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Patent Enforcement - What to do and what not to do

A friend of mine - Alexander Poltorak, CEO, General Patent Corporation has written an excellent piece on patent enforcement which has been published by Industry Week.

According to Alexander every business owner and manager needs to know the DO's and DON'Ts of patent enforcement. He provides a detailed list of both do's and don'ts detail which I believe every patent owner must read. He then explains each of them in detail.

I have provided you only with his Do's and Don'ts – please read the entire article for the vital, full explanations.

What Alex Says Not to Do

Don't Assume you Have to Practice Your Patent in Order to Enforce it

Don't Contact a Company you Believe May be Infringing Your Patent

Don't Sit on your Patent Rights Idly

Don't Leave Yourself Unprotected

Don't Try to Enforce Your Patent Yourself

What Alex Suggests You Do

Do Mark Your Product with Your Patent Number(s)

Do Remove the Patent Marking Once Your Patent Expires

Do Apply for a Patent at the Right Time

Do Think of Your Patents as Assets

Alex's best tip of all:

If you don't have first-hand experience with patent strategy and enforcement, get professional help. Although these tips can warn you against some of the most blatant mistakes, patent enforcement is not for amateurs - and the wrong move can cost you a fortune. So get an expert to guide along the way and play it safe!

I totally agree. Check out his track record and you will see that he is one of the most successful players in the Patent Enforcement arena.

ICAP Ocean Tomo IP Think Tank & Live Auction

I will be attending the ICAP Ocean Tomo IP Think Tank & Live Auction Event taking place on March 24-25 in San Francisco, CA. I am really excited about this particular auction not only because of the IP being auctioned, but also because of the IP Think Tank Sessions, and other sessions surrounding the auction. This includes a Gala Dinner in the historic Julia Morgan Ballroom of the Merchants Exchange building.

The Think Tank sessions have various tracks that focus on exploring the next generation of intellectual property (IP) development.

“Last year we saw governments step up efforts to harness the power of IP to stimulate economic development and shield domestic industry,” mentions Dean Becker of ICAP Ocean Tomo. “We’re excited to present this track. The use of IP for nation-building is a topic that is currently relevant, and important to our industry as whole.”

The track will follow ICAP Ocean Tomo’s recently-developed IP Think Tank conference model, beginning with panelist presentations on subject matter, including tax law and policy, sovereign wealth funds, licensing and technology transfer, and IP management. The program continues with a collaborative panel and audience discussion, wrapping up on day two with a presentation of the session by the track moderator.

The IP Nation track is presented by the International Intellectual Property Institute (IIPI). “The notion of using IP as a fundamental strategy to support growth and development is not new,” states Hon. Bruce Lehman, former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, and current president and board chairman of IIPI, who will be moderating the program track. “The primary focus of the session will be exploring some of the key strategies currently employed and how these can lead to economic development. I’m thrilled to moderate the panel on this highly relevant topic.”

Other IP Think Tank program track topics include: Investment in IP; The Growing Intangible Asset Marketplace; and Developing a National Intellectual Property Economic Infrastructure.

ICAP Ocean Tomo is recognized as the pioneer and leader in the live auctioning of intellectual property assets. Since April 2006, ICAP Ocean Tomo, and its predecessor organization, Ocean Tomo Transactions, has held ten live auctions across the United States and Europe resulting in the successful transaction of over $120 million in IP, benefiting sellers such as individual inventors, small and mid-sized companies, large corporations, federal and government agencies, academic institutions, and investors.

Designed to bring a sense of urgency and closure to IP transactions, the Auction platform creates a center for IP liquidity and promotes transparency for a market in which none had historically existed. Through our stringent qualification process and day-of-event execution, the ICAP Ocean Tomo Live IP Auction has become the premier live public forum for the open and public exchange of IP.

To register to attend the ICAP Ocean Tomo IP Think Tank & Auction, please click here.

Hope to see you there

If you would like to set up a meeting we me,  please email me.

Thanks and hope to see you soon in San Francisco.

