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Licensing Questions from Inventors

Marketing your Invention Yourself?  Or Licensing it?
Here are a few of the Reoccurring Questions – and my Answers…

by Jeffrey Dobkin

Patenting Your Invention

Do you recommend a patent?

I don’t usually recommend a patent – a patent doesn’t protect you, a patent only gives you the right to protect yourself.

You’d have to sue someone if they violate your “claims” as shown in your patent.

But for licensing, a provisional patent may be a good place to start.

You can file for a provisional patent yourself for under a couple hundred dollars.

A provisional patent won’t protect you at all, it isn’t really a patent.  But it will establish you as the inventor and the date, and create a timeline.

Once you file a provisional patent, you’ll have a year to apply for a regular patent.

My actual recommendation:

Apply for a provisional patent.

Here’s the difference between me and every patent attorney I’ve ever spoken with:

I say… don’t use your main claims unless you are 100% sure you will be filing a traditional patent within the year.  A claim is the specific innovation or idea you are trying to protect in your patent.

Reason: if you DON’T apply for a real patent (a traditional Utility or Design Patent) WITHIN ONE YEAR, the Patent Office will invalidate any patent based on those specific claims after that as prior art (“prior art” is patent office speak for it’s already been done and not new).  So after a year if you didn’t file for a regular patent, you won’t be able to — using the claims in your provisional patent.

Can not-using your main claims hurt you?  Yes – if someone else files for a patent using those specific claims in the mean while.  So there is a risk.  I personally think it’s small, but you’ll have to decide this for yourself (I’m not a patent attorney), and this is just my personal opinion.

If you are positive you’re going to file for a traditional patent within the year, yes – do use your main claims in the provisional patent.

But – most people don’t.  Patents are expensive – like $5,000 to start!

Keep in mind no one will see your invention claims in your provisional patent as the process is a private system and shielded from public view.

You can always file again, or later – and introduce your real claims as additional new claims.

A note about Patents:  

Be aware someone violating your patent may not care about being sued.

Additionally, I’ve never seen a sheet of paper stop a crook.  I’m just sayin’ sayin’.

Here’s what I like about filing a provisional patent:

You can now say “YES! I’ve started the patent application process!”  This statement is important in trying to get a licensing deal.

In this sense the advantage of a provisional patent or actually applying for a traditional patent (Figure $5,000 to $10,000) is the same.

Both processes, the provisional patent and a traditional patent application, are shrouded in secrecy – so firms won’t be able to check the validity if your patent application (to see how likely you are to receive approval of your patent) or to see any claims – if you follow this route.  This works in your behalf if your patent is weak – you may not want someone to see your claims, as they may be able to easily circumvent them.

Remember, there are “patent circumvention specialists” out there who do this for a living.  Some are pretty good at it.

Marketing your product —

The cost and difficulty to market your product depends on the product, the industries you are marketing to, and the novelty and design of your invention.

Some products – and some industries – have high entrance barriers.  Imagine trying to market a new lipstick – you’d face dozens of women’s magazines where other lipstick manufacturers take out full page ads in every issue.  You’d face retailers who have huge lipstick showcase displays already in place.  And you’d face buyers for chain stores who are taken out regularly on the boats of the sales reps from the larger lipstick marketers.  How much did you say was in your budget?

And of course, marketing your product certainly depends a great deal on your budget.

Here’s what I’d do to get a licensing deal:

Note:  The road to successfully license your product is difficult.
First, it’s tough to find a firm that is willing to license it.  There are a lot of bullshitters out there who will jerk you around endlessly; and only a scant few will take an outside invention and invest heavily in it.  But there are some…
Second, it’s even more difficult to get a GREAT deal from a licensing firm.  These is the double edge sword of licensing.

Here’s how I approach it:

If you are going for a licensing deal and have a target company in mind, get the name of the President.

Write him (or her) a letter saying you are a product developer and have a product that will offer these benefits:  ___________, _______________, _______________.

Important: Don’t actually say what the product is, just the benefits.

This is an introductory letter and you are just seeking information.  You are NOT selling your idea.  You are NOT telling them what your idea or invention is.

Ask what his recommendations are for submitting a new product to his company, and how they would like you to go about this.

Let him (or her) tell you what he wants.

Then, actually feel free to follow – or not follow – his advice.

This first letter is just a test!

The test is to see how receptive they are to new ideas.

If they outline a good path, by all means take it.

If not, at least you have the name of the President of the firm and you know how you can reach him (or her).

If you get no response, write a second letter.

Remember, it’s direct mail, and direct mail is a game of numbers: and percentages of response.

Make your second letter similar to your first letter:

“A few weeks ago I sent you a letter about a product I have developed. It offers benefit, benefit benefit…”

If he responds to either letter and you don’t like the path he outlines – like asking you to send your invention to their “New Product Committee,” I wouldn’t.  To me, this is always the kiss of death: death by committee.  How are you going to follow up?  Who are you going to call?  The “new product committee”? No, I need a name, and I actually need a name of someone who can write checks and push a product through the company.

I’d send them another letter.  Say in the letter “Thank you for your kind attention to new ideas, and responding to my letter! I prefer to submit my product directly to you, as the President of the firm – would that be OK?  My innovation does this, this and this…”

Feel free to embellish the benefits of what your product does without much detail, but make sure to make it sound compelling.

Then ask if they have a non-disclosure form they use, or if he would agree to sign one you have taken out of a marketing book you read.

