The end objective for an established business is to develop and launch a product or service that captures substantial market share and returns a profit to the business. When considering patent protection, I strongly recommend that the established business invest in the best patent search available. The reason for this recommendation is that the business may reconsider its position if patent protection cannot be obtained and the business will certainly reconsider its position if the product infringes a patent owned by a competitor. Assuming that there are no negative indications in the search results, the business will file a well written patent application. It takes the patent office approximately 3 years to get around to reviewing the patent application. By this time the business knows whether the product has been successful. If the product has been successful, the patent agent is usually instructed to obtain the best possible patent protection without budget constraints being imposed.
An inventor who is trying to sell his idea to an established business has different considerations. The end of objective of the inventor is to enter into a successful negotiation with the established business. A patent without a buyer is of no interest to the inventor, regardless of how strong the patent may be. Unless the business shows an interest in the invention, money is tight and comes out of savings. For this type of inventor, I recommend the following strategy:
Step 1 – Do some searching. There are free databases online at the government patent offices. If some funds are available, purchase an hour of a professional patent agent’s time. A competent patent agent can determine within that hour if there are already a dozen or more patents similar to your invention. You do not need an exhaustive review at this stage, but would like to know if you are clearly wasting your time and your money before you move forward.
Step 2 – Figure out what you can safely say to a business to attract their interest without saying too much and giving them your idea for free. By way of example, a client of mine was able to indicate that he had developed a method and apparatus by which an unconscious disabled lineman suspended by his harness from a power pole could be lowered by a co-worker to the ground. As you can see, the description indicates what is achieved but not how it is achieved.
Step 3 – Approach a number of businesses until you find one that is sufficiently interested that they ask you to send more information and provide you with a name and email address that can be used as a channel of communication. Larger businesses will have established a review procedure, complete with “idea submission” forms that must be signed.
Step 4 – Have your patent agent file a “provisional” U.S. patent application or an “informal” Canadian patent application. With a provisional or informal patent application the rules are less stringent and it should cost you less money to get to the “patent pending” stage. Bear in mind that you still must ensure that the patent application fully describes the component parts that make up your invention, how they are assembled and how the invention may be used.
Step 5 – once protection is in place, provide the information to the business and indicate you will follow up after 30 days if you have not heard from them within that period. The business will indicate whether or not they are interested. It they are interested you are into a negotiation. If they are not interested, ask for the reason why they have decided not to move forward. A client of mine had an idea rejected because the business thought the bingo market was too small. The client then provided statistics on the actual size of the bingo market; the business reconsidered and decided to proceed. Another client had an idea rejected because the invention only suited one style of plastic wrap machine. The client then confirmed that the business would still be interested if the invention was modified to work with all styles of plastic wrap machine. While you await word from the business, bear in mind that the due diligence evaluation by the business usually takes three stages and leads to the preparation of a mini-business plan:
Stage 1 Marketplace evaluation – Is there a need for this product or service in the market? Is the market for this product or service large enough to present an opportunity? Who are the competitors? How does this product or service stack up against the competitors? Are there barriers to entry?
Step 2 Financial evaluation – Can the business make money? What are people prepared to pay? What are the costs associated with getting this product or service into the marketplace?
Step 3 – Legal evaluation – Here the business will be doing the best patent search available. They will also receive recommendations on how to structure a transaction with you, the inventor.