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The Intellectual Property Marketplace is becoming crowded and complex. More and more players are entering the marketplace - bringing with them capital, expertise, new services and business models for making money from IP
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The most important step in obtaining the best possibleIPprotection is to choose the best possible intellectual property attorney. Choosing the rightpatentattorney is one of the most important decisions you can make in protecting your invention.
Here are some tips to help you choose the bestpatentattorney for your invention:
1. You should select apatentattorney who is also an engineer. Both skills are needed to construct a goodpatentdocument.
2. You should select an attorney whose technical background relates to the field of your invention.
3. Ask the attorney, what kind of engineer he is, how long has he practicedpatentlaw, how manypatentshe has drafted and for what kinds of inventions.
4. Only choose an attorney who can give you a quote for what the entire bill will be.
5. Use apatentattorney that hires an independent professionalpatentsearcher. An in-house searcher would provide a conflict of interest, leaning towards making thepatentsearch more favorable.
6. Trust you intuition and only choose an attorney who you feel understands your invention.
7. Interview different attorneys until you have made your choice. You will be working with this individual for 2 to 3 years.
8. Watch out for hidden fees. One of the questions that you should ask before choosing apatentlawyer is, “Are there any hidden charges in addition to service fees and disbursements, including government fees, etc.?”
9. Finally, ask the attorney or agent about a provisionalpatent– it could save you some money.
To find out how many and what types ofpatentsthe particular attorney has prosecuted, you can do a search for free here. Under “field” choose “Attorney or Agent”.
To find out if thepatentattorney have a good reputation among other attorneys click here.
Ok, you want to license your invention to a major corporation. You find the right person at the company, contact her and arrange a meeting. Good for you. Now, do you want to screw this up big time? If you do, ask her to sign an NDA (non-disclosure agreement).
A major player will never, ever, sign an NDA and by asking you really look foolish and amateurish.
You think you are the only one seeking to license an invention to this company? Major companies see lots of inventons and they are not about to create legal issues because they sign a NDA and then license another invention.
Moreover, if they signed NDAs they would first have to waste time reading it, deciding if there are problems, show it to their lawyers and in the end will spend more time on the NDA then on the particular project.
In addition, they also would have to keep track of all the NDA’s they signed and constantly review them for potential conflicts.
Don't make a meeting until you have at least a pendingpatentand don't insult the intelligence of the company by asking them to sign your NDA.
If your invention is not number 3 – have to have – it will be very difficult to license.
While most inventors think that there invention is a have to have, most of the time their inventions are either 1 or 2 above.
To prove that your invention is a have to have – you need to show that there is a definite, identifiable need for it. Now, the key here is who is the inventor. If a doctor invents a new device that he knows would have saved a patient that died, he probably has a have to have invention on his hands.
On the other hand, if an electrical engineer invents a new dental implant, then it will be harder to prove the need. Hopefully, your invention is in your specific field or based on some first hand experience or hobby you may have.
Also, please note that just because you did apatentsearch or even received apatentdoes not mean that there is a need. A need comes from the market and that is where you need to start to prove that there is indeed a need for your invention
The best way to prove that there is a need for your invention is to show that it solves a large, previously unaddressed problem. If you can concisely state the problem, list current solutions and then show that your invention solves this problem significantly better than you are on your way to proving the need.
Another way to prove the need is to speak to the market. For example, if your invention is a new tool, then go to the hardware store near your house and look and listen. Look at what is already there and listen to the customers who are buying tools. Also, speak with the sales staff and ask them questions about the need. State what you believe is the problem and see if they have a solution.
Yet another way to prove the need is to go to trade shows or virtual trade shows onlne and see what similar products are out there. Talk the people attending the show and the exhibitors. But more importantly, LISTEN. LISTEN VERY CAREFULLY and hopefully you will learn that your invention does indeed solve a major problem.
Again, I cannot stress this enough. If you invent in your field – it will be much easier to prove the need, find the right company and approach the company. This sounds simple, but you would be surprised how many people try to invent outside of their areas of expertise and end up wasting all kinds of time and money trying to educate themselves.
Three Common Mistakes Inventors Make When Trying to License Their
In my almost 2 decades of experience workng with inventors, I have found
that the following are the 3 most common mistakes inventors make when
they try to license their inventions.
Hopefully, you will learn from their mistakes -- I did.
