Patenting An Idea..

Patenting An Idea..

When inventors contact my company about Due Diligence I like to explain the reasoning with a simple example. Think about it this way, if a manufacturer is getting ready to make the decision to develop, manufacture, and market a new item that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would most definitely take their time to ensure they are creating a good business decision in advancing using the product (i.e.: they have done their homework on the product). Therefore, you can summarize “due diligence” as the whole process of gathering all the information necessary to make a good business decision prior to making the large financial expenditure. It can generally be assumed that the more time, effort and cash (i.e.: “risk”) that a company must spend to develop Inventhelp Company News, the more they are going to evaluate the potential license. Stay in mind that even if a product is apparently simple and inexpensive, the whole process of developing and manufacturing is rarely easy and low cost. Companies will evaluate such criteria as customer comments, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.

Inventors often wonder if they need to perform Due Diligence on the invention. As discussed, this will depend on the option you may have elected for taking your product to market.

Option 1 – Manufacturing all on your own – If you are planning on manufacturing and marketing the invention by yourself, then yes you will need to perform research. Essentially, you are the manufacturer in the product and for that reason you should perform the due diligence on the invention just like other manufacturers would. The situation that I have found is that many inventors who elect to manufacture their particular inventions do little, if any marketing research, which is actually a big mistake.

Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, i believe you can minimize your due diligence efforts, because before any company licensing your invention, they will likely perform their own research. In case you are working with a company like Invention Home, the expense to advertise your invention to companies can be minimal – therefore it may set you back more to actually carry out the homework than it would to just market the Ideas For Inventions to companies (which, is ultimately your very best form of research anyway). Remember, you need to have taken enough time to do your basic market research along with a patent search earlier in the process to be reassured that your product or service will be worth pursuing to start with (i.e.: the merchandise will not be already on the market and you will find a demand).

Let me summarize. If you are planning on investing a substantial amount of money on your invention, then it is recommended to analyze an opportunity first to make sure it’s worth pursuing; however, in the event you can actively advertise your invention to companies with minimal cost, you can be confident that an interested company will perform their very own homework (not depend on yours). Note: it is usually helpful to have marketing homework information available while you discuss your invention opportunity with prospective companies; however, it is really not easy to obtain these details so you should balance the time and effort and cost of gathering the information using the real necessity of having it.

I also will provide you with some due diligence tips.As discussed, the idea of marketing research would be to gather as much information as possible to create a well-informed decision on purchasing any invention. In a perfect world, we may have the relevant information about sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this info is not always simple to come by.

In case you are not in a position to pay for a specialist firm to perform your marketing evaluation, it is possible to perform the research all on your own; however, you must understand that research should be interpreted and used for decision-making and by itself, it offers no value. It really is everything you use the details that matters. Note: I might recommend that you DO NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold as a “starting point” (they’ll usually approach you again with an expensive “marketing” package), the information is largely useless because it is not specific research on your own invention. Rather, it is actually off-the-shelf “canned” industry statistics, that can possibly not assist you in making an informed decision.

Before we get to the “tips”, let me clarify that “due diligence” can come under various names, but essentially each of them mean the same. Some of the terms i have seen to illustrate the diligence process are:

· Homework

· Marketing Evaluation

· Commercial Potential

· Invention Salability

· Profitably Marketable

· Market Research

· Invention Assessment

Each of these terms is basically discussing the study to gauge the chance of an invention’s salability and profitability. The question of whether your invention will sell can not be known with certainty, however you can perform some steps that will help you better be aware of the probability of success.

Again, if you are planning on manufacturing your invention all on your own, you should look at performing marketing research on the product. If you are intending on licensing your invention for royalties the company licensing your invention should perform this research.

Some suggestions for marketing research are highlighted below.

1. Ask and answer some fundamental questions

– Is the invention original or has somebody else already come up with the invention? Hopefully, you may have already answered this question within your basic research. Or even, check trade directories or the Internet.

– Can be your invention a solution to your problem? Otherwise, why do you reckon it can sell?

– Does your invention really solve the problem?

– Is your invention already on the market? In that case, exactly what does your invention offer within the others?

– How many competing products and competitors can you discover on the market?

– Exactly what is the range of cost of these items? Can your product fall into this range? Don’t forget to aspect in profit and maybe wholesale pricing and royalty fee, if any.

– Can you position your invention as being a better product?

2. List the pros and cons that will impact the way your invention sells and objectively evaluate your list

– Demand – can there be a current interest in your invention?

– Market – does a market are available for your invention, and if so, what is the dimensions of the current market?

– Production Capabilities – could it be easy or difficult to produce your invention?

– Production Costs – can you have accurate manufacturing costs (both per unit and setup/tooling)?

– Distribution Capabilities – might it be easy or challenging to distribute or sell your invention?

– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, ease of use)?

– List Price – have you got a price point advantage or disadvantage?

– Life – will your invention last more than other products?

– Performance – does your invention perform much better than other products (including better, faster output, less noise, better smell, taste, look or feel)?

– Market Barriers – will it be difficult or very easy to enter your market?

– Regulations and Laws – does your invention require specific regulatory requirements or are there special laws that must be followed (i.e.: FDA approval)

3. Seek advice or input from others (consider confidentiality)

– Target professionals / experts in the field.

– Demand objective feedback and advice.

– Speak with marketing professionals.

– Ask sales people in the field.

– Ask people you know within the field.

– Talk to close friends and family members who you trust.

– Demand input on the invention including features, benefits, price, and in case they might buy it.

During the diligence stage, existing manufactures provide an advantage in that they are able to talk with their potential customers (retail buyers, wholesalers, etc.). Within my experience, just about the most important factors that the company will consider is whether or not their existing customers would purchase the product. Basically If I took Find A Patent Attorney to some company to talk about licensing (assuming they could produce it on the right price point), you will find a high likelihood that they would license the merchandise if an individual of the top customers consented to sell it.

Whether a retail buyer is interested in buying a item is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest in an invention but they ultimately atgjlh to pass through on the idea because their customer (the retailer) did not show any interest in the product. Conversely, I’ve seen companies with mild interest in an idea who jump with a cool product each time a retailer expresses interest within it.