This bear scared me when I was little, but it made $1,000,000 per month in royalties for the inventor. Stephen worked on it.
This is a continuation of my previous Q&A with Stephen Key, who has licensed to companies ranging from Coca-Cola and Disney to Nestle. He was also involved with the design of both Teddy Ruxpin and Lazer Tag. This second and final part will cover royalty rates, negotiation, and how he calls into companies to sell his concepts (including actual call scripts).
Before we get started, here are a few other resources that I have in my licensing and product design library, which really focuses on deal making and arranging revenue splits:
Inventing Small Products (Stanley Mason, like Stephen, is a specialist at tweaking/combining existing products as a lucrative shortcut to successful deals)
Secrets from an Inventor’s Notebook (Maurice Kanbar, creator of Skyy Vodka, among many others)
How to License Your Million-Dollar Idea
The Inventor’s Bible: How to Market and License Your Brilliant Ideas (stick to the licensing recommendations)
Now, back to Stephen and his approach:
-How much money does it take to license your idea? How much time does it take?
In review, I spend $100 on a provisional patent application so I can legitimately claim “patent pending” status for a full year, $80 or less on a sell sheet that I have created by a graphic design college student. My third cost is the cost of making phone calls to manufacturers. So for many simple products your total costs are $200 to see if your idea has legs. Of course there are always exceptions. Some products will cost more, but you’d be surprised at how little you can spend to be “pitch ready.”
Sample Sell Sheet
-What is a typical royalty rate?
Royalty rates can range from .0001% to 25%. Royalties are usually based on the wholesale price. This is the price the manufacturer sells to the retailers for, or that they sell to a distributor for.
A very general rough way of figuring out the wholesale price of an item is to just cut the retail price in half. This doesn’t work for all industries or product categories, but it’s a nice way to get a rough estimate of what your royalty might be for your idea.
If you think your product is going to sell for $10 at a retail store. You half that, to get a wholesale price $5. Your royalty would be on this $5 wholesale price.
So why would you ever want a .0001% royalty rate? Well if your invention went of every bottle of Coca-Cola that sold worldwide. That might not be a bad royalty rate. Or if you had a software product that only aardvark researchers bought, 25% might be very fair, since the manufacturer isn’t going to sell many units.
In my experience a 5% royalty is most common for consumer goods. I usually ask for 7% and settle on 5%.
I’ve licensed many novelty products that have sold in stores for one or two years and then never sold again. That can be fun, and I wouldn’t discourage people from licensing novelties, but that’s not where I made my millions. I’ve made serious money by selling ideas that I knew could sell 100,000’s or millions of unit every year.
My advice is to pick a product area that does high unit volume. This way that 5% of the wholesale price on every unit can really add up.
To further illustrate my point, I’ll tell you a little story. I had a student that had already filed a patent when he came to us. My approach, as you know, is to use provisional patents that only cost $100, so you don’t need to spend a bunch of money in advance of selling the idea.
It was to late for this particular student. He’d already spent about $6,000 on a patent. His invention was a drum key that made tightening the thumbscrews on a drum easy, so drummers don’t have to hurt their thumbs to get their drums tuned up.
Drummers loved it. He took our inventRight course and licensed his idea to a musical instruments manufacturer. The manufacturer was already selling another drum key and gave him an idea of how many of his drum keys they thought they would sell each year.
So he did the numbers, then realized that it would take a year just to earn back in royalties what he had spent on the patent. It was a low volume product. The lesson – pick high volume products and you’ll make much, much more money.
Six thousand a year in royalties just isn’t worth the time for me. It takes almost the same amount of energy to license a small idea as it does a big one, so why not go for the big one?
In my prior life, I worked as a product designer at Worlds Of Wonder (a now defunct toy company). I watched the inventor of Teddy Ruxpin, the talking teddy bear popular back in the late 80’s, make $1,000,000 in royalties a month!
I know that’s a long winded response to your questions about what a typical royalty rate is, but I wanted to give your readers some solid advice and examples that they can take and use when licensing their ideas.
-What should people consider when working on their first idea?
Most inventions are just slight variations of existing ideas. I’ve found it easier to sell ideas that aren’t too radically different. The easier it is for people to understand the idea, the better.
I prefer simple ideas, but I’ve worked on a few tough ones also. My Michael Jordan wall ball was super simple [a basketball hoop attached to a cut out of Michael Jordan, all of which was attached to a door]. I licensed the idea almost overnight and received royalties for ten years. It was a great product for me to start off with because it was so simple, required very little research and the manufacturing was easy. My spin label invention is much more complicated and after many years and millions of labels, I’m still working on getting it to where I want it to be.
My best advice is to make your first idea a simple one, so you can go through the whole process of selling an idea. Then work on the harder ones after you’ve gotten a little experience under your belt.
-Who do you call at companies when you try to license a new idea?
Sales guys are great, but my first choice is the marketing manager of a product line at the company that would easily understand your invention. Avoid purchasing. [Note from Tim: Find the manufacturers’ names by browsing the relevant categories in a department store, or online at a place like Amazon.]
For example, if you have a new comfortable grip hammer innovation, call and ask for the “marketing manager of the easy comfort grip hammer line” at Stanley. Use the product line name when you call. It’ll sound like you know exactly whom you are calling for. I think you get the idea. This is just one of many tricks I use to get into the decision makers at companies. If this doesn’t work, there are many other tricks you can use to get your idea in front of a decision maker.
[NOTE: For real scripts that Stephen has used in calling into companies, click here to download a PDF]
-What kinds of products can someone license?
You can license almost anything. You just need a new product benefit and some IP (Patent, Copyright or Trademark). In some industries like the toy industry, you don’t even need any IP.
However, I wouldn’t recommend licensing toys. It’s too competitive. You might have to show 200 ideas before you get interest in even one. I don’t like those numbers.
I prefer to sell ideas to industries that don’t see so many new ideas each year. I’m talking about industries that don’t currently have many innovative new products. The packaging industry is one of these industries.
I licensed my spin label invention to a packaging company. They thought I was a genius. I’m not a genius. I’m just more creative than they are, and they don’t see many new ideas.
I guess my little secret tip for you to contemplate is to consider coming up with new ideas in industries that may be a little stale. You won’t have much competition and they’ll think you are brilliant. [Note from Tim: a good method for examining industries is to browse categories or departments in a store like Wal-Mart and look for products that haven’t changed in a long time, or those where most products are nearly identical. Can you reinvigorate a commodity with a small tweak?]
-Do you have any words of advice regarding negotiating for those new to licensing ideas?
The ability to hold back information and dole it out in small intriguing bits and pieces is a critical part of my approach. It works almost every time. And more importantly, it keeps the dialog going. Once the dialog stops, the deal slows down and fizzles out.
If you keep the dialog going with a manufacturer, you’re more likely to close the deal. So don’t give them all the information up front. The manufacturer has no reason to call you back if you give them everything up front.
This is one of the biggest mistakes I see inventors make. They give up to much to soon and don’t know how to keep a dialog going with a manufacturer. [Tim’s note: Don’t oversell. This is as true for PR as it is for licensing — the goal isn’t to sell in one call, it’s to get a second conversation or spark questions that lead towards a deal.]
###
Odds and Ends: Hacking Japan and Living Like a Rockstar in Tokyo
A number of you have asked me to do a “How to Live Like a Rockstar in Tokyo” post like the how-to article I wrote for living large on little in Buenos Aires. Now you can get some of my top picks and tricks for Tokyo. I have a series of sidebars called “Tokyo Tips” in the debut issue of Everywhere magazine, which is out now. It’s a gorgeous magazine and one of the best I’ve seen in the travel genre. It should be available starting today in most bookstores.
The Tim Ferriss Show is one of the most popular podcasts in the world with more than one billion downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.
