Common Sense Inventing - Educational articles to help Inventors make informed decisions

I have had a couple of Inventors this year contact me saying company X is ready to sign a licensing agreement, but now I am not sure what to do. Because I really like company Y more and am waiting for them to review my product. Don’t expect companies to put up with you being indecisive when it comes to making a decision on a licensing agreement. You can let the first company know you have other interest in hopes of getting a bidding war going, but in most cases the company will either drop the offer or stick with the current offer and put a time limit on it. Especially, if they were under the assumption that they were exclusive to you.

Some Inventors are stuck in the “Grass is Greener” mode and are always looking for the better deal and end up destroying all the deals and get nothing. There is a fine line between going for what you want and being so greedy no one wants to deal with you.

You need to decide up front what your goal is in a licensing deal and what is the least you will accept and work towards the best goal first. But you need to make sure you are being realistic in your goals. Asking for $100,000 advance on a plastic comb is probably not going to happen.

Update: One of those Inventors contacted me yesterday to say they were disappointed to find out company X withdrew their offer and company Y has passed on their product. So now they are back to square one and the other companies they have available to approach are most likely going to offer much less than the first two and have a significantly smaller distribution network.
Their solution to the problem is to approach company X again and offer to take a much lower royalty and advance in hopes they will have renewed interest.
What would you do and why?

To many Inventors have the grass is greener issue combined with the unrealistic expectations issue. A deadly combination that normally does not end well.

Update: The Inventor contacted me today saying they went back to company X and said they would take a lower royalty rate and advance if they were still interested. He was shocked they declined the offer and they wished him luck with his future ventures.
So now they have no offers on the table and company X and Y were the top of their list of prospects since their market was only a few major players.
What would you do?

A misconception that plagues Inventors is two-fold, one they don’t do the proper research to see if their idea is patented and the other is they don’t do research to see if it is on the market. These two are independent of each other, but they both need to be done before you move forward and start spending money on your idea. You can do a lot of this for free, it just takes your time.

They forget every item patented is not on the market and every product on the market is not patented. So, just doing a patent search is not the answer to every idea you may want to research. I get contacted by Inventors all the time telling me they did a patent search and could not find their idea anywhere and I have had Inventors swear they looked online and in every store for their idea and can’t find it.

In both cases they missed the product in the other field. When checking to see if your idea is out there you need to check both areas not just one. Go into any large chain store and look at how many products you see on the shelf without a patent. I think you will be amazed at what you find.
As I always say “patentable does not equal marketable” In a number of cases branding and getting to market first has proven to be more effective than a patent.

Not a week goes by without an Inventor emailing me wanting to know why it takes so darn long to get an answer from a company they have approached or is reviewing their idea. Being a serial Inventor myself I understand the frustration with the long wait, so I am going to try and give you some insight into why it takes so darn long.

Here is an example I like to use: I contacted a company I have a long relationship with to look at a particular product. First, you have understand the company owns 34 other companies and all new products have to go through one central person to be reviewed by this person to decide if it should even go to a particular company within their grouping. He then gets involved with the lead person for that division and works with them the entire process. The 34 companies make everything from industrial lubricants, pet items, tools, medical supplies, plumbing items, auto parts and more. So they are very diverse.

I have talked with this person weekly for a number of years. So we have a great working relationship. He first saw the product in December of 2012. He forwarded it to the division lead that looked at the product and liked it for their pet division. They did some initial costing and other reviews. They came back saying they wanted to do further testing and would get back to me. The testing took 2 months due to the complexity of the product. They came back saying it was of interest but they had some internal personnel changes and it would take some time to move forward if at all. I continued to send the product to other companies for review and got a couple of bites, but those companies decided to pass on the product.
After several more months the original company I presented it to were back looking at the product and starting with a new focus group. So, I started their review process all over with the new people in that division. As things progressed we got involved with their engineering people discussing CADs, design changes and other information. After a couple more months we started discussing terms for the licensing of the product. It took 2 months of back and forth to agree to terms on a final contract. That contract was signed March 2014. So as you can see it was not an overnight success, but it was a great success.

