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.

So, you want to sell your idea for a patent?  Here are some factors to bear in mind.

The companies who are your potential purchasers have different criteria for accepting new ideas.  Typically, larger companies demand that you have either a patent or patent pending prior to even looking at your invention.

Other small to medium size companies may be willing to look at your ideas with no patent pending and without a prototype.

In fact, one notable U.S. hand tool manufacturer accepts ideas without a patent and without a prototype. If they like it they will build a prototype, test market it within the company, and you still have the opportunity to potentially patent it on your own, AFTER you know that a company sees value in your invention and wants!

See how dramatically different these two approaches are.  One suggests that you at least initiate the substantial expense of applying for a patent, PRIOR to even submitting your invention to a company, and the other approach allows you to forego this expense until AFTER you at least get some indication as to the potential marketability and interest in your invention.

With the United States being on the ‘first to invent’ system, you may have up to a one-year time period to do this type of market due diligence, PRIOR to filing a patent.

So, how do you find out whether your situation would apply to the first scenario, or the second one?  The answer is simple.  You simply have to communicate with the right people in the right companies.  These people are the ones who would be your potential purchasers or licensees of your invention.  The right people can tell you what it is the company would like to see from you, in what format, (email versus regular mail), and with what kind of proprietary protection they expect you to have prior to the submission of your invention to their company.

The good news is, you can identify the right company – and even pre-qualify them WITHOUT ever revealing the patentable subject matter or trade secrets of your invention.

Now the question becomes, why wouldn’t you do this do diligence, IN THE BEGINNING OF YOUR PROJECT if you have an opportunity to do so?

In this way, you can establish your development process and decide how much you need to budget, when, and for what.  It enables you to answer questions regarding patenting, prototyping, and more.  Will you need a ‘works – like’ working model or ‘looks-like’ sample and etc?

Inventors can easily do their own initial market research to identify whom these right companies are and talk to the right people who can give you these answers.   For more information and to learn how to do this, read The Inventors’ Bible:  How to Market and License Your Brilliant Ideas, which has two chapters dedicated to instructions about how to learn this information, and it has a workbook included with the third edition with specific questions to ask and who to ask them of.  Additional information is found on www.docie.com and www.dimwit.com.

The National Hardware Show, and Lawn & Garden Expo will be held May 4-6, 2010 at the Las Vegas Convention Center. This is an international trade show, and the major US show for consumer, do-it-yourself (DIY) products sold in Lowe’s, Home Depot, Menard’s, Ace, True Value, and hardware stores throughout the USA and even internationally.

If you are an inventor of new products relating to: Hardware & Tools; Lawn, Garden & Outdoor Living; Paint & Accessories; Homewares; Plumbing & Electrical; Storage & Organization; or need help with International Sourcing, this National Hardware Show is place to be.

Most inventors think that they need a patent and a prototype before attending such a trade show. NOT TRUE. The fact is, I’ve attended these shows, while representing inventions, for over three decades – so I’ll let you in on the secrets.

First, you attend the show, you do not pay the big bucks to have an exhibit booth. This allows you time to walk the entire show, which will take a day or two, and see every exhibitor, talking to those with promise.

Second, the attendance price is normally free, or under $100, airfare and hotels are cheap, so for a budget of $300 to $1,000 you can attend an entire three day show, all expenses paid. Why pay $5,000 for a patent, or for expensive prototyping, when you may find a manufacturer who can potentially help you fund your invention project, and save you the risk and investment?

Third, at the show, you are there to listen, not pitch your invention. Therefore, you never have to show anyone any trade secrets or patentable subject matter relating to your invention. All you need to do is be able to talk briefly about the potential benefits and advantages of your invention, just to get in the ballpark of conversation.

Forth, follow the teachings on Docie.com, Trade Shows webpage, and you will learn how to find the markets for your invention, the distribution channels, who the potential manufacturers are, the right contact people, the companies idea submission procedure, their track record of working with other inventors, pricing for your product, potential sales revenue, competitive information, risks and obstacles you may face, and much more important information that you would otherwise never be able to obtain at one location, and in such a short period of time.