Comment Rules: Remember what Fonzie was like? Cool. That’s how we’re gonna be — cool. Critical is fine, but if you’re rude, we’ll delete your stuff. Please do not put your URL in the comment text and please use your PERSONAL name or initials and not your business name, as the latter comes off like spam. Have fun and thanks for adding to the conversation! (Thanks to Brian Oberkirch for the inspiration.)
Hi Tim,
lots of good advice these last two posts, still trying to absorb it all. Also looking forward to your Tokyo article, I’ll go look for it today.
Later,
Erik
Another thought/question…how does licensing an idea to a co. relate to just contacting their customer support and offering a suggestion? Granted, my mindset is more in terms of software or maybe even technology hardware. But if something doesn’t do what I want it to, I think I’d be more apt to contact the company and offer the suggestion rather than patent the idea and sell it to them.
Maybe I’m just not cutthroat enough. I’m still very much intrigued all the same, and will be putting my thinking cap on soon to see what I come up with.
wouldn’t you rather make money off your creative ideas if you could rather than just give them away for free so someone else can make money from it? unless they are a friend that you want to help out and you have all the money you want…
Pete Wrote. . .
“Another thought/question…how does licensing an idea to a co. relate to just contacting their customer support and offering a suggestion? Granted, my mindset is more in terms of software or maybe even technology hardware. But if something doesn’t do what I want it to, I think I’d be more apt to contact the company and offer the suggestion rather than patent the idea and sell it to them.
Maybe I’m just not cutthroat enough. I’m still very much intrigued all the same, and will be putting my thinking cap on soon to see what I come up with.”
REPLY FROM STEPHEN KEY
Hello Pete,
If you really like a company and it’s products, i could see calling in and suggesting a new feature for a product. But will anyone ever even look at your idea? Probably not.
Submitting ideas through formal channels on a companies web site or over the phone to customer service will most likley go into a black hole. I’m speaking from my experience and the feedback I get from my student.
Doing what I suggest in this blog post and getting in the back door with the right marketing manager or sales guy will be 1,000 times more effective.
If you put the time in to contact the company, you deserve to get paid in my opinion. I teach my students how to set up the deal so you make sure you get paid for your new product ideas.
It can be done with very little money invested in a provisional patent application, a sell sheet and the cost of your phone calls.
Kindest Regards,
Stephen Key
inventRight.com
More than a year ago I was live on the air purchasing a new Keurig mini brewer. I asked them when they were going to make “soups”. The representative looked kind of puzzled by the suggestion; the program host shared how I perhaps should receive royalties over that. Well fast forward . . . . in 2014 they will be selling soup in collaboration with Campbells!!!! This was my suggestion so how do I get any royalties? They can’t deny it wasn’t me–it was viewed live on TV by millions of people!
Thanks for the great interview. Before trying to rent your idea, is it advisable to first set up an LLC/corp to protect yourself? What happens if you somehow end up licensing an idea for a product that then (directly or indirectly) results in an injury or harm at a later time? Could you potentially be liable for that? Sorry if this is a dumb question and thanks in advance!
Very informative.
This is great stuff. I love the emphasis on minimizing startup costs. Very high upside, with almost no downside to this approach.
Hey Pete… when you make your suggestion to customer service it goes on a slip of paper that nobody reads.
when you make it to the right person, combined with your teaser sales pitch, you may see your improvement actually happen
…and get paid!
I think you’ve made a great point, it could be the very same idea, but it must be presented right and go to the right person. Nothing cutthroat about that.
~V
Hey Tim, I’m negotiating to become a distributor of the Invent-Right program, so don’t worry about the FERRISS50 coupon code…
I will offer my own discount to the loyal fans of 4HWW!
I spoke with Andrew Krauss, the co-founder of Invent-Right and was amazed to find out that their $400 DVD program actually comes with 1 year of follow up support, where you can call in and Andrew or Stephen themselves will answer your question.
This really is the ultimate 4HWW plan for inventors and idea guys.
~V
So you go to a company with this idea that you put in a PPA. What would cause them to wait a year for the PPA to expire and then produce your idea cutting you out?
What about overseas protection?
Scott G. F. Wrote. . .
So you go to a company with this idea that you put in a PPA. What would cause them to wait a year for the PPA to expire and then produce your idea cutting you out?
What about overseas protection?
REPLY BY STEPHEN KEY
Hello Scott,
I get this question often. You don’t call just one company, you call five or eight or maybe even 10 or more companies.
A year is plenty of time to see if an idea has legs if you start making calls the second you file your provisional. So don’t sit around feeling all warm and fuzzy that you can say patent pending. Start making calls ASAP after you’ve filled your PPA.
Here’s a little trick. Subtly let the companies know that you have filled additional provisionals. They won’t know what is in them and they just might think you’ve made even more improvements.
I won’t get into overseas protection in this comment. There are so many things to cover there. Maybe Tim can interview me about International patents for a future blog post.
BTW- I’ve just started blogging on the mega business site http://www.AllBusiness.com . You can check out my new blog by visiting http://www.allbusiness.com/4969065.html
Kindest Regards,
Stephen Key
inventRight.com
Scott:
I would assume, since you would then be shopping the idea to their competitors, they would not be able to wait you out if the idea has merit (i.e. a competitor could buy the idea and help you get the patent to cut out the company trying to wait your PPA out). I have no experience in the area, but that’s my guess.
Jim
Great Question Scott,
I have the same question. This is really something new to hit my brain. Almost an alternative to owning a company. I like this article and really want to thank Tim for his contribution to making society a more fun and enjoyable place to experience. He is by far one of the newest humanitarians. I would even go as far to say he is the next Bono. Look forward to the responses.
Best
Jose Castro
Tim – thanks for yesterday’s reply! I imagine your gym woulda been pretty bad ass! I think licensing my gym might be sorta as mentioned here, not enough profit, although I’ve seen a few guys do it, I don’t think they’re putting their kids through college on it.
talk soon bruddah,
lata!
–z–
We tried to promote a popular product (already developed and patented) in the US to the market in the UK. Although everyone found the product fascinating, innovative and useful. The hierarchy of approval was too lengthy! At times we would bounce emails and calls to whom would sound like the right person and then you get reshuffled to someone else. Now this may not be the case if the maximum exertion to develop and produce a product/item/implement solution is on the shoulders of the actual company pitched.
The cold calling seems too simple 😛
But saying that I did actually come up with a brilliant idea to prevent Credit Card fraud and called it the CreditCard Firewall. I did get response from the right people but was looking at the angle of development throughout. Come to think of it, on several occasions I did this; it maybe time to pitch as an idea instead of as a product ?? So are you available for email or telephone discussion for a brief chat Steven? I think I missed the tele-seminar or we do not cross times as I am in the UK
Stephen,
Thank you for the time you took to reply to my query. I already hold one patent 7080668 and have 5 others in the cue but it’s for the Co. I work for and I don’t realize the benefit.
I do have ideas that do not apply to what I am working on and will try and use what you have suggested to see if I can do this.
Thanks again.
Hello
I’m the founder of an online shop, and a reader of your book.
I always have hundreds of ideas to invent and build stuff and it could be an option for me to patent/license those inventions. But I’m not sure if in France (where I am) it’s enough to show a sale sheet to patent an invention.
Also if I have someone interested they’d like to see a prototype, how will you make it?
Hi Andrew &Stephen,
Thank you for all the help you’ve shared to inventors & product developers.For a while I felt so lost when I started my invention ,I did a lot of research but looking back I wish I could have been one of your student then my stress could have not been so overwhelming to me. Reading through your advices, I think I did not do bad. I have a utility patent pending on a medical device ( Class 1) I listed it with FDA , sampled them to hospitals , sold quite a few but since marketing seemed to be a struggle in the process . ,I have decided to submit it for licensing with positive response from a medical company . The IP market is vast ( US/WW ) . I wonder during the negotiation process if the licensee determines the figure first , I mean . The upfront & royalty. Kindly advice me in this aspect. Thank you . Best Regards.