To give you some real life examples of why things don’t move as quickly as you and I may want. Read some of the responses below that you get from companies. Do you think calling them daily or weekly asking for an update would help or hinder your chances of getting the current product they are holding licensed? If you called them daily or weekly asking for an update in these situations do you think they would be happy to work with you and want to see more items from you? Do you think pushing the issue would change their internal policy?

From a major leader in this particular market.
I forwarded the concept to our __________ Folks. Can we please touch base again in another month about this and other _________ ideas?

Am I supposed to tell him a month is to long to wait? Should tell him I need an answer by Friday because I don’t want to wait that long?

This is from a Toy Company that specializes and is the leader in the type of toy I want to present. I contacted them on October 2013 and below was their response.

Hi Roger,

Thank you for your email. __________ is currently wrapping up our product development for 2014, but if the opportunity is still available in the spring, perhaps we could discuss then.

Should I tell them Spring is to far off, I think December would be better? I went back to them in March and they have interest in the product I presented to them. They were so interested we have a meeting set to meet them face to face in the next few weeks to discuss that product and others.
Do you think it would have gone so well if I had emailed them every week saying “ Is now a good time?” “ How about now?”

Would I love to send a product out on Monday and be closing the deal by Friday? Yes. Does it work that way? In most cases I would say, No. Typically you are working within each company’s system and dealing with multiple people within those companies to get the products reviewed by the right person within the company, allowing the company to do their internal due diligence, costing, focus group or whatever else they deem necessary for them to make an informed decision. Why? Because, they will be spending a large sum of money and effort to get your product to market. You want them to be successful which means you will be successful.

One thing I have learned over the past 15 years of inventing and getting my products licensed is that you WILL have to wait, things will not always go the way you want, but if you do things in a professional manner your chances of success are higher.

A good practice to follow is once you have a product out there for evaluation don’t just sit there worrying about where that product is, and its progress. Start working on your next product to take your mind off the first one. The time will go by quicker and you will have another product to add to the mix.

Being a Serial Inventor and having worked as a Licensing Agent I have seen both sides of the industry. Working with Inventors over the past 18 years I have found that in a majority of cases Inventors have unrealistic expectations of how the inventing and manufacturing industry works versus how they think it should work. So I put together a list of comments Inventors should read and consider because they are a fact of the industry whether you want to believe them or not called Just Because:

1. Just Because you love it and can see it in every home in the U.S. does not make it a reality.

2. Just Because your friends and family love it, does not mean it is a million dollar idea.

3. Just Because you have a patent does not mean its marketable.

4. Just Because you can make it cheaply does not mean a company HAS to sell it.

5. Just Because you sent it special delivery to a company does not mean they will open it right away or that they will love it.

6. Just Because YOU KNOW it would fit well with the company’s line of products does not mean they will.

7. Just Because you spent a lot of money having a prototype made, paid a lot for a patent, paid more to shoot a video, paid a marketing company for
a marketing analysis and are in debt over your head does not mean a company has to take that into account when they review your idea.

8. Just Because you have been busting your butt for the past 3 years on this product does not make it marketable.

9. Just Because YOU want it to happen you can’t force consumers to like your product and buy it.

10. Just Because you got rejected does not mean THEY are stupid.

11. Just Because there are 360 million people in the U.S. does not mean you put in your sell sheet that all 360 million people will throw away their current (perfectly working) product to buy your product.

12. Just Because you don’t understand WHY, people will buy things you think are stupid and useless over yours it will still happen.

13. Just Because you called the company and left a message does not mean they have to call you back.

14. Just Because you sent them your prototype unsolicited does not mean they have to pay for the return postage.

15. Just Because a company has the capabilities to make your product does not mean they Have Too.

16. Just Because you don’t want to do any of the boring research does not mean a similar or better product than yours does not exist.

17. Just Because you have a patent does not mean companies will be beating down your door to buy it.

18. Just Because you have all the facts and figures on your potential sales does not mean you will meet those goals. Rule number one- consumers are fickle.