If you are working with a marketing company, and they are not attending this trade show, get someone else, because they are not seriously in the game.

Fifth, the United Inventors Association is hosting a one-day seminar for inventors on May 3, the price of which includes admission to the show.

If you can not attend this show, contact some of these reputable companies who plan to be in attendance: America Invents, Docie Marketing, and Lambert and Lambert, all of whom have experience in hardware, with working this show, and are seasoned marketers. Some charge a fee, and others charge commission only.

Good Luck!

Many people think that invention submission type companies are the biggest sources for ripping off inventors. But these companies can’t even come close to taking money from inventors at a rate remotely near what inventors waste on patent attorneys to file erroneous, inappropriate, and ineffective patent applications.

Here’s how you get scammed. First you establish a profession of highly paid and powerful lawyers. Then you add a lobbying body like the APLA (American Patent Law Association) to do your gunning for you, both in Washington, and with PR. With this facade of seeming credibility, you publish material and build a case for telling the lowly independent inventors (I’m in this category, too) that the first thing you’d better do is patent your invention before doing anything else. Some go so far as to inappropriately tell the inventor that they are “protected” by the mere filing of a patent application.

Of course the justification for such advice is many fold. Filing a patent application, and thereby establishing your date of priority certainly may be critical; however, with most inventions being in rather small niche markets, this advantage is mostly outweighed by the inherent risk of losing any and all money you spend on patenting and developing your invention. Every inventor’s situation is different; one size doesn’t fit all. As such, should you patent BEFORE spending a little time and money doing some market research? The answer is, normally, and on average, NO.

The next concern of the cautious patent attorney is if you reveal your invention while doing ANY market research, you’ll probably lose any chance of receiving foreign patents. Although this may be true, consider these two facts:

1. There is a tremendous amount of market research that an inventor can do on their own, without ever revealing any of the trade secrets of their invention. Isn’t it interesting that patent attorneys, as sharp as they are, have never in the 200+ year history of US patents, figured out how an inventor might do some quick preliminary market research before applying for a patent? Since these patent attorneys as a whole, and as a profession, are inept when it comes to invention marketing and especially invention market research, I would humbly suggest that they leave this sort of thing up to marketers, and maybe even glean some advice from the marketing profession and work in concert to help inventors on a more holistic basis.

2. What if you never get a foreign patent? My experience is that foreign patents are not appropriate for over 95% of the hundreds of invention projects that I have personally worked on or been familiar with. This is because it normally requires an investment of well over $100,000 to go down the foreign patenting route. Plus, there are exorbitant costs to maintain those patents on an annual basis. Most inventions by individual inventors are never successful, or only a tiny portion ever get international distribution, and fewer will ever receive enough royalties or other income to justify the investment of foreign patenting.

So, how does an inventor pre-determine whether their invention project is even appropriate for foreign patenting? Well, this is where the market research comes in handy. And who’s going to do this? Not the patent attorney. You don’t hire a brain surgeon to repair your car. And you’ll find few patent attorneys referring their would-be clients to a marketing company, especially prior to any patent application.

Are you starting to see the vicious circle here? Patent attorneys have used every apparent credible resource and reason to capture the first dollar spent by inventors. Nearly every day an inventor tells me that they can’t spend any money on marketing because they blew their wad on patenting expenses, yes, even mortgaging the farm in some cases. The number of inventors who tell me this dwarfs the number that complain that the submission companies have just allegedly ripped them off.

You may ask, why would these unscrupulous attorneys, many of whom seem nice, want to rip off the poor independent inventor? The answer is simple. When cash flow is tight, do you send the inventor to a marketing research firm to tell the inventor that his “baby is ugly,” or do you take the first dollar, give him a vanity patent, and make tons more money in the process? Enter — the dark side.

Next thing you know, you’ve spent $5,000 to $10,000 for a patent that you will never need and you’ve wasted three or more years waiting for a response from the patent office.

