In my experience the reason most people do not succeed is because they just don’t know what to do, not because they are lazy or unmotivated. My hope is that this article will educate inventors and help take some of the mystery out of the steps associated with turning an invention into a profitable endeavor.
Before you consider contacting anyone the best first place to start is with a simple question, which will help you chart the right course. Ask yourself: What you want to do with your invention? Do you want to make and sell your invention? Or, do you want to sell your invention rights to an individual or company who would make and sell your invention? Or, do you want to try and license one or more individuals or companies to make and sell your invention? After you make this determination your initial strategy should come into focus.
Licensing may be the way to go for those who do not have a lot of money to invest. Even a simple kitchen gadget can cost hundreds of thousands of dollars to take from idea to realization through patent and to market. Costs have gone down over the last several years, and you can proceed responsibly little by little, but to manufacture and sell is a big commitment financially.
When discussing with me the “Cashflow Comparison” graph (see below), Trevor Lambert, of Lambert & Lambert, explained: “The cashflow comparison shows that you go well deeper into the negative cashflow when you are going to manufacture it yourself, but your likely returns on investment are much higher. So licensing is more of the safer bet for those who are not independently wealthy.”
You can clearly see from Lambert’s exemplary illustration, the amount of money necessary to generate, develop and commercialize is far less for those pursuing a licensing path than it is for those following a manufacturing path. Through idea generation the cost is roughly similar, but starts to diverge to significant degree during development and even greater during commercialization. Of course, when licensing a product a royalty of 1% to 2% is not uncommon in many industries, so the long term profitability for licensing has an up-side cap that is much lower than the up-side potential for those who pursue manufacturing.
Several years ago I interviewed Stephen Key, an inventor coach and author of two excellent books: One Simple Idea: Turn Your Ideas Into a Licensing Goldmine and One Simple Idea for Startups and Entrepreneurs: Live Your Dreams and Create Your Own Profitable Company. During our conversation we turned to the question about licensing versus manufacturing. Key’s take is that you might not necessarily need to decide right away because many of the steps in the process will be the same for both paths.
QUINN: But it strikes me in listening to you talk that whether your ultimate goal may be to license this, or whether your ultimate goal is to set up a company and do it yourself, a lot of the initial steps really are identical. Do you see it that way?
KEY: Yes. They’re exactly identical. I’m glad you mentioned that. Because at the very beginning you need to say, look, is there an opportunity here? Do I have a product that’s going to work? So you need to test early. And I tell everybody, even if you want to venture yourself, manufacture yourself, or even license, try to license at first to companies. Get their feedback. Understand the good points, the bad points. Understand manufacturing. Do all the testing, even at the very beginning, it doesn’t matter. So you understand, number one, it can be manufactured. Number two, I can protect it. Number three, people do want it. And then you can determine which path you want to take. And sometimes they collide. Sometimes you can start a company and then license it later. A lot of people have done that. Sometimes you’ll manufacture and you might even license certain parts of the industry as well. So—
QUINN: If you’re licensing, too, and you have some short run success, that will help you there as well, right?
KEY: It’s the number one thing to do to take away risk.
Jack Lander, known as the Inventor Mentor, has been sharing his wisdom with inventors for many years, having helped thousands of inventors. His advice is straight forward: “If you want to license your invention for 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.” And for those who who have an invention with moving parts, but do not have a tangible prototype, Lander suggests that you “consider making a virtual prototype. A virtual prototype is an animated video that is made by a graphic studio.” Indeed, the more you can do to make what you have tangible and easily understandable the better.
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Of course, whether you are going to pursue licensing or manufacturing, for the first lesson is to realize that there are no tricks to invention marketing. It just takes work. Of course, you need to first determine what it is that you want to accomplish with your invention, which should be covered in some form of patent pending prior to beginning commercialization efforts. But once you have determined which path to follow you just need to focus your efforts and attention to identifying opportunities, pursuing them and not taking no for an answer. Certainly, there may be a time that you will have to retreat and move on, but those who succeed by and large share the same quality of determination. Determination is critical.