I will be attending the ICAP Ocean Tomo IP Think Tank & Live Auction Event taking place on March 24-25 in San Francisco, CA. I am really excited about this particular auction not only because of the IP being auctioned, but also because of the IP Think Tank Sessions, and other sessions surrounding the auction. This includes a Gala Dinner in the historic Julia Morgan Ballroom of the Merchants Exchange building.

The Think Tank sessions have various tracks that focus on exploring the next generation of intellectual property (IP) development.

“Last year we saw governments step up efforts to harness the power of IP to stimulate economic development and shield domestic industry,” mentions Dean Becker of ICAP Ocean Tomo. “We’re excited to present this track. The use of IP for nation-building is a topic that is currently relevant, and important to our industry as whole.”

The track will follow ICAP Ocean Tomo’s recently-developed IP Think Tank conference model, beginning with panelist presentations on subject matter, including tax law and policy, sovereign wealth funds, licensing and technology transfer, and IP management. The program continues with a collaborative panel and audience discussion, wrapping up on day two with a presentation of the session by the track moderator.

The IP Nation track is presented by the International Intellectual Property Institute (IIPI). “The notion of using IP as a fundamental strategy to support growth and development is not new,” states Hon. Bruce Lehman, former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, and current president and board chairman of IIPI, who will be moderating the program track. “The primary focus of the session will be exploring some of the key strategies currently employed and how these can lead to economic development. I’m thrilled to moderate the panel on this highly relevant topic.”

Other IP Think Tank program track topics include: Investment in IP; The Growing Intangible Asset Marketplace; and Developing a National Intellectual Property Economic Infrastructure.

ICAP Ocean Tomo is recognized as the pioneer and leader in the live auctioning of intellectual property assets. Since April 2006, ICAP Ocean Tomo, and its predecessor organization, Ocean Tomo Transactions, has held ten live auctions across the United States and Europe resulting in the successful transaction of over $120 million in IP, benefiting sellers such as individual inventors, small and mid-sized companies, large corporations, federal and government agencies, academic institutions, and investors.

Designed to bring a sense of urgency and closure to IP transactions, the Auction platform creates a center for IP liquidity and promotes transparency for a market in which none had historically existed. Through our stringent qualification process and day-of-event execution, the ICAP Ocean Tomo Live IP Auction has become the premier live public forum for the open and public exchange of IP.

To register to attend the ICAP Ocean Tomo IP Think Tank & Auction, please click here.

Hope to see you there

If you would like to set up a meeting we me,  please email me.

Thanks and hope to see you soon in San Francisco.

China's patent applications on sharp rise

From China Daily

China received more than 976,000 patent applications last year, up nearly 18 percent year on year, according to the State Intellectual Property Office (SIPO).

The figure included patent right of invention, utility model and design.

Nearly 90 percent of them were domestic applications, the number of which was up more than 22 percent year on year. The others were foreign applications, down 10.9 percent, according to the SIPO.

For the entire article, please click here.

How To Bang Out Patents Like IBM

From TorrentBomb

For the 17th consecutive year, IBM has earned the most US patents of any company with 4,914. The next closest was Samsung with 2,906. Together with this year’s acquisitions, IBM’s mountain of patents numbers more than 30,000.

The sheer volume of IBM patents may have even created an entirely new business. IBM will begin selling a patent management software suite to companies keen on being the next IBM. The software will help businesses survey their patent holdings and target opportunities for new patents.
IBM will even be offering training sessions on how to build and leverage patent portfolios. “We are making our IP (intellectual property) know-how and patent management software available because clients have increasingly approached IBM for insight into how to effectively establish and manage their own patent and IP portfolios,” said IBM’s Manager of IP, Kevin Reardon.

For the entire article, please click here

Is 'golden age for inventors' at hand?

From CNN

The Great Recession has created more opportunities for inventors, several industry insiders say.

Alan Tratner, who has run an inventors workshop since 1971, says he's seen a surge in calls from companies seeking the latest hot idea.