# RM Says:
November 27th, 2007 at 1:11 pm
Thanks for the great interview. Before trying to rent your idea, is it advisable to first set up an LLC/corp to protect yourself? What happens if you somehow end up licensing an idea for a product that then (directly or indirectly) results in an injury or harm at a later time? Could you potentially be liable for that? Sorry if this is a dumb question and thanks in advance!
——————–
I’m actually interested in this as well. Anyone have any comments regarding the above?
Tim & Stephen, great job. I’d love to see this series continue. Thanks!
Hey Tim,
It seems that patent research is an elusive aspect of the inventing process that is also key to being successful with inventions. I don’t know how much experience you’ve had in this department, but you usually seem to have some website or trick up your sleeve – any tips regarding patents and patent research for newcomers to the licensing / inventing industry?
Thanks!
Phil
Azzam wrote. . .
The cold calling seems too simple 😛
But saying that I did actually come up with a brilliant idea to prevent Credit Card fraud and called it the CreditCard Firewall. I did get response from the right people but was looking at the angle of development throughout. Come to think of it, on several occasions I did this; it maybe time to pitch as an idea instead of as a product ?? So are you available for email or telephone discussion for a brief chat Steven? I think I missed the tele-seminar or we do not cross times as I am in the UK
STEPHEN KEY’S REPLY
Yes, Azzam. I’m very reachable.
Feel free to call me at 1-800-701-7993.
Kindest Regards,
Stephen Key
http://www.inventRight.com
RM Wrote. . .
November 27th, 2007 at 1:11 pm
Thanks for the great interview. Before trying to rent your idea, is it advisable to first set up an LLC/corp to protect yourself? What happens if you somehow end up licensing an idea for a product that then (directly or indirectly) results in an injury or harm at a later time? Could you potentially be liable for that? Sorry if this is a dumb question and thanks in advance!
——————–
I’m actually interested in this as well. Anyone have any comments regarding the above?
Tim & Stephen, great job. I’d love to see this series continue. Thanks!
STEPHEN KEY’S REPLY
Hello RM,
First off, I’m not an attorney and can’t offer you legal advice. I can only tell you what I do and what my experiences are.
I have set up my company as an LLC and as everyone knows it does provide you with more legal insulation than a sole proprietorship or partnership.
If i were starting from scratch with no money and I was new to licensning, would i run out and file an LLC before making some phone calls to sell my ideas?
Heck no. It would be just one more thing on my “TO DO LIST” that would slow me down.
Do i really need to worry about some consumer suing me for a product i licensed to a big corporation? Think about this. Who do people usually sue. The corporation manufacturing and marketing the product or the little inventor that licensed it to the corporation?
With that said, you can get additional product liability insurance when you license a product. Heck, you can get insurance on almost anything.
If you’re really determined to protect your millions. One thing you could do is just file an LLC a week or two before it looks like you are going to close your first licensing deal.
I wish you much success in all your invention related endeavors.
Kindest Regards,
Stephen Key
http://www.inventRight.com
Scott Wrote. . .
Stephen,
Thank you for the time you took to reply to my query. I already hold one patent 7080668 and have 5 others in the cue but it’s for the Co. I work for and I don’t realize the benefit.
I do have ideas that do not apply to what I am working on and will try and use what you have suggested to see if I can do this.
Thanks again.
STEPHEN KEY’S REPLY
Good luck Scott! Call me at 1-800-701-7993 if you ever have a question.
I wish you much success in all your invention related endeavors.
Kindest Regards,
Stephen Key
http://www.inventRight.com
Stephen:
I see you have done some work with WalMart in the past. I have an idea, but no one really seems to know how the marketing director even is. Also, my idea isn’t so much an idea that is a different way of doing things in their store. Since I’m not creating something, what licensing would address this issue?
Thank you for your time sir.
Cameron Benz
should have said who* the marketing director is.
Hi Tim,
First things first, I love your book!
Okay, I have an idea to bring the trend of designer apparel(fashion forward messenger bags, track jackets, etc) into a different industry. I know the styles I want to emulate but one problem… I’M NOT A DESIGNER! Would you reccommend I spend money on hiring an apparel designer to get sketches and specs? I’ve found none on elance and one on craigslist but am waiting on pricing.
I talked to the buyer for a nationwide company who’s shown interest but needs pictures of the product to see if they’ll buy. It would be a HUGE account. I’ve already found a manufacturer who will send samples, but they need specs.
I’m really amped on this idea and have no clue why it hasn’t been done but need some direction!
Very Best Regards,
Ryan
Ryan wrote. . .
Hi Tim,
First things first, I love your book!
Okay, I have an idea to bring the trend of designer apparel(fashion forward messenger bags, track jackets, etc) into a different industry. I know the styles I want to emulate but one problem… I’M NOT A DESIGNER! Would you reccommend I spend money on hiring an apparel designer to get sketches and specs? I’ve found none on elance and one on craigslist but am waiting on pricing.
I talked to the buyer for a nationwide company who’s shown interest but needs pictures of the product to see if they’ll buy. It would be a HUGE account. I’ve already found a manufacturer who will send samples, but they need specs.
I’m really amped on this idea and have no clue why it hasn’t been done but need some direction!
Very Best Regards,
Ryan
RESPONSE FROM STEPHEN KEY
Hello Ryan,
You are getting off to a great start. Taking a concept from one market and applying it to another is a great approach.
Maybe you could try hiring a very capable fashion student at a local college. Call a professor and ask who their best fashion design students are and if they would like some extra work and an opportunity to build their portfolio. This will save you thousands!
I wish you much success in all your invention related endeavors.
Kindest Regards,
Stephen Key
inventRight.com
Hi Tim & Stephen, Thanks for this series as an inventor this was interesting to me. I’ve done some things “wrong” according to this “given up too much info — too fast” and some things according to this like getting the provisional and NOT the patent quite yet and talking to the right people within companies. I do have a new product (cordless hair dryer) and while there are patents for this – none are like mine and none that I know of have a working prototype (I do). I’ve been told by BIG corps that any of their models are at least 2 years from being out here with their technology and mine has been working for me for over a year. The issue? Since it is so new I have been told while my next remake of the prototype needn’t have all the bells and whistles it SHOULD be changed significantly and be able to prove its power and that the changes I made are all functional. I’ve invested time, money, energy and am ready to sell this — give all my ideas for the new version (have had it researched) and move on. I LOVE this product — I want every household to have one but honestly my life has taken on a very different route from when I started. Do I spend the money to make my new prototype? DO I get the next virtual rendering done and make an advertising page like you suggested? What is the quickest way to “be done with this” license it for a royalty schedule and move on?
I am now concentrating on helping people better their health by natural means. I have healed myself of several chronic illnesses and pain by studying the mind/body connection. I feel this is very important and maintain a blog on it. I know the invention would give me the resources to reach out to more people….. Any advice you can give me would be GREATLY appreciated! Thank you! BTW Tim — I have been referred to your blog about 10 times in the last 2 weeks by friends and LOVE it — thank you for your great content. Gratefully, Jenny
Cameron Wrote. . .
I see you have done some work with WalMart in the past. I have an idea, but no one really seems to know who the marketing director even is. Also, my idea isn’t so much an idea that is a different way of doing things in their store. Since I’m not creating something, what licensing would address this issue?
Thank you for your time sir.
Cameron Benz
Hello Cameron,
Thanks for the questions.