Inventors conduct strategic planning for the licensee. I have probably
heard this a 1000 times: There are 2 companies that I will approach,
Companies X and Y. One of them will license my invention to keep the
other from gaining a competitive advantage”. Yeah, sure. Companies X
and Y are Fortune 500 companies who have short, medium and long term
plans in place. They have highly skilled executives who have prepared
detailed business and strategic plans. While these plans may include
(according to Jack Welch, they should include) plans to license
technologies from outside companies, they are not basing their future
competitive advantages on unsolicited third party inventions.
Inventors think that they will get money upfront. This happens rarely if
at all. Most companies will license inventions in exchange for royalties
from future sales. They will not give you money upfront. They may give
you money against future royalties, but this is also rare. However, you
may be able to become an outside consultant for the company – helping
it develop your invention further. In doing so, the company will pay you
a consulting fee. Moreover, if you end up with a lucrative long term
royalty – you can monetize it and get money now, rather than later.
Inventors act like Companies have time to invest in licensing inventions
from outside inventors. Forget about it. Please learn from the start
that when you try to license your invention you are a pest, a pain, an
intrusion. The person at the company that you think will become your
champion has more than enough to do without you entering the picture.
That person also is being “bothered’ by other inventors like you as
well. He gets his salary whether or not he knows you and will always use
the “buttsworth rule” – is it worth putting my butt on the line
for this invention – when deciding to even respond to your initial
A bonus #4 -- Inventors throw around the word "patent pending" as if it
will really impress the licensee. Licensees wantpatents-- issued
patents. They also want prototypes and working models. You will not
impress them if you only have a pendingpatent-- even if it is a car that runs on bull shitake.
The following ten commandments have helped companies develop business plans for internal use -- and to raise millions of dollars.
These rules (commandments) should act as your guide in your quest to develop the best possible business plan.
I . I Am Your Business Plan. Think Me Through
The business plan development process forces you to think through all of the aspects involved in your start-up venture or expansion. The discipline involved in putting your plans into a structured document will enable you to organize your thinking and make fundamental strategic decisions.
It also assures that you cover all of the bases. In preparing the business plan, you must objectively examine and analyze all of the ramifications of your marketing, operations and financial strategies. You must also determine what human, physical and financial resources are required.
By doing this on paper, you are not only forced to deal with the business realities of your new venture, but you save the time, energy and resources you would have consumed through actual trial and error.
The business plan is the first step in the investment process. Without a well-written and hard-hitting business plan, serious investors will not meet with you. The business plan is your company's ambassador to all potential investors. Your business plan must speak to investors in the language that they understand and appreciate. Moreover, because you only have one chance to make a good first impression with potential investors, your plan must be highly professional and customized to show your company's unique advantages and abilities. Investors look at a myriad of business plans and yours must stand-out and be flawless.
II. Thou Shalt Not Create Graven Images. Customize Your Plan
Many entrepreneurs try to save the time and expense involved in preparing a proper business plan by utilizing "substitutes." If you expect investors to invest their most valuable resources - their time and money in you -- you better do the same and provide them with a business plan that shows you respect them and appreciate their time.
III. Thou Shalt Not Swear False Business Plan. Do It Right
Investors expect to see a business plan that was developed, customized, and tailored for the business at hand. Moreover, developing a business plan is more an art and a process than it is a simple fill in the blank writing assignment. There is a wide spectrum of far-reaching issues facing the individual company that must be specifically addressed vis-à-vis your specific company if your plan is to have any impact - both in-house and externally.
IV. Guard Your Cash Flow and Keep Your Projections Holy
If you want your company to succeed from both a business and capital raising point of view, your business plan must contain realistic cash flow projections - and you must do your best to abide by them. Focus more of your time on receipts - projecting cash expenditures is much easier.
Investors will look at your cash flow projections to determine the amount of capital you require, and to learn if you can see the big picture. You must be reasonable and not overly optimistic.
When you meet with investors, they will expect you to be able to provide support and backup for your forecasts. Make sure that all forecasts are realistic. Investors can easily check your projections against the industry norms.
V. Honor Thy Reader and His/Her Short Attention Span
Investors are incredibly busy and will initially only skim your plan. You must include an Executive Summary that needs to capture the entire essence of your business in only two pages. The rest of your plan must also be as brief as possible, organized logically and written to grab and keep the readers' attention.
For example, The Table of Contents must be user-friendly and enable the reader to quickly locate any topic in the business plan. It must also act as an outline of the entire business plan, so that the reader can quickly grasp the "big picture." Be direct and hard hitting. You should summarize the product descriptions - focusing primarily on the user benefits. You should not simply cut and paste from brochures and product specifications. Do not give the potential investor a “data dump.”