In all fairness, I must say that irrespective of all the statements about attorneys I’ve made herewith, I use attorneys all the time, I recommend that my clients use attorneys, and I think everyone should use, at least to some extent, a patent attorney or agent to file their patent application; attorneys have saved my ass, helped my clients, and many are my personal friends. Not every attorney is unscrupulous, and many do recommend that inventors seek marketing and market research results before pursing a patent. You just need to do your research beforehand and know when it’s the right time to use an attorney’s services, and which of their services to use.

In the next few blogs, I will talk about what inventors can do to learn more about the pros and cons of patenting, and how to establish a patent strategy.

RON DOCIE’s career in the world of inventions spans more than three decades. His own inventions are found in Wal-Mart, Kmart, and thousands of other outlets. As an agent for inventors, Docie has negotiated over fifty licenses with such companies as General Motors. He is an expert consultant on idea submission to Johnson & Johnson and other prominent companies. Docie is the president of Docie Development, LLC, an international company that provides services for inventors and corporations, and he is author of The Inventor’s Bible: How to Market and License Your Brilliant Ideas, Third Edition, 2010, Ten Speed Press, a Crown Publishing imprint of Random House.

In the early 1980’s, after I successfully commercialized my first invention, a blind spot mirror for vehicles, I decided I would change the direction of my business, and market ideas, patents and technology solely in the “green” categories of saving energy, helping the environment, reducing pollution, etc.

Being a successful inventor, many other inventors would approach me — some of whom had inventions that would save millions of barrels of oil, reduce C02 and other pollutions ten-fold, save energy and in general help the environment, our quality of lives and the planet.

The notion of working for inventors with such idealistic standards was exciting and encouraging.  However, being a neophyte in marketing and only in my 20s, I would have never believed what I was about to learn about marketing energy-saving inventions.

At the time, the US Department of Energy was the only branch of the U.S. Government that had programs and financing specifically for inventors. Further, the U.S. Government funded the SBIR (Small Business Innovation and Research) program, and billions of dollars were allocated for inventors and small companies to develop innovative technologies geared toward saving energy and the environment. However, after their research was successfully concluded, it was up to the grant recipients to figure out how to commercialize, market or license these fabulous technologies.

Here comes Docie Invention and Patent Marketing Services to the rescue. I went to the conferences sponsored by the US Government for these energy programs and I sought out the top inventions and inventors who seemed most reasonable and willing to work towards commercializing their technology. I even provided most of my services on a commission basis.

The net result: I essentially financially lost my ass and had to completely remodel my business.

Here we were, in the early 80s when the first oil embargo took place, interest rates were in the double digits and the gasoline prices increased at least threefold in a very short period of time. You would have thought the timing was perfect to commercialize any energy-saving invention, whether or not it had an environmental twist to it. Guess again.

The oil embargo blew over, fuel prices stabilized, the presidential administration and congress changed guard, and all of a sudden we went from a condition of everyone being so concerned about affordable gasoline to business as usual; who cares. Does this scenario sound familiar? It should, because the exact same thing took place just recently when we were on the path to having strict fuel standards for vehicles but instead saw an explosion of gas guzzling SUVs. History repeated itself, almost to a T.

The vivid lesson learned by these examples apply to all inventors seeking to commercialize their patents, new products and technologies. The lesson is, it matters not what the facts are, it matters only what the facts are perceived to be.

There is largely a disconnect between what is true value as recognized by an inventor who developed a truly wonderful and valuable invention, and what is perceived as value by the consuming public.  For example: we might know that health food is better for us, but are there more health food establishments, or convenience stores selling sugar, caffeine, alcohol and cigarettes?  We might know that we should conserve fuel, but how many people go out of their way to do so in a serious way, let alone make a sacrifice?

So, you as the inventor may have a wonderful invention that may save lives, help the environment, reduce energy consumption and so forth.  Will it sell?  That is another story. Why? Because consumers don’t always make purchases, or even make life decisions, that are in their best interest.