He says companies are looking because they're trying to lure back customers who are deserting them, and they're trying to compensate for the staff they've laid off.

"This is new golden age for inventors," Tratner says. "Companies are looking for ideas more than ever."

The demand for green products is also increasing the demand for inventors, Tratner says. Green products, ranging from cosmetic and cleaning products to solar energy products, are in demand.

"There's this whole new rich area that's developed since the late 1990s," says Tratner, who is based in Santa Barbara, California. "This is a new age of opportunity." 

Opportunity may knock, but it's easy for any would-be inventor to make common mistakes, some say.

Todd Greene is the inventor of the HeadBlade, a ergonomically designed blade that makes it easy for someone to shave his head. The HeadBlade was selected as one of the 10 best designs of 2000 by Time magazine. Greene, who is based in Los Angeles, California, says he's made "millions" off his product. 

But one of the most important steps Greene says he took was, simply, to act. 

Greene worked out of his apartment his first two years in business and didn't take a salary. Now he can afford that fancy sports car he saw others drive.

But that's not what drove him, he says. He had a vision.

"What you have to realize is that it's always going to be harder and longer than you think, but if you're committed and you don't question those things, you can be successful," Greene says.

Please reread the above three paragraphs over and over until you have memorized them. They are the key to successful inventing

Please read the entire article. It is one of the best that I have read for inventors.

Everything You Wanted To Know About Royalties - But Were Afraid To Ask

Licensing your invention can be very lucrative -- if you knowhow to approach just the right company. For help on this, please go the IP Playing Field.

If you mange to get a company interested in licensing your invention, then you better know as much as you can about Royalties - because in most cases, you will be receiving royalties in exchange for licensing your invention.

A great souce for learning all about royalties can be found here

You will learn a lot, including the following:

1 Non-renewable resource royalties

2 Patent royalties

3 Know-how royalties

4 Trademark royalties

5 Copyright royalties

6 Other royalty arrangements

7 Other compensation modes

8 Approaches to royalty rate: intellectual property

9 Approaches to royalty: rate determination and illustrative royalties 

For more on royalties and how to make money from your invention, please click here.

And the World's 2009 Patent Winners Are...

From Business Week

Who are the patent champs of 2009? Samsung and Toyota, of course. But would you have guessed Mondobiotech, a Swiss company that specializes in fermentation? 

Patent volume doesn’t equal innovation. But all these Excel spreadsheets do suggest where inventiveness is flourishing. By industry, creativity abounds most in computers and peripherals. This sector tallied 226,293 patents last year, or 29% of the total of all 12 groupings. Second is semiconductors with 95,106 patents, followed by telecommunications with 90,867, and automotive with 89,106, or roughly 12% each. 

In smart media, Samsung is tops. It’s also No. 1 in space vehicles and satellite technologies within aerospace, discrete devices within semiconductors, and mobile telephony within telecommunications. Toyota leads in both petroleum fuels and chemical engineering within petrochemicals, and alternative-powered vehicles within automotive. 

Here is Top 10 list to ponder. It’s organics, which account for nearly two-thirds of new patents worldwide in the pharmaceutical industry.

1. National Institute of Biological Science, Beijing
2. Mondobiotech
3. Roche
4. University of California
5. Zhejiang University, China
6. National Institute of Advanced Industrial Science & Technology, Japan
7. Suzhou ANJ Biotech
8. Novartis
9. Abbott Laboratories
10. Kao 

Read the entire article here

Paris Hilton Sued For Design Patent Infringement

From Business Journal

Paris Hilton and her shoe company, Antebi Footwear Group, have been sued in federal court in Seattle by a New York shoe company, alleging patent infringement.

Brooke Hollow Inc., which does business as Gwyneth Shoes, is suing the celebrity actress and Antebi in U.S. District Court in Western Washington, alleging that a Gwyneth Shoe design patent has been infringed.