First off. Make sure you can make money with the idea. If you have an idea for their store, how many would you sell.
If you got a 6% royalty on the wholesale value. How many would Wal-Mart use. How many stores do they have. Would you be happy with that amount of money for your efforts?
You see, you need to license products that do large numbers to make money.
Hope this helps .
I wish you much success.
Kindest Regards,
Stephen Key
inventRight.com
Hi People,
From my experience the home business industry is a great way to tap into a proven system and begin marketing. Be weary of the “automated systems” you will have to funnel lots people into these systems, so just b/c you dont have to talk to people, there are other big hurdles. People will never buy big ticket items with out some level of training and mentorship. The business I found allows me to earn a maximum of $14k per customer, and yes it is not uncommon for them to purchase all of my products at once. While there is a benefit to doing small testing, in the end there may not be a big pay off, and that time and energy could be better harnessed using an already existing model, that has big payouts. I am glad I did what I did, because my ideas are too niche and not mainstream enough. The best thing I could think of is an e-book on how to be a club DJ, but why market to an audience that loves pirating copyrighted material.
Just my thoughts, Thanks Tim!
Eric Dick
Hi Stephen,
Don’t some (many?) companies just take your idea and run with it, expecting that you won’t have the resources to go after them?
I have an idea for a series of childrens books that fit perfectly into the new “yoga” mommy, Baby Einstein mindset of educating small children. Being a young mother myself I have had plenty of opportunities to test the idea on other mother’s and children and they all love it. My question is because it’s a series of books should I try to start a small publishing company myself or is it possible to license the idea to a company. Is it even possible to license a book idea or is it harder because its not a typical invention?
Thanks a lot.
Hi
I stumbled across this site last week and congratulate you on some very interesting articles.
But I have a specific question. I have been thinking laterally and dreaming up ideas/fixes/solution etc to the point of severe frustration. In the 80’s I was in the computer games biz so have quite a bit of experience in licencing and in the 90’s I took out patents so I understand that side too.
My question is: Not every idea is patentable. Nor can it have a registered design or copyright attached to it. So how does one approach a company (a potential licensor) with an idea that cant be protected, and how do you avoid being ‘ripped off’ by the company just ‘taking’ the idea.
I would add I have done many many ‘confidientiality agreements’ etc etc but in reality any company with a half decent lawyer would have no problem circumventing these.
So do you have a ‘simple’ flowchart for how each idea is ‘licensed’ dependant upon its level, if any, of protection
Thanks
Terry
Hey Tim and gang!
Quite a culture that has developed here based off the book! I love it! The book certainly opened up lots of perspectives on life I had always had in my head but am glad you, Tim, were able to bring it out onto written word. Makes me feel not so alone!
My question is how do you feel about the network marketing industry? Have any companies approached you in the same respect they approached Robert Kiyosaki and his Rich Dad, Poor Dad? Are there any companies that you’ve had a chance to look over and have caught your eye?
Thanks much!
John
###
Hi John,
I haven’t explored this much and have turned down those that have made proposals thus far. I’m always open to proposals, but I can’t feel good endorsing most products I’ve had come my way.
Hope that helps,
Tim
Great, very informative site !!!
I have a couple of questions to present to the table. One is what TERRY ASHTON posted, so can anyone answer those question presented by ASHTON.
What if your idea is in a field that would take years of schooling, to actually come up with a prototype to sell. For example, LCD flat screen TV’s , I and I’m sure many, many others had this idea but how many of us can actually build a TV. How can an idealist sell a idea , like LCD TV’s but has no clue and would take years to get a clue about the product design, get a license ?
Also, what if your idea doesn’t fall under ” improving on an existing invention ” ? What if your idea , is something that, if you worked for the company would get you a promotion but it’s nothing new, just hasn’t been done before ? For example (not my idea ), the person who had the idea to put team logos on towels probadly worked for the company not a Licensor . Or what if it’s just a remake, like bring back clear jelly sandals ? Can these ideas be licensed ?
Can someone please answer these questions ? These question seem to never get answered in any forum ? Please help !! Thanks in advance for any response !!
Hey Tim.
My question is this, what if I have some great ideas involving the automotive and construction feilds, but dont want the hassle of trying to sell them. Is it possible to get a more qualified individual to look at my ideas and drawings and sell them for say half the profits (if any)?
Hello Jeff,
RE: your question
Your idea is about 5%, protection(Patent,copyrights and trademarks) is about 5% and the remaining 90% is selling the idea. The more qualified individual that should review your idea is the manufacturers you are selling to. Manufacturers that have been in the business 10, 20 or 30 years are the best people to get advise from. Advise or opinions from people or companies that aren’t being asked to put up money are questionable at best.
Keep Inventing,
Stephen Key
Stephen-
Just came up with an idea to exploit a product that is not really advertised and would be a no-risk proposition to companies that I’m targeting, especially since there wouldn’t be anything new to create or manufacture besides labeling for the product. It’s not private labeling, just a different way for the company or manufacturer to market the product. I would like to refine my sales and communicating skills before I start contacting the manufacturers and would be interested in your DVD’s, but I’m deaf, so they wouldn’t be much use. However, I’m still very interested in learning from your experiences and would be interested in any other offers you may have besides the DVD’s that would be of use for me. Thanks.
-KC
KC WROTE
Just came up with an idea to exploit a product that is not really advertised and would be a no-risk proposition to companies that I’m targeting, especially since there wouldn’t be anything new to create or manufacture besides labeling for the product. It’s not private labeling, just a different way for the company or manufacturer to market the product. I would like to refine my sales and communicating skills before I start contacting the manufacturers and would be interested in your DVD’s, but I’m deaf, so they wouldn’t be much use. However, I’m still very interested in learning from your experiences and would be interested in any other offers you may have besides the DVD’s that would be of use for me. Thanks. -KC
REPLY
KC,
Sounds like you may have something. You need to figure out what it is your getting IP(patent protection) on though. You might be able to protect your idea with a business method patent? However, business method patents can be a bit more tricky than a regular patent. I’ve done quite well with my SpinLabel invention. My spin label was not a new product but packaging that helped market the product it was on. I patented the method of applying my new label innovation to containers. So what I’m saying is that you need to think through what it is your protecting.
With regards to my inventRight course, the course comes with an over 200 page workbook, so you don’t have to listen to the CD’s. Unlimited phone support is also included with our course, but using phone support may be difficult or expensive if you need an interpreter. I’d be happy to communicate with you via email instead if you decided to buy the course.
Keep Inventing,
Stephen Key
inventRight
Stephen,
I am preparing to license my new product logo to a certain industry.
I Love the idea about you using a provisional patent.
Is there any way to do the same with a trademark?
I have already filed for a TM, but if there is provisional trademark or something similar I will us it next time.
David E.
I won’t go into detail since I’m not an attorney, but using “TM” is a trademark and it’s FREE. You just put it next to your mark and it costs you nothing.
If you pay and file for a trademark with the United States Patent Office, you would use “R” which means it’s a registered trademark.
I was just thinking about this thread recently as some things have been going on. What are some things to think about (or is it even possible?), to license a product or idea to your own employer?
I work for a company that provides an Internet-based service (actually, the company I worked for was acquired, so now I work for megacorp). There is one aspect of our business niche that isn’t being met, and corporate has been lukewarm to pursuing it.
I’m not happy with their business direction in general and their basically killing our (better) product, but I’m wondering if I were to put together a product on the side that met this niche, what I could do with it. I’m pretty sure their crappy non-compete would keep me from running it myself, so the thought of licensing it to them came up. Or releasing it into the wild as open source….but again I don’t know how much teeth the noncompete actually has. Any thoughts?