Even in my own case, knowing that the market hasn’t fully changed my do-good intentions.  I am currently working on developing a hybrid, solar cooking oven that uses the sun in combination with other fuels to cook without having to turn on your oven.

Does it work?  Yes. It actually works great.

How did the test market go?  It bombed of course, no one cares about us.

Will I give up?  No.

Yes, I am a true inventor.

You can learn more about this disconnect in inventing and marketing by reading more articles on DIMWIT.com Self-Help Guide for Inventors, or checking out my book, The Inventor’s Bible, How to Market and License Your Brilliant Ideas, 2001, 2004, and 2010, 3^rd edition by Ten Speed Press, in print by Random House.

RON DOCIE’s career in the world of inventions spans more than three decades. His own inventions are found in Wal-Mart, Kmart, and thousands of other outlets. As an agent for inventors, Docie has negotiated over fifty licenses with such companies as General Motors. He is an expert consultant on idea submission to Johnson & Johnson and other prominent companies. Docie is the president of Docie Development, LLC, an international company that provides services for inventors and corporations, and he is author of The Inventor’s Bible: How to Market and License Your Brilliant Ideas, Third Edition, 2010, Ten Speed Press, a Crown Publishing imprint of Random House.

This past summer I was invited to attend the Hawaiian Inventors Conference in Honolulu September 19. I was hosted by the conference organizer and speaker, Daynin Dashefsky. Daynin is a real go-getter and loves to share her experiences of how she was successful commercializing her own invention. She holds conferences like this and has a series of CD’s sharing the process she went through, and the process any budding entrepreneur may need to go through to commercialize their invention, especially if they want to do so on their own, i.e., be an entrepreneur and have their own company for manufacturing, distribution and marketing.

What was somewhat unique about Daynin’s conference, despite the location, which was much more wonderful then most of the inventor conferences that I attend, was the format for the conference. Daynin was the principal conference speaker on Saturday.  Then, on the second day of the conference, all attendees were invited to spend 30-60 minutes interviewing any member of the half-dozen industry experts on various topics pertaining to the commercialization of inventions.

In attendance were: Brian Kunzler, a patent attorney from Utah who helped inventors understand U.S. patents and trademarks, the process of patenting, how to get a patent, how to apply for a patent, and so forth. Michelle Price consulted on social media and marketing. Michael Drew, an expert on market positioning, book publicist, and SEO specialist; Ron Wilder, electrical engineer and prototyper, Connie Chow, asian manufacturer sourcing specialist, and yours truly, Ron Docie, invention marketing and licensing specialist.

Other Inventors’ Events

The Minnesota Inventors Congress (MIC) held in June each year, in Redwood Falls, Minnesota, offers a similar format. However, their conference has many more speakers, a broader range of advisers, and a tradeshow for inventors to display their inventions.  Sometimes new product scouts from major manufacturing companies go to the Minnesota show to seek inventions.  Unfortunately, the Minnesota Congress, which is the oldest conference of its kind in the United States, and possibly the world, is the only substantive conference held without interruption over the years. Check out this blog in a couple months to get updates about these upcoming trade shows, or the news reports covering them.

The Yankee Invention Exposition in Waterbury, Connecticut, offers the format very similar to that of the MIC however; it is unclear if they will receive the funding necessary to hold a conference in 2010? Because of funding they had to cancel the conference in 2009.

In my next blog, I’ll talk about the Wisconsin innovation workshop for inventors and share information about that conference format and features as I learn more.

RON DOCIE’s career in the world of inventions spans more than three decades. His own inventions are found in Wal-Mart, Kmart, and thousands of other outlets. As an agent for inventors, Docie has negotiated over fifty licenses with such companies as General Motors. He is an expert consultant on idea submission to Johnson & Johnson and other prominent companies. Docie is the president of Docie Development, LLC, an international company that provides services for inventors and corporations, and he is author of The Inventor’s Bible: How to Market and License Your Brilliant Ideas, Third Edition, 2010, Ten Speed Press, a Crown Publishing imprint of Random House.

