How to Rent Your Ideas to Fortune 500 Companies: Part II (Plus: Hacking Japan Tips) 49 Comments

Written by Tim Ferriss Topics: Filling the Void

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.]

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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.

Posted on November 27th, 2007

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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)

49 Responses to “How to Rent Your Ideas to Fortune 500 Companies: Part II (Plus: Hacking Japan Tips)”

Erik Cox
November 27th, 2007
10:33 am

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
Pete
November 27th, 2007
11:43 am

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.
Stephen Key
November 27th, 2007
12:17 pm

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
RM
November 27th, 2007
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!
John
November 27th, 2007
1:23 pm

Very informative.
David
November 27th, 2007
1:50 pm

This is great stuff. I love the emphasis on minimizing startup costs. Very high upside, with almost no downside to this approach.
Victory Darwin
November 27th, 2007
1:56 pm

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
Victory Darwin
November 27th, 2007
2:03 pm

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
Scott G. F.
November 27th, 2007
2:44 pm

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?
Stephen Key
November 27th, 2007
3:20 pm

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
Jim
November 27th, 2007
3:44 pm

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
Jose Castro
November 27th, 2007
5:05 pm

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
zach even - esh
November 27th, 2007
11:07 pm

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–
Azzam
November 28th, 2007
8:32 am

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.
Azzam
November 28th, 2007
8:37 am

The cold calling seems too simple :P

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
Scott G. F.
November 28th, 2007
11:15 am

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.
David
November 29th, 2007
4:36 pm

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?
Matt
November 30th, 2007
2:07 pm

# 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!
Phil B
December 1st, 2007
3:40 pm

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
Stephen Key
December 3rd, 2007
10:51 am

Azzam wrote. . .
The cold calling seems too simple :P

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
Stephen Key
December 3rd, 2007
11:06 am

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
Stephen Key
December 3rd, 2007
11:09 am

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
Cameron
December 3rd, 2007
10:01 pm

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
Cameron
December 3rd, 2007
10:27 pm

should have said who* the marketing director is.
Ryan
December 7th, 2007
2:55 am

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
Stephen Key
December 10th, 2007
3:02 pm

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
Jennifer Mannion
December 11th, 2007
3:56 pm

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
Stephen Key
December 12th, 2007
1:18 pm

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
Eric Dick
December 13th, 2007
11:24 am

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
greg
January 2nd, 2008
4:41 am

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?
Rachel
January 3rd, 2008
6:50 pm

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.
Terry Ashton
January 13th, 2008
12:46 pm

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
John
January 13th, 2008
8:16 pm

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
Leo
January 14th, 2008
9:03 am

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 !!
JEFF PLASTER
April 6th, 2008
12:36 am

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)?
Stephen Key
April 7th, 2008
2:44 pm

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
KC
April 9th, 2008
5:24 pm

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
Stephen Key
April 10th, 2008
11:18 am

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
David Ellis
August 21st, 2008
5:36 pm

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.
Stephen Key
August 22nd, 2008
8:12 am

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.
Pete
September 23rd, 2008
7:01 am

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?
Brian Marks
October 10th, 2008
3:47 pm

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
Stephen Key
October 13th, 2008
9:17 am

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
JEFF
January 20th, 2009
12:44 pm

WHEN YOU SAY CALLING DIFFRENT MANUFACTUER DO YOU MEAN A COMPANY WHO MAKES THE PRODUCTS FOR EX: SONY . OR DO YOU MEAN SONY.
Stephen Key
January 20th, 2009
2:26 pm

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
Kevin
May 11th, 2009
1:37 pm

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……
Stephen Key
October 1st, 2009
3:53 pm

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.
Stephen Key
October 1st, 2009
3:54 pm

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.
Stephen Key
October 1st, 2009
3:56 pm

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.