VI. Thou Shalt Not Be a Product – You ARE a Company
You must demonstrate that you are indeed a company and not simply a product. You must explain what business you are in, and the image you are creating for your company. You must also provide long-term strategies, explain how the company will grow, and how it will expand its markets and product lines.
To prove you are a company, you should focus very hard on identifying and describing your potential customers – who they are, what do they value, what kind of brand loyalty exists among them, who participates in the purchasing decisions, and how you will get you product directly into your customers’ hands.
VII. Thou Shalt Not Negotiate in Thy Business Plan
You must be very careful to avoid negotiating in your business plan. For example, do not state that you will sell 20% of the company for $1 million, because you will establish the upper end of the negotiating range. Sophisticated investors will realize that this is their worst case scenario and that they should be able to negotiate a better price. Your company is also worth more to different types of investors, so leave the negotiations for face-to-face meetings. This should not be confused with the amount of money you are asking for - which should be stated in the plan, along with a detailed use of proceeds sections.
VIII.. Thou Shalt Not Say: "All We Need To Succeed Is 1% Of A Huge Market."
The above words are very familiar to investors, and are a very quick turn off. The marketing
section is one of the most important in the entire business plan. The percentages, in and of themselves, are irrelevant. You must not only state which market niches you will focus on, but what determines that niche - price, quality, performance, geography, patents, etc. You must discuss competition and never state that there is no competition. You must also deal with market penetration, sales force, and other marketing and promotional issues. While many business plans contain expert opinions regarding the technical feasibility of core products, it is very rare to find a business plan that contains an expert-based market analysis.
IX. Thou Shalt Not Avoid Potential Risks
Every business faces risks and potential problems. You must deal with them in the business plan if you want to be credible. By identifying and discussing the risks, you demonstrate to investors that you have thought about them, factored them into projections and can deal with them professionally. In identifying the risks, include a description of those pertaining to the industry, your company and the market. Indicate which business plan assumptions or potential problems are most critical to the success of your venture.
X. Thou Shalt Not Shop The Plan Around
It is very important for the business plan to get into the hands of the most appropriate investors. All investors have their own specialties and if your plan is rejected because it does not meet that particular investor's known criteria, then you have lost credibility in the investment community and your plan could get a "shopped around" reputation. Furthermore, valuable time has been wasted simply because someone forgot to do their homework. Companies must learn as much as they can about investors before approaching them - especially their investment criteria including their methodology, industry preferences and investment criteria.
Dr. Kfir Luzzatto reveals his tips for an economically soundIPmanagement, which will help you navigate through lean times.
These are difficult times forIPowners. The economic pressure they feel daily is inevitably passed on to thepatentlaw firms that manage their intellectual property. Faced with the need to accommodate their clients’ demand for reduced costs, manypatentlaw firms around the world have resorted to cost-cutting schemes that adversely affect the quality of the work they can provide, on the assumption (which, sadly, is often justified) that it will take a long time -- typically years, if ever -- before the client realizes that the quality of the work has deteriorated, but on the other hand he will see the cost savings immediately.
One of the most dangerous schemes is that of "cooperative work". Firms that operate in that way employ professionals on a "pay per charge" basis, according to which the professional is paid a share of the revenues that the firm receives from the client for which he has done the work. In many cases the professional is paid a low, and even only a nominal salary, which the firm recoups from the billing that he generates.
The advantages for the firm are enormous and evident: it in practice acts as an intermediary between the professional and the client, receiving a good cut of his billing, while relying on its existing infrastructure and without having to pay him a real salary. In some cases, beside the administrative support, all the firm has to worry about is giving the professional a laptop or a PC, and allowing him the use of the office facilities, such as meeting rooms. This scheme lets the firm grow to a large size without investing the sums of money that a conventionally-runpatentlaw firm needs to spend. As long as there is enough work to be distributed between the various professionals the scheme works, and if the volume of work diminishes it's no skin off the firm's nose: the professionals will make do with less or will look for work elsewhere.
While at first sight the above may seem a clever scheme, implementing it may lead to disastrous results. Some of the immediate consequences of the setup described above will be briefly described below:
Courting dishonesty. The cooperative scheme proverbially places an obstacle in the blind man's path, inasmuch as it directly links the salary of the professional to the hours he bills on behalf of the firm. While we would like to think that everybody is honest, it would be naïve to assume that heavy overbilling does not ensue. This means, for example, that if ten hours are needed to perform a specific task with good quality and giving it the required attention, a professional may be tempted to bill those ten hours, but to spend only six or seven of them actually on the job, using the remaining time to do work for a different client.