This Wisconsin inventors conference, sponsored by The University of Wisconsin, Wisconsin Innovation Service Center, was held Oct. 1-2, 2009 in Dells, Wisconsin.  The conference was well attended by what seemed like 100-200 inventors as well as plenty of consultants and experts who facilitated workshops on various subjects relating to patenting, marketing, prototyping, manufacturing, raising venture capital, seeking government assistance, forming a company, commercialization, and licensing, and consulted with inventors at no charge.  If the inventor were to pay the regular hourly rate for these experts to consult with them on their invention project the cost could be $500 – $1,000 to get this level of advice.

It’s a great deal to attend a conference like this for under $200, or even under $100, depending on the conference, since you’re able to take advantage of these experts at no additional charge. And this is in addition to the valuable information that you learn from the speakers and workshop leaders.

In addition to the workshop, this conference hosted exhibit booth space for inventors to display their inventions and be judged in an inventor’s contest.  I was one of four outside judges for this inventor’s contest and, as usual, when it came down to the last half-dozen candidates it was very hard to choose which invention may be more deserving of a certain prize than another. We had about 50 or 60 inventions to choose from with the inventors coming from several different states.

Prizes awarded to inventors included free market research and patent services. During our judging process, we attempted to determine what the needs of the inventor were and what stage in the commercialization process they were in so that we could award prizes that would fit their needs.

By coincidence, one of these winners of this contest also had an exhibit booth at the annual automotive aftermarket parts and accessories association tradeshow in Las Vegas where I attended. They had robust activity in their booth and I was able to talk to a couple of manufacturers in the trailer towing and hitch industry that expressed a somewhat favorable response to the notion of including such a product in their product line.

It looks like our judging at least hit the mark on our impression of that invention. And hopefully, in some of the next blogs to come, we can follow that inventor to see what they end up doing after the response they got from the automotive tradeshow.

During the two days of the Wisconsin conference, three simultaneous workshops, each about an hour and a half in length, took place throughout the day. During breakfast, lunch and dinner on the first day, the keynote speakers shared their insights regarding inventors or the invention process. My workshop was a panel of experts, which included Warren Tuttle, former product scout for Lifetime brands, the largest manufacturer of housewares products in the world, who is now an independent product scout in the housewares industry through his company Monashee Marketing. Other panel members included: Doug Reigle, Senior Vice President, Regal Ware, Aina Vilumsons, Director, WI Procurement Institute, and Thomas Motosko, Versatile Housewares and Gardening Systems.

We had a robust question and answer session answering inventors’ questions regarding how to license your invention to a company, how to find a manufacturer, how to get royalties or sell your new product idea, and inside information about the process from those who have been there and done that.

All in all, I had a wonderful time in Wisconsin, mostly owing to the wonderful people and nice hospitality, and I am hoping to attend this conference again next year.

I’ll also be attending the 2009 Automotive Aftermarket Parts and Accessories trade show in Las Vegas the week of November 2, 2009. If you have automotive aftermarket related inventions or ideas, you should definitely come along.

Even if you’re an inventor still at the idea stage, with no patent application, you can still get many benefits from attending such a show, and you never have to reveal your invention in the process if you’re not ready. (Check out my article about attending trade shows)

Docie Marketing will be representing a couple of independent inventors at the show, and we have room to accept a couple more, so if you’re interested, send us an email or give us a call.

Photo courtesy of Roadsidepictures’ Flickr stream / CC BY-NC 2.0

• We’ve launched DIMWIT.com Self-Help for Inventors, a site with tons of helpful resources for inventors and an application (coming soon) to help them get customized invention advice and build a professional marketing presentation
• We’ve updated Docie.com with new information and a new look, and we’re working on improving our free evaluation submission process to make it more convenient for you
• We’ve launched a Twitter account (@DIMWITInventor) and Facebook page so we can better connect with our friends and fans
• And now we’ve launched a blog so we can share what’s going on with DIMWIT, Docie and The Inventor’s Bible

We hope you’ll join us by subscribing to the blog and connecting on our social sites. We can’t wait to talk inventions and patenting with everyone!