If you are an inventor and you want sell or licence your invention it is important to have all of your ducks in order before taking off on the road to demonstrate your invention. The first item you need to check off you action list is getting some type of patent protection. Don’t even bother taking your invention on the road until you have a patent or at the very least a patent pending. The more solid your protection, the better your odds of getting your foot in the potential licensee’s door.
It is important to know that many companies will refuse to sign non-disclosure documents. Often times they are concerned that they could get sued if they reject your idea but later come out with something similar. In fact many companies will require you to sign a “Waiver Agreement”. If you sign this document, you agree to give up your right to sue them if they reject your offer and pursue a similar idea later.
Having a registered patent is your best defense in dealing with waiver agreements. Having a patent pending is a weaker, but better than the alternative of nothing at all. Potential licensees will also want to know if your patent pending is from a nonprovisional patent application or a provisional one. Obviously, a patent pending stemming from a nonprovisional patent application will carry much more weight than a provisional patent.
Another thing that is critical to getting a potential licensee interested in your invention is proof of concept. The stronger proof, the better. A working prototype gives you the best chance of success. If you don’t have a prototype, you better have something substantial that shows how your invention works. One option is to create a computer simulation of your invention in operation. Drawings are a another but far weaker selling tool.
The final selling tool that is an absolute must before going out to market your invention is marketing research. You need to show that there is a substantial need for your product. You also have to demonstrate that it has substantial advantages over potential competitors. Another critical factor that needs to be discussed is proof that your invention can be manufactured and marketed for a substantial profit.
So let’s say that you’ve got all your selling tools lined up. You’ve got a registered patent. You’ve got a working prototype and a well researched and thorough marketing report. What is the next thing on your agenda before taking your show on the road? What you need to create is what is known in the business as your “Elevator Pitch”. In most cases you will only have a couple of minutes to sell a potential licensee to take a closer look at your idea. This is where the elevator pitch comes in.
So how does an elevator pitch work? Imagine if you met a potential licensee or a product scout on an elevator. How would you pitch your idea if you had only 30 seconds to do it? You might say that crazy. There is no way it can be done. Unfortunately, in most cases 30 seconds is about as much attention as you are going to get from a potential licensee. So creating a sales pitch with that time frame in mind makes a lot of sense.
The formula for the perfect elevator pitch involves describing three things as succinctly and precisely as possible, these are the problem your invention solves, the solution your idea provides, and the potential market size of your product or service. The final step in making your elevator pitch is to take all of the information in your statements regarding the problem, the solution and the market size and distill them into one sentence. I would suggest going to NewBusinessCreator.com to get a more in-depth discussion on how to create an elevator pitch.
So now that you have all your selling tools lined up, you’ll need a good roadmap before take your dog and pony show on the road. Your roadmap will consist of thorough research of the industry that your invention addresses. Learn who are the main players in that industry. Then thoroughly investigate the potential companies that may want to license your invention.
The last thing you want to do is solicit a company blindly. Check out their product lines. Make sure that they don’t already have something similar to your invention in their product line. Find out which wholesalers and retailers sell their products. This type of knowledge will establish credibility when you present your invention.
There are a number of sources you can go to in order to do research on potential licensees. One source is trade associations. Almost every industry has a trade association. These groups usually have annual or semiannual conventions. They also publish directories, and a weekly, biweekly or monthly newsletters that describes what’s going on in their industry.
One way to find the trade association that would be most pertinent to your invention is to use an internet search engine such as Goggle. Information about trade associations can also be found in the Encyclopedia of Associations. This publication is available in most libraries.
Trade magazines are another potential source of inside business information. These are usually subsidized by vendors who support a particular industry. The Gale Directory of Publications and Broadcast Media is a good source of information about trade magazines.
So now you are finally ready to solicit licensees. So what is the most effective approach? Probably the best bang for your buck are trade shows. At these conventions anyone who is anybody shows up to show off their new products and exchange information. These shows are perfect venues for pitching your invention. Prior to the, event, request an exhibitor directory from the organizers of the convention. From this list, narrow it down to the best companies to approach with your idea.
If you decide to sell or licence your invention at a trade show, one option you may want to consider is setting up your own exhibition booth. Be aware that this can be expensive. However, it can significantly increase your chances of making meaningful contacts. This is because, agents, product scouts and potential licensees are always walking the exhibit hall. Be aware that these VIPs often cruise the booths anonymously. Many of these VIPs actually refuse to purchase or wear VIP badges that would give them extra status. Often they will attend wearing street cloths and a visitor badge. Why do they do this? Many times they do it to avoid being hounded by exhibitors. So the bottom line is, treat everyone like they are a VIP.