19. Just Because your presentation was great and your prototype worked perfectly companies still can and Do say NO.

20. Just Because you have a patent does not mean your product won’t be knocked off.

21. Just Because you think the long story of how you came up with your product is interesting does not mean you have to add it to your presentation to the company.

22. Just Because you signed a contract with a company does not automatically mean you will be rich. It still has to sell to the consumer.

23. Just Because you have a product on the market does not mean it will sell forever. Every product has a shelf life and each one varies.

24. Just Because you spent $10,000 on a prototype and a patent does not mean you will make your money back.

25. Just Because you want everyone to be a cheerleader for your product doesn’t mean you won’t have to face criticism.

26. Just Because you can talk people into investing in your product doesn’t mean it will be a great seller in the stores.

27. Just Because you get rejected does not mean you can’t find success. Learn from the criticism, improve your product and try again.

28. Just Because your product is a niche item doesn’t mean you can’t be the leader in that niche.

29. Just Because you have competition in your market does not mean you can’t compete, you just have to work harder at it, find your HOOK and stand out from the crowd.

30. Just Because you have three patents you want to sell does not mean a company has to buy them. They have to have market value to get a company interested.

31. Just Because you can get a loan to file a patent…should you? (Do your research first and make an as informed decision as possible before going in debt)

32. Just Because you interpret another person’s patent in your favor does not mean the Patent Examiner will have the same interpretation.

33. Just Because you think you are to smart to fail, doesn’t mean you won’t. Do your research upfront and treat it like a business……because it is.

34. Just Because you are able to make a prototype does not mean it is marketable.

35. Just Because none of your relatives have said your idea is not marketable doesn’t mean a company will have the same assessment.

36. Just Because you are willing to travel with your product to explain it to a company doesn’t mean the company will accept that offer.

37. Just Because you want your product on the market this year does not mean the company can make it happen. You have to take into account their selling season, the time to manufacture, get it in front of Buyers for retail and distribute the product. That all takes time.

38. Just Because you feel you should get a top royalty rate does not mean one will be offered. Royalties vary depending on what you bring to the table, the ROI, their margins, your target market and more.

39. Just Because you don’t understand everything in the agreement you are about to sign does not mean the company is taking advantage of you. It is your responsibility to get legal advice and understand what you are agreeing to in any contract BEFORE you sign it.

Persistence, Patience and Positive Attitude
I thought I would share the Three P’s that have made my inventing successful.

Persistence- defines persistence as “the act or fact of persisting.” I would expand on that definition to add “A controlled steady movement towards a goal”. Many Inventors tend to be overly pushy and demanding wanting answers immediately from the company they are trying to get interested in their product idea. There is a fine line between Persistence and being a Pest. Once that line is crossed your chances of success are lost.

Patience-If you don’t have it, you better start learning it. Inventing is a love/hate relationship. You love your idea and want the world to buy it, but you hate the time it takes to get it to market. No matter how much control you think you have over your project there are always obstacles you can’t control. So, unless you are the sole person doing every aspect of the design, gathering materials, manufacturing, shipping, sales, marketing, product placement and own a chain of stores to sell it, you will be waiting on someone.

Positive Attitude- The final P is Positive Attitude. Without it the first two mean nothing. Your attitude can make or break your success. Whether it is a meeting with potential investors, a presentation of your idea to a company or speaking with a consumer about your product your attitude is key to your success.
You have to have faith in yourself and your idea. If you don’t why should anyone else? You don’t see an infomercial on T.V. saying “We think you might like our product.” Instead they are saying “You will love how it does _________ faster, better, easier.” Why, because they know these are words that are positive and tell the consumer the benefits of their product. They are stating all the positives to get you in that same frame of mind.
Ask yourself why you came up with this idea. Do you truly believe it will accomplish what you say it will? If you can be positive about your product and its benefits are real, not just hype, it will sell.

Remember- “Dreams are accomplished by people who do, not by people who wish”.