You've Patented A New Product. Now What?
Cliff Ennico
cennico@legalcareer.com
#147;I designed a purse a year ago that I got comments on everywhere I went #150; women on the bus, women walking up to me on the street, women at the coffee shop, and even a male bank teller at my local bank. I decided to apply for a patent on the purse, which I did. I have a filing certificate from the U.S. Patent Office, and I expect the patent to come through very soon now. I cannot afford to spend any more money on this project, and I do not have the energy to start my own business. I need an honest buyer who is willing to find a manufacturer and get the purse to market, without shutting me out completely from any profits. I know the purse will sell, and I can see it hanging on the hooks in WalMartreg; or Targetreg; stores. Can you help me?#148;
First of all, just because you#146;ve received a filing certificate from the U.S. Patent Office does not mean your patent will be approved. It merely confirms that they received your filing, and you#146;ve got a looooooong way to go before a patent issues. It sounds to me like you made the patent filing yourself, without the assistance of a patent agent or attorney. That#146;s a big mistake. You will have to show the Patent Office that your purse design is not #147;obvious#148;, and normally only a patent agent or attorney will know what the Patent Office examiners will want to hear. Also, patents can be either #147;strong#148; or #147;weak#148;, and you want to get the strongest possible patent you can, since it#146;s a 100% certainty that if your purse design catches on, someone will try to #147;knock it off#148; and make unauthorized copies for the street vendors on Fifth Avenue to sell for two dollars. Since your budget is limited, get thee to a patent agent, pronto!
Once you have a valid U.S. patent, you will want to license #150; not sell #150; the purse design to the company that will manufacture, market and sell it. In a license deal, you grant a company the right to make and sell your purse, and they pay you a royalty (usually 1 or 2 percent of the retail price) on each sale. So far, so good. But how do you go about getting a license deal, especially when you have limited resources? Is there anyone out there who can help you license your purse?
According to Mark Nowotarski, a patent agent and founder of Markets, Patents Alliances LLC in Stamford, Connecticut (
www.marketsandpatents.com
), there are two types of people who help inventors land license deals #150; licensing agents and invention promotion firms #150; but you have to be careful. #147;Invention promotion firms are those companies you see advertising on television at 2 o#146;clock in the morning,#148; says Nowotarski, #147;and they have a very bad reputation for being misleading about what they will do for their clients.#148;
That leaves licensing agents. Nowotarski says that for consumer products such as handbags, the best place to look for licensing agents is in the #147;classified ads#148; section of #147;Inventor#146;s Digest#148; magazine (
www.inventorsdigest.com
). According to Nowotarski, a typical licensing agent will work either for an hourly fee or an upfront payment of #147;a couple of thousand dollars #150; anything more than that I would be suspicious of their intentions#148;, and will want a percentage (up to 50%) of the royalty you receive from the manufacturer.
Nowotarski also recommends attending your local chapter meeting of the Licensing Executives Society (
www.usa-canada.les.org
). While the Society#146;s members focus on high-tech products -- pharmaceuticals, electronics, and telecommunications -- rather than consumer goods, Nowotarski explains that #147;Society members usually know #146;who#146;s who in the zoo#146;, and can direct you to some local licensing agents with solid reputations.#148;
Before approaching a licensing agent, though, you need to do some basic market research: just saying you envision your purse in WalMartreg; or Targetreg; stores isn#146;t enough. Here#146;s a suggestion from Nowotarski: go to a local university and ask the engineering department to make a prototype of your purse, as a student project, without charge to you. Then pay a local manufacturer to make a small #147;trial run#148; of purses #150; say, a couple of hundred units. Then, sell the purses on eBayreg; and see what happens. #147;You won#146;t make a lot of money,#148; says Nowotarski, #147;but you will find out what parts of the country are interested in your handbags, and what the retail price might be. That kind of market intelligence will make it a lot easier for your agent to narrow down the list of potential buyers and quickly help you land the right licensing deal.#148;
Before hiring a licensing agent, Nowotarski insists you speak to inventors the agent has dealt with in the past, and trust your gut instincts: #147;there#146;s never a free lunch in the licensing business; if an agent promises you one, walk away.#148;
Cliff Ennico (
cennico@legalcareer.com
) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at
www.creators.com
. COPYRIGHT 2004 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com