The suit involves a Gwyneth Shoe patent called “Shoe Sock Having a Heart Shaped Pad.” Gwyneth contends in the suit that the Paris Hilton Footwear Line Collection, which features a shoe with a similar pad, copies that design. The suit alleges that Hilton herself chose the styling and design for her shoe collection. The suit quotes a Hilton blog post, “Each shoe has a heart shaped comfort pad sewn into the inner sole, so you can dance all night long! ... They are super cute!” 

For the entire story, please click here

IP Deal Making Tip (7 of 101)

In our quest to provide you with 101 deal making tips, here is tip #7:

Make Sure You Have An Industry Comparable!

In licensing your selling your IP, a critical determinatiion will be the valuation and/or the potential royalty rate.

Most entrepreneurs try to create all kinds of spread sheets, sensitivity analysis and forecasts to try to get the highest valuation or royalty for their IP. This is a waste of time.

The best way to get the royalty or valuation that you want is to find an industry comparable.  What company just licensed some IP and what royalty or valuation did it utlize? There is no guarantee that you will get the same number - but by using a comparable you have more or less set the foundations for a fair negotiation.

Once again, you need to do your homework. Search the Internet and if you put in enough effort you should be able to find comparables. 

You can buy books and reports that will give you comparable royalty rates - but these are expensive. Moreover, the books and reports most likely gleaned their information from Quarterly or Annual Reports of publicly traded companies.

You can get access to Quarterly and Annual Reports for free here.

Patent Map From Free Patents Online

The Patent Librarian's Notebook is reporting that Free Patents Online is now offering a very cool Patent Mapping Service.

The Patent Mapping Service utilzes iventor and assignee city data from 3 million US patents and published applications and then combines them with a map of the US generated by Google Maps.

It is really pretty neat to work with. You can click on the particular geographic area you desire and go all the way down to the city level. The patents or published applications are shown in a circle using the colors purple for high values and green for low values.

When you click on the city, you will get a listof the patents or published applications given to an inventor or assignee.

It is fun to work with and very educational.

Kudos to Freepatensonline for providing this service -- for free.

Israel as a Patent Hub

I was interviewed at the recent Globes Israel Business Conference on why Israel has become a patent hub.

Please check out the article that contains snippets from my interview.

Patent Filings Fall in U.S. in 2009

From CNN Money

Patent filings fell in 2009 for the first time in 13 years, worrying Silicon Valley that it is losing its place as the leader in global innovation. 

The number of patent filings in the United States fell 2.3% in 2009 to 485,500 from 496,886 last year, according to a preliminary estimate by the U.S. Patent and Trademark Office. That makes 2009 the first year since 1996 in which businesses and inventors filed fewer patents year over year. 

At the same time, U.S. patents issued to inventors and businesses in foreign nations jumped 6.3% for the year. That's a worry for Silicon Valley, which has been a global leader for decades.

Most blame the recession for the drop in U.S. filings. As a result, many companies are opting to hold off on bringing new ideas to market until the economy improves substantially. 

The number of patent filings in the United States fell 2.3% in 2009 to 485,500 from 496,886 last year, according to a preliminary estimate by the U.S. Patent and Trademark Office. That makes 2009 the first year since 1996 in which businesses and inventors filed fewer patents year over year. 

"The American innovative spirit is stronger than ever. If we're able to get patent reform through, we absolutely can take processing times way down and get innovations through to the marketplace," said Kappos, who estimates that legislation will help reduce the average wait time to as little as one year. 

For entire article, please click here

In our quest to provide you with 101 deal making tips, here is tip #6:

Make Sure The Final Decision Maker Knows Who You Are!!

This happens over and over and in both capital raising and licensing. You start the deal making process with an Executive and you spend all kinds of time and effort negotiating with her. Then as the deal gets closer, all of the sudden the deal grinds to a halt.

Soon, you learn that you were not dealing with the person at the company who has the final decision making power -- only a subordinate.  Unfortunately you also learn that the head of the company is not interested and never was in the picture at all. What a waste of time and money and all your expectations down the drain.

