If you want to get your invention licensed and receive royalty payments, you have to deliver more than a “me too” product. Prospective companies will demand that your product exceed their standard profit goals in order to pay royalties, which represent increased expense.
Many inventors believe the way to get a company interested in their inventions is to write a letter – and then hope they receive an invitation to begin negotiations. This seldom happens.
Your licensing quest should begin by phoning and asking for your prospect’s invention submission guidelines. Know that many times unpatented inventions, or inventions without at least a patent pending, will not be accepted.
For patented (or patent pending) inventions, you’ll have to agree to give up all your rights except those that are, or will be, granted by your patent. You’ll have to acknowledge, by signature, that you agree to this condition or they won’t review your product.
Study guidelines carefully to determine whether the company advises on how soon it will give you an answer. If you’re lucky, the guidelines will come with a signed letter. Companies often discourage direct communication with inventors. So, without a commitment on response timing, or the name of a person with whom you can follow up, your proposal may be destined for the corporate “black hole.”
If your targeted company appears especially well-matched to your invention, you may have to accept this anonymous way of dealing. But if the company is just one of many that all rank about the same as prospects, place it low on your priority list.
If the company has no formal guidelines, ask for the name of the person who will handle an invention submission. Talk directly with this person before sending off your proposal or your prototype.
The odds are not in your favor.
You may need to contact 20 or more companies before you connect. So, when you receive your first rejection, don’t sulk. Contact another company on your list right away. You should consider sending out at least one proposal every month whether you hear from your prospects or not. If you connect with more than one prospect, so much the better.
How to find prospective companies
The Thomas Register of American Manufacturers is a place to start. It’s on the Internet and may be in your library. Another way is to check is the North American Industry Classification, or NAICS, reference book at your library.
NAICS gives code numbers for all the products made in North America. Look up your “product” code and use this for researching through several other library references, such as Dun & Bradstreet, Standard and Poors, etc. Check with your reference librarian on how to do this. This will lead you to profiles of prospective companies, along with names of their key executives.
Also review companies that produce complementary products. If you’ve invented a better mousetrap, the mousetrap companies may not be interested. After all, what they’re selling now is doing well, why compete with themselves? Another mousetrap might also sell well, but would it increase their sales and profits? A rodent poison producer, on the other hand, might welcome an addition to its product line.
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Don’t send your only prototype to a company. Either have enough copies of your prototype made so that you can afford to lose one or have tied it up for a few months while the company contemplates its licensing. Or, if your invention has moving parts that are important to its proper demonstration, make a video and duplicate it. It’s important to send a DVD rather than a VCR tape. Every executive these days has a computer that will show the DVD, but VCRs are rapidly going the way of the 8-track tape player.
If your invention has moving parts, but you haven’t yet made a working prototype, consider making a virtual prototype. A virtual prototype is an animated video that is made by a graphic studio. Each second of animation is very expensive, so plan your demonstration carefully. Once you have the master, duplicating DVDs is inexpensive.
For more information on this and related topics please see:
- The Inventors’ Dilemma: Drafting your own patent application when you lack funds
- The Inventor’s Patent Dilemma: Beware the many pitfalls waiting to trip up the unwary
- Provisional Patent Applications the Right Way, the Wal-Mart Way
- Design Patents: The Under Utilized and Overlooked Patent
- Patent Drafting: Describing What is Unique Without Puffing
- How do you know if you have a licensable product?
- Provisional Patents: What are they and why do you need them?
- Inventing to Solve Problems
- 5 things inventors and startups need to know about patents
- Why Exclusive Patent Licenses Can Be More Valuable Than Owning Patents Outright
- Drafting Patent Applications: Writing Method Claims
- An Introduction to Patent Claims
- Patent Drawings: An Economical Way to Expand Disclosure
- Is This Patent Any Good? How to Tell a Good Patent From a Bad One
- The Attorney-Client Relationship Can Be Harmful to a Startup if Not Managed Correctly
- Why Does It Cost So Much to Prepare Patent Applications?
- Drafting a Licensing Agreement, a Patentee Perspective
- Protecting a Trade Secret: Taking Precautions to Preserve Secrecy
- What is a Trade Secret?
- Understanding the Patent Process: Rejections vs. Objections
- Patent Drafting: Define terms when drafting patent applications, be your own lexicographer
- There is no such thing as a provisional patent
- Patent searches are always a good idea, even if your invention is not on the market
- What is a patent and where do patent rights come from?
- Patent Claim Interpretation: The Broadest Reasonable Interpretation Standard
- The Best Mode Requirement: Not disclosing preferences in a patent application still a big mistake
- Patent Drafting: The Use of Relative Terminology Can Be Dangerous
- Patent Drafting: Learning from common patent application mistakes
- Patent Drafting: Distinctly identifying the invention in exact terms
- First to File Means File First! The Risk of Not Immediately Filing a Patent Application
- Patent Drafting: Understanding the Specification of the Invention
- PCT Basics: Obtaining Patent Rights Around the World
- Tricks & Tips to Describe an Invention in a Patent Application
- Sell Your Ideas With or Without a Patent
- Understanding the Patent Law Utility Requirement
- Understanding Obviousness: John Deere and the Basics
- Invention to Patent 101 – Everything You Need to Know to Get Started
- Patent Drafting 101: Beware Background Pitfalls When Drafting a Patent Application
- Patenting business methods and software still requires concrete and tangible descriptions
- Describing an Invention in a Patent Application
- When should you do a Patent Search?
- Design Patents 101 – Protecting Appearance Not Function
- The Top 5 Mistakes Inventors make with their Invention
- Patent Searching 101: A Patent Search Tutorial
- Freedom to Operate: Knowing if you will likely infringe a patent
- Patent Drawings and Invention Illustrations, What do you Need?
- The Key to Drafting an Excellent Patent – Alternatives
- Patent Strategy: Building a patent portfolio with meaningful rights
- Patent Strategy: Laying the Foundation for Business Success
- When Should a Do It Yourself Inventor Seek Patent Assistance?