The end of intra-office consultations. One of the advantages of a firm that employs a number of professionals in the same field and in closely-related ones, is that whenever a difficult question arises, or doubts bother one of the professionals, he can consult with his colleagues and benefit from their knowledge and experience. In the environment described above this is no longer possible because consultations within the firm are not for free. Absurd as it may sound, professionals working in the same firm will bill one another at the end of the month for the time spent in helping their colleagues. Therefore, any attempt to do a better job for the client results in an out-of-pocket expense for the professional. This effectively kills the practice of intra-office consultation.
The end of quality control. Some firms may turn a blind eye to the practice of overbilling, perhaps quieting their conscience by saying to themselves that they are saving costs to the client because their reduced operational costs allow them to charge less, and that the client should take the rough with the smooth. However, they confront a bigger problem: the control that the firm retains over the quality of the work done by its professionals is limited at best. The temptation to grow more and make a good profit with little overhead, also inevitably leads to a situation in which quality control is not practically possible, because the billing professionals greatly outnumber those who can exercise proper technical control over them.
In the personal opinion of this author (which, no doubt, may and will be challenged and criticized) the only way in which high quality professional work can be delivered to a client in theIPfield is by severing the direct linkage between the professional work and the wages. In other words, there should be no pecuniary considerations involved in the professional work done by an employee for a client, and every professional should know that he will not suffer financially for spending the amount of time needed to do a proper job. That does not mean that the efficiency of the professional is not at scrutiny, or that he is allowed to spend an unreasonable amount of time doing a job -- all that belongs to the quality control process which must be in place and which is a basic requirement. However, the professional must know that he has nothing to gain by overbilling and that, quite to the contrary, performing his job inefficiently will not reflect well on him.
So how can you know if you're walking into apatentlaw firm that is free from the issues described above? The first question you should ask them is on what basis does the professional assigned to your work get paid. If he receives a monthly salary that is independent of the work he does for you, then you may assume that the problem does not exist. However, beware of situations in which the firm gives him "bonuses" of any kind that are directly linked to the work he does for you; regardless of how nicely it may be dressed, any such remuneration scheme is not in your best interest as a client.
But then, you will ask, how do I save on costs? The truth is that there is no universal scheme for saving costs and at the same time maintaining quality. Cost savings are achieved through accurate planning that must be tailored specifically to your needs. Manypatentlaw firms in recent years have struggled with the problem and have come up with ingenious ways to help their clients save costs, without negatively reflecting on the quality of their work. Cost savings indeed can and should be achieved by streamlining the firm’s work, but also and principally through a thorough understanding of the needs of the client. It should be a major item on the agenda not only at your first meeting with the firm you are engaging, but constantly and periodically in discussion with the firm, because circumstances and opportunities change with time.
Giving up quality to save costs is the easy way out through the wrong door. So before you touch that doorknob you will do yourself a service by considering first what lay behind it.
Use Your Social Networks For Introductions to Investors
Once you have your business plan ready, the next step is to use it as a tool to raise money.
Raising money from venture capitalists and other professional investors can be a daunting task – but it can also be exciting and even fun. You really should not be intimidated – especially if you have something that you believe is truly a breakthrough.
The best advice I can give you for approaching investors and making the best possible impression is to be yourself and let your passion for your new idea shine through. If you can accomplish this, you are well on your way to getting an investment. The tips that follow will also help you in your quest to get a meeting with, and then to impress the best possible investors.
Approaching Potential Investors
The best and in my opinion the only way to approach potential investors is via a quality introduction. Investors will give much more of their time and attention to reviewing business plans given to them by someone they know and trust. Ideally, this introduction should be through someone that has introduced a successful company to that particular investor in the past. This could include consultants, lawyers, accountants and bankers. Another avenue is via an entrepreneur of a company that the investor has previously invested in.
Another way is via your social networks. Go through all your contacts and their contacts etc. Find someone who is connected to the particular investor you want. Search the investor in the particular network. Is she even in this particular network? Post a question asking if anyone in the network knows the particular investor. You must be persistent and put in the time and energy to make this happen.
You need to do whatever it takes to get an introduction – without one you may meet with a low level associate, but that won’t get you anywhere – it will only bring you a rejection and waste your time.
To learn about various investors and to see what entrepreneurs like you have said about specific investors click here.
Yes, it will be hard - but if you really believe you have something special you should get out there and raise the money you need - now.
What are you waiting for!
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