Stephen,
I have been told by two different patent attorneys that a provisional patent will not give me enough protection to go public with my invention. I want to make sure that I will be covered when presenting my product to different companies. You mention that you have used many PPA in the past; have you ever had any problems with the security of your ideas. I have everything in place but am still wary of what type of patent I need to feel secure. I have so many inventions in the works and need to know my ideas will be safe.
I have thought about starting a company with my partner Ryan Chester but dont have the money to get started. If our invention would interest investors where could we find that type of business invenstor that works with inventions/innovations?
-your time is appreciated
Brian Marks
Brian,
I would be happy to answer your questions. Let’s answer your first question about money. The nice thing about the way I license is that with a $105 Provisional Patent Application and a sell sheet that I create myself, I can sell my ideas. I have money, but I don’t need it or use it when I license most of my products. You see the manufacturer is going to invest their money in the idea and pay me a royalty. That’s what I love about licensing, you can do it with very little money.
Regarding Provisional Patent Applications and having enough protection. PPA’s have always worked for me, but realized this . . . Licensing and business in general are not a game for people that want 100% assurance that everything is going to be ok. You need to take risks. I take very little risk “money wise” with most of my ideas. This way if things don’t work out, I can move onto my next idea. But I do take risks. You have to. Licensing is not a job, you aren’t guaranteed a paycheck every Friday. If you are passionate about your idea and want to get them licensed to a big company that can sell more than you ever could, then it’s a great game. I can’t tell you how wonderful it feels when I see one of my products on the store shelf.
This is not legal advice, please consult a patent attorney if you want a legal opinion.
Stephen Key
WHEN YOU SAY CALLING DIFFRENT MANUFACTUER DO YOU MEAN A COMPANY WHO MAKES THE PRODUCTS FOR EX: SONY . OR DO YOU MEAN SONY.
Jeff,
You call the manufacturer that sells to a retailer. If you have a new hammer innovation. You call companies that sell hammers and already have distribution at for example. . . Home Depot, Lowes, Wal-Mart ect..
And yes, sometimes you might license to a sub-contractor that then sells to a big company like Sony.
Keep Inventing,
Stephen Key
Is it OK to give the patent # or full details of your product to a large company- even if its on-line for the public from the US patent office?
I even included in detail of the product is made from start to finish on my patent -pending product when I filed it……
Hello Kevin,
One big advantage when you have a provisional patent or patent pending is that the licensee/manufacturer that your trying to sell you idea to doesn’t know what you have protected or what you haven’t protected. This is a great advantage.
However if your patent has already issued and you have a patent number, this can be good also. If you have a patent number, that means that you’re patent has issued/been granted. The manufacturer doesn’t need to wonder if you patent will issue with the claims/protection you applied for.
I would suggest that you not worry about someone seeing your issued patent. Instead, I’d focus on selling the benefits of your idea by using a sell sheet such as the one in this post.
If you’d like to learn more about sell sheet and selling your invention, I have a free webinar coming up. Just click on the website link in this email to attend.
Hello Kevin,
One big advantage when you have a provisional patent or patent pending is that the licensee/manufacturer that your trying to sell you idea to doesn’t know what you have protected or what you haven’t protected. This is a great advantage.
However if your patent has already issued and you have a patent number, this can be good also. If you have a patent number, that means that you’re patent has issued/been granted. The manufacturer doesn’t need to wonder if you patent will issue with the claims/protection you applied for.
I would suggest that you not worry about someone seeing your issued patent. Instead, I’d focus on selling the benefits of your idea by using a sell sheet such as the one in this post.
If you’d like to learn more about sell sheet and selling your invention, I have a free webinar coming up. Just click on my name next to my picture in this post to attend.
Kevin,
One big advantage when you have a provisional patent or patent pending is that the licensee/manufacturer that your trying to sell you idea to doesn’t know what you have protected or what you haven’t protected. This is a great advantage.
However if your patent has already issued and you have a patent number, this can be good also. If you have a patent number, that means that you’re patent has issued/been granted. The manufacturer doesn’t need to wonder if you patent will issue with the claims/protection you applied for.
I would suggest that you not worry about someone seeing your issued patent. Instead, I’d focus on selling the benefits of your idea by using a sell sheet such as the one in this post.
If you’d like to learn more about sell sheet and selling your invention, I have a free webinar coming up. Just click on my name next to my picture in this post to attend.
Hello Stephen,
I am really enjoying reading about your techniques for licensing (and Tim’s technique’s for overall life management).
Just curious…have you adopted any of Tim’s techniques into your own business practices for licensing. If so, how and what exactly?
For example…
Can you/Do you outsource “cold calls”?
Can you outsource the negotiating?
At what point in the licensing process could you turn it over to someone else?
What aspects of your methodology can you delegate to others?
I would love to learn how to focus my time more creating good inventions and not selling/negotiating (Although I know that I must do some of this.).
Am I dreaming an impossible dream?
Thanks,
Rachel
Dear Stephen,
I have a few questions regarding the PPA:
– Would there be a point in filing a PPA for a supplement formulation?
– If an imitator changes the dosages of my formula slightly, would the PPA protect me?
Thank you
Rachel,
Great questions!
The biggest benefit of licensing is that once you license your product to a company, they handle everything.
Here’s a list of just some of the things a manufacturer will take care of after you cut a deal with them.
* The money (You will risk their money, not yours.)
* Sales, (You don’t need to do any day to day sales. Their sales force will handle all the sales.)
* Distribution, (A big mfg will have a HUGE distribution network that they can instantly plug your new product idea into.)
* Advertising, (they pay not you)
When you license a product to a company, most of the time you are handing it over to them. They take care of everything and pay you a royalty based on each unit sold.
You now have the bandwidth to move on and license other products, because you are not spending your time running a company.
Licensing is the ULTIMATE in outsourcing!
Of course, you do need to do some initial work of course to make that sale(license) your product idea to the manufacturer. You just don’t need to do the back end work of running the company and that’s a huge plus.
With regards to outsourcing and cutting this deal. I would give it a shot yourself first before you try to outsource this very important part of the process. It’s really not as hard as you think and no one is going to pitch your idea with more enthusiasm or know it better than you.
Instead of having to call thousands of people to sell your product, which is what you have to do when you own your own company, you will create a targeted list of eight to twelve manufacturers to license your idea to. When you close this one sale, they will manufacture your product, run the company and pay you a royalty.
So you only need one sale!
I would give it a shot yourself before you try to outsource the cold calling and negotiating. It’s hard to manage someone implementing a process when you don’t have first hand experience with the process yourself.
I’ve made my career licensing new product ideas. It give me the freedom to live my life the way i like without the commitment of running a company.
Keep Inventing,
Stephen Key
Mond,
I’ve been told that you can’t patent a combination of natural substances. For example a recipe.
However you might be able to get a patent on a manufacturing technique to make your supplement. Or if your ingredients are not naturally occuring in nature, you might be able to get a patent on the ingredients.
PPA(Provisional Patents Applications) are great. For $110 you can fish of the pier and see if anyone is interested in your idea. I highly reccomend them!
Keep in mind that I’m not an attorney and this is not legal advice. Please seek the services of an attorney if you require legal advice.
Keep Inventing,
Stephen Key
Hello,
I’m wondering if it’s possible to license a method of doing things, a website concept. I’ve noticed a certain website concept, an entire industry in fact, that hasn’t changed in a long time and I have a way of potentially improving it. Is it possible to license this idea, as it isn’t exactly a product.
Any thoughts on this?
Best regards,
Johan
Johan,
I would learn about business method patents. They’ve come under fire lately in court, but they are still a valid way of protecting a method of doing something.
One of the most famous business method patents is “Amazon one click” checkout.
Google it to find out more.
-Stephen
I’m going to first say that finding this blog was like finding a diamond in the mountain of garbage information that is the internet… great info!