Other ways to make initial contact with potential licensees is by writing a solicitation letter or by making cold calls. The most effective way to do this is to mention a referral. It is important, however that the referral is genuine. In a letter you can give the longer version of your elevator pitch, followed by a request for a meeting. Be sure to mention that you have patent protection and a working prototype, if it is available. When you’re making phone solicitations you need to use the short version of your elevator pitch. If you have a referral, mention that person’s name right away. Again mention that you have patent protection and a prototype you can demonstrate, if you have one.
Another source you should strongly consider for finding potential licensees is IntellectualPropertyStore.com. This web site attracts thousands of people and companies that are actively looking for new business opportunities. Many of them are very interested in intellectual property that can be commercialized and turned into a thriving business. Instead of making cold calls and knocking on company doors to find these people, why not let them find you! When you place a listing on this site, you can use narratives, pictures and movies to pitch the commercial marketability of your patent. This is a very powerful and timesaving way to either sell your patent outright or license it.
The important thing to remember when you make initial contact with a potential licensee is that your primary goal is to arrange a full demonstration of your invention at a meeting in the future. Don’t start with a long winded presentation. Be concise. Make sure you describe the problem your invention solves and how your invention will solve it better than what is currently available. Also point out the huge potential market size and profit potential if your invention was commercialized.
Other issues to bring up in an initial meeting is the status of your patent protection and whether a working prototype is available. Also mention any special credentials that will strengthen your credibility. At the end of your pitch give them your business card and any written marketing materials you may have. The most important thing, however, is that once you’ve hooked them, you need to reel them in with a call for action. Be sure to ask for a future meeting. At the end of every discussion, make sure to ask each person you come in contact with for their business card.
I would recommend when talking to prospective licensees, that you ask for their advice. Don’t be defensive! Often their advise may be the difference between success and failure. Remember you are conversing with people that have probably have got more inside information that you could possibly know.
Now let’s say that you’ve successfully sold a company to bring your invention into the marketplace. In most cases it will now be in the companies court as to what they are willing to give you to be able to commercialize your idea. In some cases they will want to have the patent rights assigned to them. In this case, the ownership rights of the patent will be fully transferred from you, to them. They become the assignees of the patent. As the assignor, you will then receive a lump sum of money or periodic royalty payments as compensation for assigning the patent. It goes without saying that if you accept royalty payments as part of your compensation, it is important for you to do your due diligence to make sure that the assignee can successfully manufacture and market your invention. This is definitely a time to solicit the services of an attorney that specializes in product licensing.
Another potential agreement companies will present to you is a licensing agreement. With a license you are leasing your legal rights to your invention. If the licensee fails to honor the terms of the licensing agreement, the inventor can terminate the agreement and reclaim possession of the patent rights. It is important to note that there is a great deal of flexibility when drafting license agreements. You can, for example limit the license for a period of time, or to a certain geographical area. You can potentially license your invention to more than one company.
If a company is interested in ether assigning or leasing your invention they will initially present you with a letter of intent. This document is drafted after you and the company agree on the general licensing terms. This is not a binding contract. Think of it as a first draft of the licensing agreement. Occasionally you will be offered an Option agreement. A potential licensee uses this document to prevent you from licensing your invention for a certain period of time while they make their final decision. In general, the longer the option period, the more money you should receive for the option.
If all of your efforts to sell or license your patent are coming up empty handed, you should probably enlist the help of a licensing agent or product promoter. One very good way to find a licensing agent or a product promoter is to pitch your invention in IntellectualPropertyStore.com. This listing site can be used to showcase your patent to hundreds of licensing agents and product scouts that are scanning this site daily for products they may be interested in promoting. These professionals have major industry connections. So if you want to get your invention in front of the decision makers that can turn your idea into a reality, then decide to showcase it in IntellectualPropertyStore.com today!
When you have a valuable patent, another option you can consider is creating your own company to manufacture and sell your invention. If you are considering this option, you need to check out NewBusinessCreator.com. This website will give you the information that’s needed to create a successful business. It also serves as a portal to a number of affiliated listing sites that will enable you to obtain the capital, human resources, materials and marketing systems that will be required make your dreams a reality.