While you can certainly find individuals and companies that offer to do the work for you, you this typically comes with a cost. Hiring someone, such as an attorney or licensing specialist to engage in invention marketing activities can get quite expensive unless they work on percentage basis, also known as a contingency. It is very difficult to find reputable people who will work on a percentage basis. One company that does offer licensing services on a contingency basis is Lambert & Lambert. Another company to consider is Enhance Product Development. Enhance, which offers services for a fee with respect to design and engineering assistance, but they also provide licensing consultations and representation as well. You can and should consider making an inquiry with both companies. If you are an inventor in need of a mentor, certainly consider Invent Right, the company Stephen Key founded, or Jack Lander, who has been working with and helping independent inventors for decades.
For more information on this and related topics please see:
- Design Patents 101 – Protecting Appearance Not Function Jul 25 2015
- The Top 5 Mistakes Inventors make with their Invention Jul 18 2015
- Patent Searching 101: A Patent Search Tutorial Jul 11 2015
- Freedom to Operate: Knowing if you will likely infringe a patent Jun 27 2015
- Patent Drawings and Invention Illustrations, What do you Need? May 30 2015
- The Key to Drafting an Excellent Patent – Alternatives May 23 2015
- Patent Strategy: Building a patent portfolio with meaningful rights May 09 2015
- Patent Strategy: Laying the Foundation for Business Success May 02 2015
- When Should a Do It Yourself Inventor Seek Patent Assistance? Apr 25 2015
- Patent Cost: Understanding Patent Attorney Fees Apr 18 2015
- US Patent Office Fees Apr 11 2015
- The Cost of Obtaining a Patent in the US Apr 04 2015
- An Inventor’s Guide to Being Taken Seriously by Patent Attorneys Mar 28 2015
- Enablement – Did the public receive all it contracted to receive? Mar 07 2015
- Provisional patents are like chicken soup, good for everybody Feb 24 2015
- Plausibly estimating the market for your invention Feb 14 2015
- The Business Responsible Approach to Patents and Inventing Feb 07 2015
- A beginner’s guide to patents and the patent process Jan 31 2015
- Every invention starts with an idea Jan 24 2015
- Patent Drafting: Identifying the Patentable Feature Jan 17 2015
- Patent Drafting: Thinking outside the box leads to the best patent Jan 03 2015
- Patent Pro Bono Program and Micro Entity Status Dec 27 2014
- How to Know When You’re Ready to File a Nonprovisional Patent Application Nov 08 2014
- Are you Ready to File a Provisional Patent Application? Oct 25 2014
- The Importance of Keeping an Expansive View of the Invention Oct 18 2014
- Why Inventors Should Not Rely On Their Own Search Oct 11 2014
- Patent Drafting: Ambiguity and Assumptions are the Enemy Sep 27 2014
- A Conversation with New UIA Executive Director John Calvert Sep 13 2014
- Patent Drafting: Appropriately Disclosing Your Invention Aug 30 2014
- Getting Your Invention to Market: Licensing vs. Manufacturing Aug 16 2014
- How to Describe an Invention in a Patent Application Aug 09 2014
- Patent Drawings 101: The Way to Better Patent Applications Aug 02 2014
- How Long Does a Patent Last? Jul 26 2014
- What is Intellectual Property? Jul 19 2014
- Understanding Patent Claims Jul 12 2014
- Different Types of U.S. Patent Applications Jul 05 2014
- Utility Patent Applications – Content and Substance Jun 28 2014
- The Patent Process on a Tight But Realistic Budget Jun 14 2014
- The Risk of Not Immediately Filing a Patent Application Jun 07 2014
- Patent Drafting: Top 5 Critical Things to Remember May 31 2014
- Obtaining Exclusive Rights for Your Invention in the United States May 24 2014
- Patent Drafting: Not as Easy as You Think May 17 2014
- Completely Describe Your Invention in a Patent Application May 10 2014
- The Successful Inventor: Patenting Improvements May 03 2014
- The Trade Secret Value Proposition: The Secrecy Requirement Apr 19 2014
- Q & A: File a Patent Application Before Market Evaluation? Apr 05 2014
- An Overview of the U.S. Patent Process Mar 15 2014
- Design Patent Infringement: How to decide if you should sue Mar 01 2014
- Protecting Ideas: Can Ideas Be Protected or Patented? Feb 15 2014
- Why Do You Want a Patent? Feb 08 2014