One or three times a week – some weeks even more often – I’m contacted by inventors who, having been issued their patent, want to know what to do next (actually, they want to know what to do next in order to make money from their patent).
I tell them what I have preached for years: That the value of a patent is determined even before the invention advances to a prototype phase. In other words, if the inventor doesn’t know BEFORE he files for his patent precisely how, and to whom, he will be presenting his invention for possible licensing, chances are that he will never successfully commercialize his invention.
If you are in this “I have a patent – what do I do next” category, don’t despair. Before you follow these next steps, you must face the realization that your invention, for all the investment you have made so far, may simply not have any commercial value. Although following my method of “building value into your patent before you invent” is certainly no guarantee of success, it does provide a valuable basis for evaluating whether you should continue to invest in your idea. If your objective business assessment indicates little possibility of success, you should be prepared to walk away from your investment and move on to the next one.
But, you say, you can “sell it on the Internet.” If you think that building a Website is the panacea for profiting from your invention, see my “Reality Check” article below. If you’re Yahoo – it’s possible to make money on the Internet, but if your website is anything less, it’s highly improbable that you will make enough to cover your costs, even after a couple of years.
So what do you do if you have your patent and you’re trying to find out what to do next? You’ll have to go back to the beginning . following the same steps as you would if you were just starting the invention process. Don’t worry that you already have your patent. Novelty (a patent requirement) is completely different from Marketability (the ability of the patent to sell).
The market and your potential licensees are exactly the same whether you have a patent on your idea or not. The opportunity to market your invention doesn’t change just because you have a patent. The hope, of course, is that once you re-trace your steps, you will still have a marketable invention. If you find out otherwise, there is no better way to put it than you’ve just taken a big step down the learning curve.
First, map out a business plan. Pretend for a few moments that your product is successful in the marketplace – that you can find it on the store shelves. Then, envision what other competitor’s products are on the right and left side of yours. These “competitors” will be your most logical licensees, provided that your invention provides more functionality at lower cost than the competition.
Investigate these competitive companies by conducting a current patent search. See what patents they currently have, whether they are patenting a lot of new inventions lately, and whether they are licensing patents from other inventors (you can begin to get a feeling for this if you contact the inventors on the patent to see whether they work for the company, or are independent inventors such as yourself).
If your investigation suggests that one company is more inclined than the others to license inventions from independent inventors, then this would be the company to contact.
Finish your business plan, showing specifics on how the company can cut costs, increase market share, or increase profits by manufacturing your invention rather than continuing to build their current product. Hint: if you can’t show specific profit advantage to a company, you are wasting your time trying to extol the “benefits” of your invention. Companies license profits, not ideas – the only “benefit” a manufacturer can show its shareholders for making an investment in your invention is…Profits.
If your business plan projections clearly show how profits can be made, then prepare a presentation to show the prospective licensee companies. One advantage you have in posessing an issued patent is that you don’t have to be concerned about signing a confidential disclosure – something most companies require. Since your patent is issued, it’s already a public document, so show the prospective licensee everything — including your business plan.
If you have done your homework with the competitive analysis, and can show the company – on paper – how they can profit by investing in your patent, then the rest is simply a matter of negotiation.
However, if the company does not respond, or responds negatively, go to company #2, then #3, until you have exhausted the big players. If none of them get excited about your invention, look hard at the quality of your presentation, then take a hard look at the commercial potential for your invention in the first place.
Remember what I said at the start? That you may have patented an invention that companies don’t care about, or an invention that simply won’t justify the investment by a licensee? Although your invention may be “good,” if you can’t demonstrate clear profit potential your invention may not be commercially viable.
The adage “back to the drawing board” came about for good reason. There are many good inventions that never make a nickel for their inventors. If you’ve followed all of the right steps in trying to find a licensee, and still come up short in closing a licensing deal, take a hard look at your invention once again. If you can’t produce the profit potential, then it may well be “back to the drawing board” – start your next invention with the knowledge you have gained by trying to bring your current invention to market.
In short — show them the money, or move on to your next invention. Spending more money and time beating your “dead horse” is “throwing good money after bad.”