A non-disclosure form can be found in my book, “How To Market a Product for Under $500.”  I included this in my book so my inventor friends can make this exact statement. It sounds so official when you say “you took the form out of a book.” Nice, huh?

Their invention submission form will be heavily weighted in their favor.  My invention form is heavily weighted for the inventor.

Again, keep in mind I’ve never seen a sheet of paper stop a crook.

What NOT to do:

While there may be many people in the company who will tell you to send your idea to them – and who doesn’t like to see new ideas – very few will be able to act positively on it.

If you send your innovation to someone down a few rungs down on the company list, he or she may not want to risk their job by moving your invention forward.

Yea, once they recommend it, their judgement – and possibly their job – may be on the line.

High risk, low reward for them.

Fact is, most people will actually have no authority to accept a new product for manufacturing and marketing. Still, everyone will want to see your new invention!

They will turn out to be a block in the path to your license.

Even though they can’t say Yes to a new product or innovation, they’ll still feel free to say No.

So you need to find the guy who signs the checks… the first time.

IMPORTANT: Once you send your invention to someone that says “No” it will be difficult to go above their head on the path to “Yes!”

Sending to someone who has no authority to accept your product and pay you for it is a Roadblock.

Going over their head on the path to yes may create an enemy within the ranks if you do so.

Leading Question:

Before disclosing your product to anyone in any company, ask if the company has ever used a product from an outside developer.

If they say no, your chances just took a turn for the worse.  Much worse.

Not impossible, but this is a huge hurdle.

What are your chances, if they’ve never accepted a product from an outside product developer. Slim to none.

But then…

Suppose everything goes right? 

And they have accepted products from outside developers.

Then they like your idea!  They love it!!!

Ask for their standard contract with product developers.

Then, check it out!

Then — feel free NOT to use it. 

If it stinks – and I’ve seen a lot of really stinky contracts out there – ask if they will sign your own contract form that you got from a book.

I like saying you got these forms from a book as that implies fairness.

I’d then copy the contract from Harvey Reese’s book, “How To License Your Million Dollar Idea!”, modify it to what is applicable to your own case, and send it.

Harvey is very smart and his contract is brilliant: clear to read and he said it’s proven to be bulletproof in court.

I also recommend you read his book – it’s awesome.

Getting a Licensing Deal is only the beginning.

There are lots of shitty licensing deals.  Lots.  Way more than great deals that are fair to both inventor and the licensing company.

Your product being accepted is just the beginning.  Next is hammering out the license,  your negotiations, and getting a fair deal.

Good Luck!  I’ll write more on this elsewhere – this post is just an overview.

Until you have a signed licensing agreement keep working:  The deal with that one company may fall through.

Unless you have money on the table, AND a fair contract signed – it ain’t over and the fat lady didn’t sing.

Marketing 202

I speak with lots of people who have one company in mind to submit their idea.

Keep in mind there are more firms that do the same thing, market the same set of products to the same industries.  Plenty more.

Here’s where you can find them:

You can find them all in the trade magazines that serve your industry.

Find the trade magazines in Bacon’s Magazine Directory in larger libraries. Or Oxbridge Communications Directory of Periodicals.

These amazing and easy to use reference tools are in most large libraries at the reference desk.

Learn how to get FREE subscriptions to each of the trade magazines in my book “How To Market A Product for Under $500!” I’ve written an easy and foolproof plan in there, so I’m not going to repeat it here.  Go ahead, spend the $30 bucks.  If you don’t have $30 to buy the best marketing book out there, better rethink your marketing plan, and your concept of bringing a product to market.  It’s not what you know that hurts you, it’s what you don’t know.

If you are looking for firms that are in the same markets as your innovation, or companies you’d like to pitch a licensing deal to, find them in The Thomas Register of Manufacturers and Distributors.

This huge 30-book reference set is found at all large libraries.

Their online version sucks, so go to a library and spend some time there – it will be worth it.

Bring plenty of change for the copy machine, so you can copy all the pages of firms, names and addresses you’re going to send licensing letters to.

When you send anything by mail, it’s direct mail.

Remember: all direct mail goes by numbers, and percentage of response.

This is the beginning of a marketing campaign for your invention.  The beginning of a licensing deal campaign.

It works by traditional mail, and also surprisingly by email.

The email must be highly personalized to work.

With inventors I have worked with I’ve used this same formula. Some of my clients have received a positive response as high as 20% to our mailings.

Some of the response they have received is from the top firms in the industry, and directly from the President of those firms.

Hope this brief overview has been insightful.

Remember to enjoy each step of the inventing process as the trip is more than success of the idea itself.

If this invention doesn’t generate any interest from anyone from this campaign, hey, you’re an inventor – I’m sure you have other inventions.

Notice you didn’t send them an invention at this point, so you don’t even need a working model.

You’ll need a working model for the conclusion of this process – they’ll want to see it if you receive a positive response.  Send the firm a Non-Disclosure, Non-compete document and have them sign it.  Then fully disclose your product.  If they’re still interested the negotiations to license your product will begin.  By that time you should have a good idea if you want to get in bed with that firm – if they are fair and honest and will give you a deal fair to both you and them.

Jeffrey Dobkin
President Emeritus, The American Society of Inventors.

To speak with Jeffrey, please call is office: 610-642-1000.

Jeffrey Dobkin is a marketing consultant who advises and directs marketing and licensing campaigns for inventors.  He also analyzes contracts for inventors and at times negotiates in their behalf.