When it comes to intellectual property strategy, there are simply no absolutes. The more you embrace that, the better. So many of the product developers and inventors I meet are obsessed with protection. They’re far more concerned about having their idea stolen than whether it even has legs. That is absurd. To the extent that fear is a powerful motivator, I get it. But let’s be honest. If you have a hit on your hands, others are going to copy you — I guarantee it. The most powerful companies in the world can’t prevent me-too products. So, why do you think you can?
If you want to profit from your creativity, you need to establish and maintain perceived ownership. After defending my portfolio of intellectual property against what is now the world’s largest toy company in Federal Court, I no longer believe it’s possible to actually own anything. But you can craft a strategy that deters potential copycats and maps out a path forward, which you can use to secure funding for your startup or a licensing agreement.
Leaving the business of determining what your uniqueness is up to a law firm, attorney, or another third party is a mistake. Well-written intellectual property tells a story. You must become the expert — you and only you.
Why should you trust me? First, know that I am not an attorney. I am lifelong entrepreneur who has brought dozens of his own ideas to market, mostly via the licensing business model. Since 2001 I have been teaching others how to do the same. I have more than 20 patents to my name. I licensed my label technology to the largest manufacturer of pressure sensitive labels in the world, which was then sublicensed internationally. When I owned a guitar pick business, I became a Disney licensee. I am also the author of Sell Your Ideas With or Without a Patent, a guide to filing intellectual property that has value and negotiating licensing agreements.
Please, do not misconstrue the following as legal advice.
1. License your product idea to a company that has great distribution. Speed to market is paramount, meaning get to market first. Make sure your licensee has great relationships with retailers, most of which do not want to stock me-too products. Partnering with a market leader is one of the best ways to intimidate copycats.
2. Figure out how to manufacture your product idea at the lowest price point, if you can. Hitting the appropriate retail price point will protect you in the marketplace. There are other benefits to learning about manufacturing processes as well, including filing intellectual property. Do you need to fully understand how your concept will be brought to life right away? No. But it’s something to consider, especially if your idea is big.
3. Pick the right companies and people to work with. I cannot overstate the importance of vetting potential collaborators before committing to a new relationship. At a minimum, use Google to search for complaints and lawsuits. Do any red flags arise? Address them or steer clear.
4. Avoid working with companies that do not respect intellectual property. There’s no reason to believe they will respect yours.
5. Familiarize yourself with the forms of intellectual property available in your country. What are your options? Do your own research. Ask a lot of questions. Attorneys have written most of the advice published on the Internet about intellectual property strategy, which is problematic. An attorney can help you obtain intellectual property, which is easy enough to do. The more important issue to consider is how you will profit from it — and that’s entirely up to you.
6. Determine whether you have a small idea or a big idea. To establish perceived ownership over a big idea, you will need to build a wall of intellectual property, which requires time and money. Are you in it for the long haul? If your idea is a simple improvement on an existing product, you can establish perceived ownership with a well-written provisional patent application.
7. Hone in on your point of difference by studying similar products. Two of my favorite tools are Google Images and Google Shopping. If your concept already exists, you need to know now.
8. Search extensively for prior art. Like I said, you and only you must become the expert of your idea. As a result, you will operate from a position of strength. When I had my big idea, I hired the firm my attorneys recommended to search for prior art. Unfortunately, the firm failed to uncover two patents that described my concept exactly, which ultimately rendered the first two patents I filed worthless.
Your patent attorney will only ever be as good as the information you provide him or her with. For more on the realities of searching for prior art, read this article.
9. Try to steal your idea from yourself. How would you? Consider workarounds and variations. I wrote about this strategy at length in this article.
10. File a provisional patent application. You can protect simple ideas with a well-written provisional patent application. The big benefit of filing a provisional patent application first is that you have the next 12 months to determine how marketable your idea is.
12. Purchase a URL. If yours is clever and communicates well, it absolutely could have value.
13. If your idea has to look a certain way, consider filing a design patent. They are extremely affordable and issued much more quickly than utility patents.
15. Keep your valuable information to yourself. Some ideas can only be protected as a trade secret.
16. Make use of non-disclosure agreements. Have everyone you work with sign one, including contractors, vendors, and potential licensees. There are a lot of misconceptions about these kinds of agreements. Timing is an important consideration. For example, because most companies will not sign a non-disclosure agreement right away, you will have to show them the benefit of your idea first. Have them sign one after they ask you more details.
Make sure to have a patent attorney write one up correctly so that it includes important components like work-for-hire and reverse engineering language. There is no such thing as a standard NDA, so don’t go looking for one, as laws differ between states.
17. Always include some form of performance clause in your agreements, like minimum guarantees. You need to be able to get your intellectual property back in the event that your partnership goes south.
18. The same goes for an improvements clause. You need to establish that you own any and all improvements made to your innovation, because the reality is, improvements will be made during its development.
19. Before you hire a patent attorney, read patents he or she has written. Do you understand them? It’s important that you do. Another important consideration is temperament. Your attorney will need to work closely with the examiner who is assigned to your application. Look for an attorney who has good communication skills and good bedside manner.
If the field you’re in is highly specialized, like software, make sure your patent attorney has the relevant knowledge and experience.
20. Create a paper trail. Follow up every conversation you have with a written record of what was said and what next steps were agreed to. Mine came in handy during my trial.
21. Be reasonable. For example, don’t ask for too much money upfront. If you give a company a reason to work around you, they very well might. The same goes for companies that are looking to buy you out.
22. Act like a professional. Know what is standard in your industry. Never negotiate a licensing contract without someone who has experience by your side. Common royalty rates, appropriate minimum guarantees, improvement clause language — having a sense of what to expect can be extremely helpful. It will also help you be reasonable.
23. Have a great attitude. People will want to work with you and help you succeed.
24. When working with startups, make sure your contract states that you get your intellectual property back if they file for bankruptcy. Many startups will not make it.
25. Hold on to your intellectual property. Meaning, do not assign a patent to another company. If you do, make sure the company assigns it back to you. Put your intellectual property in an escrow account so that if they breach, you can get it back. This is not an absolute must, but it will help in the event that you have to go to court.
26. License your idea to more than one company. Most companies want an exclusive, for obvious reasons. But are there territories they do not sell in that you can carve out and keep for yourself? If so, you may be able to license the same idea more than once. This is not common but it is entirely possible.
27. Maintain close relationships and good communication with overseas subcontractors. If I had, I think I could have avoided suing for infringement.
28. Work with a local manufacturer first before going overseas. It will be easier to communicate and thus manage and build your relationship. Most domestic manufacturers have offices overseas.
29. Offer unparalleled customer service. If you love your customers, they will love you. I think having great customer service is one of the best ways to protect your interests.
30. Keep innovating. If you want to continue profiting from your creativity, don’t rest on your laurels. Stay abreast of where your industry is headed. Keep thinking about potential workarounds and additional applications for your invention.
I love intellectual property strategy because I think of this as playing the biggest game in the world. It’s incredibly exciting to me. You have to stay one step ahead. With enough dedication, you can.
Article courtesy of Inc.com, first published on August 30, 2017 under the title “30 Ways to Make Sure You Actually Profit From Your Creative Ideas.” Link to original publication: https://www.inc.com/stephen-key/30-ways-to-protect-your-product-ideas.html.