This is my situation. I have my idea all thought out and all of its benefits written down. I have the sell sheet (I just so happen to be a graphic design student) all done. I have my $100 for the provisional (not submitted yet). My questions; How and when do I get my sell sheet into the hands of the right person at whatever manufacturer I contact? There are about 5 or 6 benefits to my concept… how do I not tell the manufacturer everything about my idea to get that second call but get them hooked enough to call me back?
Hello Tim, Stephen,
If you cannot get any protection for your idea, for example because it is a new service, how do you start discussions with the potential licensee?
What you want to avoid is a very interested discussion, no revenue for the licensor and a licensee implementing a free of charge idea.
So what commitment between the parties can be arranged prior any discussion?
Thanks, Marcel
Hello Stephen and Tim,
First a big thanks for all your advises (from both of you) it’s exactly what I needed to know !
Second a question for Stephen, I have an idea about a product for Ikea ( and already have the sell sheet done, I have a master degree in digital arts so it helps me a lot ! ) but in this case they already have a design and product developpement team. So my question is do I have to contact this team or the marketing team to have more chances to succeed?
Best regards,
Loïc
Ps : I’m not from Usa, I’m from Belgium and there is no patent pending here but there is an alternative to protect your ideas. For the person interested in it -from Belgium, Luxemburg and Netherlands- you can find info at this Url http://www.boip.int/fr/ideeen/introduction.html
Alex,
Your question is a great one about contacting companies. Pick the one big benefit that sounds intriguing on the phone. When you talk to someone on the phone give them this one sentence benefit statement and ask permission to email your sell sheet.
On the sell sheet make sure you focus on one big benefit. You can have sub-benefits in bullet points, however make sure to have one big benefit as your emphasis. I know it’s hard, since you want to tell them everything.
Your sell sheets need to be like a billboard when you are driving down the freeway. You don’t want to throw everything and the kitchen sink in there.
Good luck and make sure to click on my name in this blog post to get access to more free advice through my internet radio show and blog.
Marcel,
Sometimes you can get a business method patent that may cover a service. I suggest you Google “Business Method Patent” to find out more.
Trade Secrets is another way to protect your an un-patentable idea.
Loic,
It’s always best to have more than one potential licensee (manufacturer to sell your idea to).
If you spend all that time to make your sell sheet and only have one potential company to sell it to, you are reducing your chances of success.
You need to ask yourself if there are also other companies you could license this same idea to.
I made four posts just above one week ago. It looks like they are still awaiting moderation.
I am the interviewee for this post and just wanted to make sure to get back to everyone.
Kindest Regards,
Stephen Key
My idea is in the medical field. I don’t know who’s who. How would I find out what companies would be the best to call.
Thanks
Hello Joann,
First, you need to make your list of companies that are a good match. They should be producing products in the category of your idea and equally important, they should already have distribution in the stores you want your idea to end up in. Don’t bother with companies that don’t have the distribution you need. If you license you idea to a big company, you will get much larger royalty checks.
Your product is a medical product, so it may not be found in a store. Maybe a catalog or medical supply house. Of course it depends on they type of medical product you have. You need to figure out where an idea like yours would sell.
Then you need to know who to call in the companies. My business partner Andrew Krauss and I talk about these issues all the time on our free inventRight radio show. You can take a listen here if you like.
http://www.inventright.com/inventright_invention_radio.shtml
Keep Inventing,
Stephen Key
Hi Mr. Stephen
Good to see this article is still being answered even after 2.5 years since it was originally written. I appreciate your work and writing about inventions. I have over 30+ ideas that I have been writing in my inventions notepad. Alas I have not acted on them on time and I already have seen some of them have been brought to market by others.
I have right now 3 ideas that are not out there as I checked them on the store shelves and talked to the store assistants. I would like to know where do I start. Is there a way someone will show my the way – holding my hands in every step.
Any help is appreciated.
Thanks and regards
Siva
Hi, Mr. Stephen Key
I’m on my way on calling company now,I filed a PPA a few weeks ago and I also have a virtual website of my product and I’m using my website as a Sell Sheet.. So i was wondering Mr. Key, is it important for me to have companies to sign a Confidentiality Agreement before I invite them to the website. And if so where or how can i draw (format) an Agreement form up?
Please help:::: I’m not 1 of your student but I feel like one, I’ve been following you and Andrew for months now on inventright wedinar, radio station, twitter and I THANK YOU both for all your experience and knowledge you two shared with the world………THX AGAIN!!!!
Hello Stephen & Tim,
Thank you Tim for giving me back my life, allowing me to be so much more “present” with my family, and impact the world community with profound good. Thanks Stephen for being responsive to so many questions, and doing so with such keen insights that you could so easily reserve for fees. Just one more reason why I’ve been such an evangelist of your book Tim (lost track of how many copies I’ve gotten sold), and have referred many to your site as well Stephen. I will give you both the most “over the top” plug ever seen on TV when I’m being interviewed on Oprah’s couch this time next year– seriously. Remember and store this blog entry!
My questions are burning a hole in my pocket: (1) How and to whom do I rent a profound idea for a social networking site where the revenue will be from the advertisers it’s sure to attract? Most of the coverage I’ve seen so far has been on answering questions about products to be sold through traditional distribution channels and receiving a % thereof in royalties. I am seeking to sell a well-developed concept and receive residuals from the ads revenue that said very lucky company/investor is guaranteed to generate a ton of. Do you have insights that you can share here or offline (via my email) on how to structure a deal around intangible ideas that have huge upsides to the potential licensee? (2) Do you ever partner with people to pitch an idea for a % of the profits? (3) Are there ways to rent an idea to multiple licensees? If it’s been done, are there any rules I should consider? Following your advice, and Tim’s citing of Parkinson’s Law, I have set a 3-month window to sell this concept or launch it myself. Either way, I will be unleashed to live my 4HWW. Can’t wait to see your reply!!!
Warmest regards,
Ken
Siva,
“Studying The Marketplace” is the first step i teach my students.
You need to figure out how the benefits of your product stack up to other products in the marketplace. You need to get out to the stores and search on the Internet. Google Product search is a great tool. http://www.google.com/products
I have a free radio show where we talk about these issues ever week. You can check it out at http://www.inventright.com
-Stephen
Tyrone,
Thanks for being a loyal listener of our Internet radio show. Andrew and I have a lot of fun doing the radio show and based on the feedback from our listeners, people seem to enjoy the show and appreciate the advice we give.
I get this question about NDA’s all the time. It’s a common concern.
Here’s the short answer……
I have found that most companies will not sign an NDA. Your Inventors notebook, Provisional Patent Application or Patent is what i use as protection instead of an NDA.
This doesn’t mean that i never use NDA’s. I just almost never use them when initially showing my ideas to companies. If they want more details later, I might ask them to sign one, but not usually. Instead, I focus on cutting the deal and getting everyone to move forward.
-Stephen
-Stephen
This is not legal advice. Seek the services of an attorney if you need legal advice.
Hello Ken,
Thanks for being so kind with your praise.
Here are some answers to your questions…..
1)
RE: Selling Intangible ideas
Yes, that may take a while to go into. Feel free to email me at stephen@inventright.com
2)
RE: Do you ever partner with people to pitch an idea for a % of the profits?
No, we stick to performing a “Teacher/Mentor” role and you keep 100% of the profits.
3)
RE: Are there ways to rent an idea to multiple licensees?
Absolutely! The deals just need to make sense to all parties involved. You can break a deal out by geography, distribution, maybe you sell two slightly different versions. I have licensed my spin label invention and am receiving royalties from many licensees(manufacturers).
-Stephen
My kingdom for a provisional patent sample that is not so intimidating… ok, so not a kingdom, but a hearty thank you at any rate!
