How to Protect Your Invention
Question: I just invented a cool new product and know I would sell millions of units if I could get it on the Home Shopping Network or QVC. The trouble is, I can't afford the thousands of dollars in legal fees it would cost to get my product patented. Do you have any ideas?
Answer: My advice is to talk to your attorney and see if you can strike a deal. Corporate lawyers typically charge $250 an hour or more, but some attorneys are willing to reduce their fees or scrap them altogether if they think you're sitting on a million-dollar idea. They'll typically take a piece of your company's equity in the form of stock, options or warrants in exchange for applying for the patents, trademarks and copyrights necessary to protect your intellectual property.
"Not all firms will file patent applications in return for equity, but startup companies should certainly ask whether it's an option," says Eric A. Prager, a partner at intellectual property firm Darby & Darby PC. Firms like Prager's sometimes take enforcement cases on a contingency basis, helping existing patent holders recover damages from infringers.
But it's not only inventors who stand to gain from sharing equity with their attorneys. During the dotcom boom of the late '90s, many securities-law firms traded legal fees for equity to take high-flying tech companies public. Some of these firms offer package deals, procuring IP rights and doing corporate work with hopes that your equity will become valuable. If you think your company could be the next MySpace or YouTube, you should talk to your attorney.
Rosalind Resnick is founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses. You can reach her email@example.com or abcbizhelp.com.