trade shows in potent!als and Wearables Business, or check out trade show directories, available at larger local libraries.
The clock turns to December 31, 1999, only once, and it's already too late for you to introduce any millennium-related products. But promotional opportunities happen all the time if you're quick. Pella got ready to seize opportunity by learning how to file his own trademarks and design patents and by setting up a relationship with a manufacturer. You can make a lot of money with just one good promotional event every year or two, so it's worth the trouble to get ready for the next opportunity that comes your way.
By The Numbers
With a filing fee of only $245, a trademark at first seems like a bargain when compared to a patent, which can easily cost more than $5,000 (attorney fees included). There's a catch: You have to pay a separate filing fee for each class in which you want to register your trademark. Trademarks are registered by the U.S. Patent and Trademark Office (PTO) in 34 product and eight service classes. A trademark applies to a category only if it is registered separately in that category. Inventor Vic Pella might want to register his promotional items under any or all of these categories:
- Jewelry (Class 14)
- Paper goods, printed matter (Class 16)
- Leather goods (Class 18)
- Housewares (Class 21)
- Clothing (Class 25)
- Toys, sporting goods (Class 28)
- Education, entertainment (Class 41)
He would have to pay $245 multiplied by seven classes, or $1,715. Attorney fees (if needed) can also add up in a hurry. To save money, Pella filed the applications himself and carefully chose his categories--but trademarks were still a major expense.
To learn how to apply for your own trademarks, read the brochure General Information Regarding Trademarks, which can be downloaded from http://www.uspto.gov The PTO's easy-to-use Web site lets you access all the information you'll need to know and lets you conduct patent and trademark searches on your own.
For copyright forms or additional information, visit the U.S. Copyright Office's Web site (http://lcweb.loc.gov/copyright).
You've Got The Look
Design patents protect a product's look, not its structure or function. (A utility patent does that.) Design patents are perfect for one-shot, short-term products, since they're simple and inexpensive to file ($155 vs. $380 for a utility patent). The issue fee (the fee you pay when your patent is awarded) is $215, compared to $605 for a utility patent. More important, the design patent application is simple, and usually no attorney is needed.
Since design patents protect only the appearance of a product, they won't stop a competitor from copying your product's mechanical features in a different design. However, a design patent does allow you to put "patent pending" on your product. When competitors see those words, they won't know what type of patent you've applied for and will typically delay introducing competitive products. For a short-term opportunity, this delay is all you need to gain a competitive edge.
Contact Source
Idea Express Inc.,lane@loop.com, http://www.year2000products.com
