The Inventor’s Bible
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From InventorSpot.com
Jun
5
Cash for Ideas & Patents
You don’t always need a patent to get your invention idea reviewed by a top company, and get it sold for cash.
For inventions that are not yet patented, or that contain trade secrets or features that are additional to the patent, I recommend considering the following procedure for submission to companies. (I am not giving legal advice, and you should always contact your attorney when you are dealing with legally binding contracts.)
I typically meet many company executives, especially at trade shows, and many are very willing to offer to sign a confidentiality agreement. They typically ask that one be sent to them at their office after the trade show. This is all fine and good, however it is my experience that 1 in 10 of these executives ever follow through with their promise. This, by itself, is not necessarily an indicator that the company is not a worthwhile candidate, for reason that I will explain later.
After returning from the trade show, I would send the company executive a confidential disclosure agreement and give them an opportunity to return it. If, after 30 days and one verbal reminder, they have not returned the confidential disclosure agreement, and if it is still part of the strategy to submit the invention to this company, then I would do so with a cover letter of confidentiality. The reason I would do this is because since the company already indicated that they are willing to receive the invention on a confidential basis, receiving a cover letter of confidentiality is not out of the realm of what they should expect.
In my cover letter to the company I usually state the invention is being submitted under the understanding that all submitted information shall remain property of the inventor, and the company shall not commercialize or use the invention without a written agreement between the parties. As long as I get this term, it usually doesn’t matter so much to me if the company also agrees to confidentiality, as I have never had a company abuse this in my 33 years in the invention business.
Attorneys have advised me that if I submit my invention to a company under these terms, and if the company accepts the submission without taking exception to the terms, then the procedure becomes and offer and acceptance, thereby potentially making the terms legally biding. (Again, no legal advice here, always consult your attorney)
If critical patent time bars are an issue, then I would lean on the confidential aspect. The book, The Inventor’s Bible, has more detailed information about submitting inventions to companies.
This vastly differs from the submission policy of large multi-national companies whose policy is either to not except non-patented inventions, or to receive inventions only after a non-confidential disclosure agreement is signed. One reason for a large corporation to not agree with confidentiality is because they may be compromised if the company were working on a similar idea simultaneous to the inventor’s submission. A confidential agreement may bring undeserving legal liability to the company. This may welcome a lawsuit from the inventor against the company; something companies want to avoid. I have heard several horror stories from corporate executives who have experienced this from unreasonable inventors.
However, for those smaller manufacturers who are interested in seeing inventions, submitting your invention under the premise of confidentiality without them actually having to sign an agreement helps to bridge the gap and lets some progress happen, especially for those executives who are liability or written contract adverse. This tends to be the case early in a relationship, especially when they don’t know you yet, and when they are not even sure whether they want to proceed with the invention at all.
Granted there is inherent risk associated with this method of submitting to a company, however it is my belief that the advantages of potential progress far out weigh the small chance of plagiarism. Further, I generally revert to this procedure especially when the invention is in a small enough niche market that there is likely not justification for any type of lawsuit concerning it. Thirdly, I tend to do this with companies that I have already pre-qualified, had some experience with, and/or have talked to the executive and so forth. This is not to suggest that it is 100 percent safe to submit to a company just because I have spoken with someone in the company. Lastly, I do not use this procedure if the premature public disclosure of the invention is an issue for either US or foreign patent filing. The inventor/client must always make the final decision as to how lenient they want to be with their submission policy.
If the potential market in the next 10 years for the invention were over $50 million in retail sales, then the inventor may want to be a little more conservative regarding their procedure for submission to a potential manufacturer. I use this as a arbitrary figure for the sake of example. If the total market were worth $50 million retail, then the manufacturing company that you license may gross $25 million. If the inventor were to receive a 5 percent royalty then this would amount to $1,250,000 over a ten-year period, or $125,000 per year, minus whatever commissions you paid for negotiation of the license.
Therefore the net income to the inventor may be in the range of $100,000 per year. When you consider that it costs on average over $1.2 million per side for just the expenses of a patent infringment lawsuit, it would be highly inefficient and not a prudent financial move to consider a lawsuit because the potential reward would not sufficiently offset the cost for bringing the lawsuit.
As such, there has to be quite a bit at stake, such as $100’s of millions before even considering going into the litigation realm. If litigation is not a reasonable alternative, then the next best thing is to make sure you are working with a company that is trustworthy, based on their track record and previous treatment of inventors.
Nothing is written in stone so at some point the inventor has to take a leap of faith and hopefully companies have been pre-qualified enough that this leap is being made into the hands of a good company. This also emphasizes the need for the pre-qualification and interviewing at places like trade shows, during in-field market research, and with interviews with executives in the company and people in the industry.
Comments
5 Responses to “Cash for My Idea – Without a Patent”
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I think this information is very insightful and gives some inventor’s help and understanding that it is possible to deal with large corporations.
Thank you, Jeff.
Well worth my time reading. As a paranoid 1st time inventor, it would have never entered my mind to submit a letter of confidentiality. It sounds like a great way of getting the door open that most would assume closed. Maybe the person would prefer not to sign.
Some years ago I developed a gun safety device that is still at least 20 to 30 years ahead of its time. Also some time back the uspto sent me a provisional patent pending and the provisional patent. However I do not have the funds to go any further at this time.
Would you have any ideas that would help?
Thank you for your time, Dave
I suggest reading The Inventor’s Bible for starters.