Hi Mr. Key
I was told by a few companies that they
would not look at my idea. Only if I had my own company and the product
was up running. Can you explain why companies need the
product to be in production already?
Thank You
Hello Tyrone,
Most companies do not require a that you have a company and that you are already selling the product in order to license it.
Most companies just want a good idea. The companies you are talking to are the exception, not the rule.
-Stephen Key
I have been contacted by the producers of a new prime-time show on the Discovery Channel.
We were asked to help get the word out to our network of Inventors about this opportunity.
Please read submission guidelines below and if you are interested, direct all submissions to
Scott Michnick at scott@krakenpictures.com
——————
New prime-time show the Discovery Channel is looking for inventors & entrepreneurs to showcase their creations. The program will feature two hosts (who are experts in invention/innovation/product development) who travel around the country meeting people who are working on “the next great idea”
We’re looking for inventors who have…
* Mechanical Masterpieces – Does your invention have lots of cool moving parts?
* Does it aid in the transportation industry? (increase fuel efficiency, use alternative fuels?)
* Does it feature green energy?
* If not any of the above, can it be “tested/demonstrated” in interesting ways. The more creative the test, the better. Can we take it to the “mall/store/main street” and have people try it out? Could we give it to “the target market” and have them try it out for the day? Can our hosts use it? Obviously inventions don’t all fit into this category, but the more “hands on” the product, the better.
* Is it an AWESOME, MUST LEARN MORE ABOUT thing?
* If your product doesn’t fit the above, but your invention is “just plain fun,” email us!
* Inventors who have made major personal sacrifices in order to get their ideas off the ground are also very desirable.
Interested inventors please email the following…
* Photo of you and your product
* A couple paragraphs describing who you are and your general location (so we can map out our “road trip” geographically). Describe your product / how it works, why is it better than “what’s already out there” and outline any personal sacrifices you’ve made to make your product come to life.
* Links or video clips of you and your product in action
Scott Michnick
scott@krakenpictures.com
Hey Stephen,
Big fan of your work and the support you give the inventor community!
I just graduated college and over the past 6months I have been coming up with ideas, writing them down, and determining if the product is commercially viable while also desirable to people. If it is I create a rough sketch and have my designer in the Philippines create unbelievable renderings of the product, it’s packaging and how it looks in use. I pay him $8 dollars (not a lie) for each IDEA and receive about 5 unbelievable images of the product a week later.
I then create a sell sheet similar to yours and send it to a guy that owns a large impulse shopping company in California. I also send him a second document that is an extensive study on the market, a marketing strategy, a distribution strategy, how the product differentiates itself from other products in the market etc…
I got in touch with this CEO through my next door neighbor whose his son. A couple months back I had a one hour conversation with him and he told me what his criteria is etc… I feel comfortable sending him ideas without patenting them and he has told me that if I send him a product concept but I don’t know how to make it ‘technologically feasible’ and he likes it – his team will figure out the engineering aspect of it.
I have been pitching my product designs to him only, have licensed two of them and I am sitting on a bunch of concepts that he has turned down. I am ready to start contacting other companies but I have three questions:
1. How likely is it to sell a product concept that you know an engineer could easily figure out but you personally do not know how it would work? An example being a soap dispensing scrubber (AKA loofah) that shoots out soap when you push a button (believe it or not the concept does not exist for loofahs but does for dish washing products). Do you need a proof of concept prior to pitching an idea?
2. I feel licensing ideas is a numbers game, the more ideas you pitch the more likely you are to sell one. I have over 100 ideas with renderings and market research on 25 of them – I can do this because each idea cost me $8 to render. If I got a provisional patent on each of them it would cost me $2,500. I’m am not an inventor that is worried of companies stealing my idea (maybe I’m naive)… What do you think of writing up the provisional patent for each of them, pitching the concept to the company, feel out their reaction to your product and filing for the provisional patent once you feel you’re getting interest?
3. What’s you’re take on pitching ideas over the phone? I feel there is nothing better than having a face to face meeting to sell an idea and sometimes that’s just impossible. If I pitch a company on the first call I make to them – what are some strategies you suggest to keep them engaged after your sale?
Thanks in advance for all your help and support!
Best,
Jariel
Hello Jariel,
Sounds like you are doing great!
RE: Your questions
1)
I pitch products all the time that I’m not 100% sure can be made. If I’m 70%, sure that’s usually good enough for me. Sometimes I’ll bother to do the research. Other times i won’t bother with the research and just see if there is interest first. Quite often the manufacturer will see your faked prototype and say…”sure, we can make that”….. and you don’t need to bother with a prototype. Other times they will ask you to prove it. If a company is sincerely interested in your product, they will wait for you to make a prototype if you need to.
2)
I do that all the time. Everyone needs to decide how much risk they want to take. For me, i don’t think filling a PPA after i call companies is a big risk. I’ve never been burned using this approach. However, most people new to the game of licensing feel more comfortable filling a PPA for their first couple projects.
3)
Face to face is a waste of time. Work the phones.
Keep up the good work!
-Stephen
Stephen,
I have a product idea that is a medical device. Should I be concerned with having medical testing done to comfirm its effectiveness before i try to sell it to anybody? Or will a manufacturer be willing to pay for this kind of thing?
Thanks for your help
Followup to my post on Oct. 25th.
Who should I approach to present my idea to in the Direct Response arena – the infomercial producers, the one stop [or so called] Direct Response companies, known contract manufacturerers in China???
Who has the authority to go after an idea; who would you approach?
Dave,
Medical device testing can be quite expensive. I’d pitch it to some companies to see if they have any concerns. After all, they are experts in the product category.
Then if they are interested, yes …. try to get them to pay for the testing. If you work together with them, make sure they sign something that says, “you own any improvements”.
Stephen Key
Steve Hudson,
One of our students at inventRight just licensed to an infomercial company only a month and a half ago. Go visit our home page and click on “How Timea Licensed Her Idea” on the right hand side of the page. The video is a full hour and it’s free.
No, you would never go to a contract manufacturer in China to license your idea. You go to the companies that sell and have distribution in the stores you want to be in.
Stephen Key
This has been the best thing I’ve read since I came up with ideas!!!
(Just so you know, I googled “how to pictch ideas to companies,” in order to find this link)
I’m definitely an “idea generator,” however, I never knew how to successfully pitch it!
Here’s a HUGE mistake I have made in the past when a friend & I came up w/a fragrance concept idea…I was 24 then, now I’m 32.
We secured a meeting with Coty Inc. and divuldged everysingle idea with no patent, protection at all (if I could go back to that day I would have at least videotaped the presentation)
They loved all our ideas and said they would “get back to us.” 3 months later, I get an email from the CFO saying the idea “would not work with their current marketing plans.”
A few months after that, our ideas were stolen! Not necessarily by them, but by other companies in New York.
We were 2 young naive girls who were gobbled up by the giants of businessmen of New York.
Oh how I wish I could go back in time.
Thank you Stephen for this awesome article. I look forward to reading all your books and putting my ideas into action. You will definitely hear back from me again 🙂
I forgot to mention, the latest thing on my mind is an idea for a style of bag. It’s a million dollar idea for sure. It’s one of those “I can’t believe it’s not in the stores yet” ideas! One that once made will have people saying “why didn’t I think of that!”
Do you have any recommendations for bag manufacturers that you have dealt with in the past? Friends in the industry?
It’s one that will have TSA officers at the airport saying “That is clever!”
Hi Stephen,
I’m a big fan, and I need some guidance with my first product. I’m wondering though if the process will be different – my product is a series of how-to books and tools that (is available online only right now) can be made into booklets and CD-ROMS.
Do I need to have them Copywrited instead of Patented? How would my process differ – if at all – from the typical invention process?
Thank you SO much for your help!!
