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Who's Who and Why You Need to Know

IP Deal Making Tip (4 of 101)

In our quest to provide you with 101 deal making tips, here is tip #4:

Keep your cool and play it very cool.

Patience is really a virtue in IP deal making.This is especially true if you are trying to license your IP to a major company. Remember, your IP is the center of your universe -- but in reality no one else really cares.

You should be thinking about your IP and how you will make money from it 24/7. However, after you make contact with a potential licensee, you need to play it really cool. Remember, you are more or less an intrusion. The person you are dealing with at the company -- your champion  has more than enought to do without you taking up more of his/her time.

Keep your cool and play it cool. After your meeting with the champion ask if any more information is required and if so, follow up. After that -- wait. Try not to contact your champion at all. Wait for the champion to contact you.

In the meantime, hopefully you have not put all your eggs in one basket and you are in contact with other companies. Play if cool with them too.

You will be able to gauge the company's real interest if they make the next move.

Ok, I know what you are thinking, how long to wait and what if they don't call.

A good rule of them is to wait at least 2 months after you have followed up. This may seem like a long time, but remember the company is running an ongoing business that is doing well without you and your IP. You need them more than they need you.

As long as you are in touch with more than one company, play the waiting game and play it very cool.

For more on how to license you IP, click here.

Rule of Thumb in Business -- A Pending Patent is Never Enough

I have met with so many inventors who believe that their pending patent is enough for them to enter into a licensing agreement with a company in the particular field.

Please, inventors understand once and for all that a pending patent s never enough.

You need much more.

A real life example - an inventor came to me with a pending patent for an invention that enables you to monitor your heart rate in real time while you run. The jist of the invention was to use a cell phone that would wirelessly connect to electrodes placed on your body.

Forget the fact that such devices more or less exist - the inventor wanted me to contact Steve Jobs (this is a true story) and have him license the invention for use with the IPhone or IPOD.

My point is not that certain inventors are naive. My point is this:

If Apple wanted to have such a device work with its IPhone or IPOD they would create it themselves and could easily do it with off the shelf technology and a little programming (look what they have done with Nike). The pending patent is worthless to Apple.

More importantly, the inventor was basically stuck the minute he came up with his invention. HIs invention needed a cell phone or PDA to work which means he either had to create his own or license one from someone else. From a business sense this would never work. He was out of luck from the very beginning.

In most cases you will need a patent (yes an issued patent) and a viable business model that can enable a business to be built around the patent.

Most if not all companies that license patents do so because they think they may be infringing the patent (stick licensing) or that they do not want to compete with the business that is being built around the patent or that could be built around the patent (carrot licensing).

If you want more examples please let me know

What is an Intellectual Property Development Company - and Why You Need to Know

From the Globe and Mail interview with Mosaid CEO John Lindgren:

(Q.) What's an intellectual property development company?

(A.) We monetize intellectual property. We have over 1,700 patents and applications now which has   doubled from a couple of years ago. The majority were filed for inventions by Mosaid employees, primarily related to memory innovation. But we also have a significant number that we purchased from others - from corporations, universities and even individuals - and we monetize those by licensing the patents to the companies that infringe them.

(Q.) Patent-holding companies have a mixed reputation, with so many operating companies being hit with nuisance patent suits. Is that your business?

(A.) There are companies that hold specious patents - that are really invalid and, on the face of it, not infringed. Those kinds of companies have really ruined the reputation of legitimate intellectual property holders. It's a shame because they are mainly looking for nuisance fees or go-away kind of money. They accuse you of infringement and expect you to pay less than you would to defend yourself in court. We, on the other hand, have very high-quality intellectual property that was invented in-house by many Mosaid innovators over the years - but also from fundamental engineering by companies like AT&T or LSI Corp. These inventions are very important within their field of technology, particularly memory and wireless, power-over-ethernet and micro-computing.

If you are a corporation, university or inventor with a patent you think might be valuable to Mosaid, contact them - maybe they can hep you make some money

Here is a direct link to their Patent Licensing Request Form on their website

Good luck and if you get money from them (eventually) because you read this, please donate 1% of your winnings to The Make A Wish Foundation

The Difference Between Invention and Innovation -- and Why You Need to Know

Techdirt  wrote a great piece stating that the Segway invented by world-renowned inventor Dean Kamen, failed because it focused on invention rather than innovation.

This is very interesting because I am sure that most inventors do not really know the difference - or why the difference is important.

Here are experts from the Techdirt piece:

Kamen's thinking on patents may actually explain part of the reason why Segway has struggled so much over the years. In believing so strongly in patents, it shows someone who tends to believe invention is more important than ongoing innovation, even as there's a growing body of evidence to suggest the exact opposite is true. Invention is the original idea, but innovation is an ongoing process of taking a product and adjusting and adapting it to the market. And we've been seeing more and more studies that note the innovation part is so much more important in determining the success and the economic contribution of a product.

So it seems like perfect timing to see Paul Graham's recent essay about why the Segway failed to change the world. He focuses mainly on the fact that the Segway basically makes people look dorky -- and that a better design might have helped more people find it enticing. But at the end he notes:

Curiously enough, what got Segway into this problem was that the company was itself a kind of Segway. It was too easy for them; they were too successful raising money. If they'd had to grow the company gradually, by iterating through several versions they sold to real users, they'd have learned pretty quickly that people looked stupid riding them. Instead they had enough to work in secret. They had focus groups aplenty, I'm sure, but they didn't have the people yelling insults out of cars. So they never realized they were zooming confidently down a blind alley.

Exactly. Again, this highlights the difference between invention (believing that you alone have come up with the perfect idea for a great product) and innovation (the ongoing iterative process of going back and forth with the market to test and understand what the market wants and how to make your product meet their needs). By focusing so much on the invention, Segway missed the real opportunity for innovation, and that's caused all sorts of problems for the company.

If you are an inventor, or want to be an inventor, you really need to understand the difference between invention and innovation.

Also, please note that Techdirt stated that one of the reasons the Segway failed was that it was too easy for them to raise money. While we should all have this problem -- it brings up 2 very important points:

1. To innovate, you don't necessarily need a lot of money

2. Make a working prototype of your invention as quickly as you can - don't worry if it is funny looking, cumbersome etc. You need feedback from your customers so you can produce something they actually want. Paper designs and more plans and still more plans will not get it done!

With all the money in the world, The Segway failed because it assumed it knew what the customer wanted. If Dean Kamen cannot figure it out either can you. Go to your customers and let them tell you. Sometimes the best advice is so, so simple.