It can be even worse when you are raising money. All of a sudden you realize that the person who negotiated the term sheet with you was simply a finder. He has no power and no money. You have wasted all kinds of time on the finder's fishing expedition.

Of course, not every negotiation starts with you and the final decision maker. The key is to make sure that she is involved, knows about you and your company or IP and is interested. Typically, the big wig will be at the first meeting or at least pop in and then leave you to negotiate with her team.

When I closed my first deal with Rebook, Paul Firemen himself poped in -- told us how much he wanted this deal to work and then left us with his team of super high priced lawyers. The point is that we knew he was involved and interested and that made all the difference in our licensing negotiations.

Great Resource for All Things Patent

Hidden away on a patent incubator site called IP Holdings, is a great resource called All Things Patent

Here you will find::

1. Glossary of Patent-Related Terms: Definitions of the most common terms in the patent infringement litigation lexicon.

2. Patent Infringement Litigation News: News about patent infringement suits that have been filed by or against major companies, or those patent infringement lawsuits that raise interesting legal questions.

3. Patent Infringement Lawsuit Settlement News - Who settled with whom and for how much? This page also contains news about patent lawsuits in which precedent-setting decisions were made by the judge.

4. Patent-Related Links of Interest: Links to worldwide patent offices and some of the main intellectual property organizations and associations.

Number 2 above is especially interesting and I have not seen a similar resource for finding patent litigation news.

Check out this really valuable resource - I highly recommend it for both beginners and experienced IP professionals.

IP Holdings is affiliated with Genral Patent Corporation, a leading intellectual property boutique focusing on patent licensing and enforcement.

Israel acknowledged as international patent center

From Ynet

The World Intellectual Property Organization (WIPO), a specialized agency of the United Nations located in Geneva, has decided during its annual assembly meeting, which took place over the weekend, to recognize Israel as an International center for the search and testing of patents. The Jewish state is herefore added to the list of 15 leading countries in the field.

In practical terms, the decision means that people outside of Israel will be able to apply for patent testing and upon approval from Israel the patent will also be recognized internationally. Up until now such applications, whether from Israeli or foreign citizens did not receive international recognition after having been recognized by Israel.

The recognition of Israel as an international center for patent search and testing entails meeting several conditions, including at least 100 patent testers and minimal documentation in databases for patent search. Israel is also obligated to meet high standards of quality assurance systems.

Click here for the entire article

Patent Blogger Defamation Suit Ends In Settlement

From Business Insider

The Eastern District of Texas is known as a hotbed for patent litigation. This week, however, the Court hosted a defamation trial - involving an attorney who blogged anonymously about patent litigation.

Texas attorney Eric Albritton sued Cisco and former Cisco attorney Rick Frenkel over posts on Frenkel's Patent Troll Tracker website that suggested Albritton filed a lawsuit - against Cisco - the day before his client had rights in the relevant patent and then convinced the local clerk to alter the docket to change the filing date.

Albritton argued the posts harmed his reputation and Frenkel insisted they reflected fact and protected opinion only. Last week the Court ruled that, even though he is a private figure, Albritton would have to meet the high standard of actual malice because the posts involved an issue of public concern - the activities of the clerk's office, Law.com said. The parties reached a confidential settlement early this week, shortly before the jury was to begin deliberations.

The facts of the suit are not as interesting as the fact that it got this far - a blog written by a lawyer for a business often targeted for patent infringement suits highlights the abundance of such suits and what he felt was abusive forum-shopping. Not surprisingly, the local attorneys filing the suits took offense. Plaintiffs' attorneys and corporate defenders whine about the opposition's abuse of legal system every day - but rarely (thankfully!) do they end up airing their complaints in federal court.

Read the entire article here

Pluritas Will Auction Zoltar's GPS Emergency Locator Patents

Michael Jackson : MJs Neverland patent bid dropped

From newspostonline

Michael Jackson’s family may heave a sigh of relief since the application to trademark the name “Neverland” has reportedly been withdrawn.