Kristy,
Thank you for sharing your concerns about getting ripped off. My business partner Andrew Krauss and I have been counseling Inventors for over ten years.
If there is one thing that we’ve learned, it’s that we need to help people overcome their fears of getting ripped off, fear of calling companies and many other doubts and the concerns that they have. You will not move forward without removing or at least reducing these fears.
Take a listen to our radio show at http://www.inventRight.com . We’ll mention your name and talk about fears for our next show.
Stephen Key
Kristy,
RE: your bag question.
I would need more info to go on. Go ahead and book an appointment with inventRight Co-founder Andrew Krauss at http://www.inventRight.com/411
He’ll give you 15 mintues of his time for free and some direction.
Stephen Key
Emily,
Most people that write “How To” materials use copyrights to protect themselves. Some also use trademarks.
This is not legal advice. Please consult your attorney if you require legal advice.
Stephen Key
Hi Stephen,
Thanks for posting the article and your continued response to questions! The Q&A has been very helpful.
1) I was curious, is it possible to license product shape? ex: Cheeto’s did a snack food that was in the shape of “X”s and “O”s.
2) Can you license a product to a manufacturer that already has rights to another license involved? ex: I recently purchased a laptop case with a logo of an NFL team on it. If my idea was a different product with just a team logo on it, is this possible? Aside from official sports teams, also included would be large brands like Hello Kitty or Marvel. Possible to earn royalties on a new way to display these brands?
3) If a company patents a product that has the same basic principles/benefits as yours, but either the manufacturing or material is different, or a slight improvement is made, would you still receive royalties from that company? Since the core of the product is still your idea?
Thanks!
I, too, was confused regarding who to contact for my new medical device invention. It involves the feeding tube process system. To make
sure I understand who to contact, would it be a company like Kimberly
Clark, Colorplast,etc. These are companies who sell feeding tube supplies.
My invention is a great improvement over the present day use. I also
believe it is a great invention. I was once tube-fed and I know what is
needed. With the baby boom population coming on, tube feeding could
be a part of everyone’s life at some point in time.
I really enjoyed reading the Q&A on your website.
If I am right about what company to approach,please advise.
Thanks.
Marilyn
Chris,
1)
Design patents can protect the way something looks. I’d suggest learning more about them.
2)
Yes, of course you can license an idea with a company that already has a license with brands like Nascar, Hello Kitty, Mickey Mouse ect.. Great idea. That’s what i did with my Michael Jordan Wall Ball. You can see a pic of the product on this page. http://www.inventright.com/about.shtml
3)
Most ideas are just improvements, so quite often you can protect your improvements. You are covered for whatever you are protecting in your patent, so of course it will depend on what you are protecting.
Stephen Key
Marilyn,
I’d contact medical device companies that already have distribution where you want your product to be.
So first, research where hospitals or individuals (depending on who would buy feeding tubes) purchase their medical supplies. Then look around at these companies, web sites, catalogs or stores. What manufacturers are selling to these distributors or retailers. License to them and get a percentage of every sale they make. That’s licensing!
Stephen Key
Steven,
First, great interview, thank your so much for sharing. (and still answering questions on a 3 year old article!)
Question: how do you come up with reasonable sales figures. I can find the companies but if they are private how am I supposed too know how much product they can move per quarter?
It seems unlikely they will want to share this information during contract negotiations
Lucas,
They may not share sales figures, however they will share how many stores they are in.
Figure a minimum of one unit per store, per week and you have a nice estimate of the volume they can do.
Of course they may sell many more than one unit per store per week, but knowing that they can at least sell the number you come up with will tell you if you want to license your idea to them.
Stephen Key
Hi Stephen,
First, a big thank you for continuing to answer questions in this format. What dedication! I have an idea that is pretty much a slight change to a popular kids’ toy (e.g. Etch-a-Sketch), but with this change it can be sold to a different market. My two questions:
1.) Presumably a company already owns the patent/copyright to the original toy, can I file a PPA with my improvements/changes? Would I neet to contact the original patent holders or get their permission?
2.) Given that the change means selling it to a different market (i.e., not children), does it make sense to approach the same manufacturers of the original with my PPA?
Hello David,
Thank you for the question. By the way you worded it, i can tell you are over emphasizing patents. Don’t worry, everyone does…..
I’m sure it’s just the way you wrote the question, but you would never approach a company with a patent or PPA. You approach them with a sell sheet to sell the benefits of the idea. You are always selling BENEFITS! Not your patent or PPA. For example, ” My Kitty Litter Doesn’t Stick To Your Cat’s Paws”. That’s a benefit and that’s what you are really selling, not your PPA.
With regards to your patent question. It really depends on what they are protecting and what you are protecting. There is no way i could answer your question without looking at the prior art.
Quite you can come up with a variation of an idea that does not violate a patent. So, you should be encouraged to know that this is quite often possible.
Stephen,
What a great read! I’ve only found out about you last night and I’m already thinking of new ideas to pitch. Thanks for your service to inventors!
An idea I have involves kitchen appliances and it would require the addition of hardware that would freshen up this “sleeping dinosaur” of an industry. The twist is that it would also require food manufacturers to make slight changes to their product on a superficial level. (I’m trying hard not to just blurt it out)
What can I do to help ensure that both appliance manufacturers and food companies took the steps needed to get this innovation on the shelf? It would benefit both industries so would I try to get meetings with both companies together? May I send you an email to expand on this idea and get your feedback?
Hello David,
Yes, of course. email me at stephen -at- inventright.com and I’ll help you out.
-Stephen
Hi Tin & Stephen,
First, I would like to say how glad I am to have found this article.(Thanks Tim!)
If I hadn’t come across this article I believe I would have been mopping thinking about my ideas to death.
I have learned so much in very little time and continue to do so. Your continued support and reply to questions is much appreciated! Thank you for sharing your knowledge with us Mr. Key!
The truth is I have always had many ideas ever since I could remember and particularly three that I believe will certainly led to a potential purchased because the ideas are very simple, innovative and the audience target is vast. However, my biggest concern is that I lack the knowledge about the proper process to go about it and have fears of denial. I have prepared my sell sheets, but I am pretty clueless to what comes after and I am starting to lack confidence. Also, I am only a twenty one years old female and afraid that no one will take me seriously.
I am really considering purchasing your inventRight course as I believe that I desperately need your help and mentoring. Will you be available for contact once I am on the program?
-Any feedback is much appreciated.
Thank you,
Iris Angela
Tim and Stephen,
Thank you for this informative interview. I now realized others have the same questions/ barriers as I do regarding licensing. Anyway, I understand that inventors must maintain a logbook to document their invention’s progress and protect their idea. So do we need a different notebook for EACH invention? Or can we use one notebook for all ideas which would save paper.
-Peter F.
Peter, You can use one notebook for several ideas or use a new notebook for each. Either way works.
Hello Iris,
Yes, my business partner Andrew Krauss and I support our students one on one over the phone or via Skype.
I’ve found that our students knowing that we are their standing behind them while they work on their projects and making sure they are saying and doing all the right things gives them the confidence to move forward.
So, yes I am available for one on one contact if you are an inventRight student.
-Stephen
Tim,
No, you don’t need to have a different Inventors Notebook for every idea. Considering how many ideas so people have, that would be difficult. If you do have a big idea or need to take a lot of notes on a particular invention, you might have a separate notebook for that idea.
The notebook you use does need to be stitched like those marble composition notebooks you used in high school or college. The pages can’t be torn out without someone noticing. This is very important. You can’t use a notebook where you can add and remove pages for obvious reasons.
There are also some other requirements for an Inventors Notebook that I don’t have enough space to go into here. Google “How To Keep An Inventors Notebook” and you’ll find an article or two.
-Stephen