Jackson’s father Joe previously lashed out at proprietors of his son’s Neverland Ranch for applying for a patent for the property without seeking the family’s approval.

According to TMZ.com, executives at private equity firm Colony Capital filed papers with the U.S. Patent Office to trademark four names for use in conjunction with the massive estate, reports the Daily Express.

Joe was left fuming, and even hinted resorting to legal action.

But that may seem unnecessary since it has now emerged that the request was dropped earlier this week.

This is a great example of how the media and lay persons confuse patents and trademarks

I hope one day they will finally get it right!!

Free Webinar -- The Most Litigated Patents in 2008

Sunlight Research is presenting the latest in its "Pesky Patents" Seminar Series: Six Programs on the Most Litigated Patents in 2008.

In a free webinar to be held Thursday, September 10, 2009 12:00 PM - 1:00 AM CDT they will discuss Pesky Patents owned by Rates Technology and Network Signatures.

This 45 minute webinar (plus time for questions) will include the following:
1) Background information on Rates Technology, Network Signatures and information on other patents they hold;
2) History of litigation involving the patents;
3) A review of each patent's claim coverage;
4) A discussion of claim mapping and a review of how the patent claims may be read on target technology; and
5) A review of any known prior art and any available "deep web" art.

Private practice attorneys wishing to stay abreast of the most common patent threats and non-practicing entities, businesses who have been put on notice of these patents, or firms currently defending against these patents. Businesses not yet on notice of these patents should consult with their patent counsel about the advisability of attending this seminar.

For more information and to register for the webinar please click here

Protecting the Patent System for Entrepreneurs

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.

Stellar Start-Ups: Hi-tech 'reality' show to give away $250,000

From the Jerusalem Post:

Let's see: There are reality programs (online and on TV) that purport to pick the best singer, the best dancer, the best chef, the most agile traveler, the nicest house makeover, the most adept survivor, who can eat the most disgusting stuff, who gets the fanciest Sweet 16, and who can use the best tricks to nab the perfect husband/wife/job/etc.

But forget the phony world of "reality" TV. There's plenty of thrills, chills and action in the world of Internet startups - enough for a reality show in and of itself, it turns out. And that's exactly what the folks behind Exit '09 are doing. With the current contest a result of brainstorming between several Israeli companies, Exit '09 was the brainchild of Sergata, which does development and coding work for Israeli startups.

According to Sandy Hammer of Conference-Art, a production company that has been helping to put together the online contest, Sergata hears from many Israeli startups that have great ideas but no resources to turn their ideas into reality. Seeing a potential "next big thing" going to waste, Sergata, along with Hammer, industry veteran Ben Hirsch and Assaf Gurney of Nascent (a branding company) came up with the contest, which will put the winner on the Israeli startup map in more ways than one.

For you see, the winner of Exit '09 doesn't just get a nice plaque to hang on the wall: The startup chosen by fans and judges gets a prize package worth $250,000!

Besides $100,000 in cash, the company gets a package of services provided by some of the top companies in Israel: software development from Sergata; patent advice and support from law firm Luzzatto & Luzzatto (my emphasis added, mn); business planning, startup support and accountancy services from worldwide giant KPMG; marketing and branding help from Gurney's Nascent; services from Israeli PR pros Doran Tikshoret; legal advice from Israeli "white shoe" firm Shavit, Bar-On, Gal-On, Tzin, Nov and Yagur; hardware from Sun; middleware and worldwide introductions from IBM; and last but not least, high-profile publicity on the Nana10 and TheMarker Web sites, and more!

It's a package that most entrepreneurs wouldn't have the chance to put together - even if they had $250,000. But with the help of pros who know the business, says Hammer, startups "have a great chance of succeeding. They take care of the vision and the application, and we take care of the details that will turn them into a success."

"We've actually created a platform - one that will hopefully propel the chosen startup to great success," he says, adding that this is the first time such an idea has been tried in Israel - or anywhere.

Out of 50 applicants, the judges' panel - which includes Meir Brand, CEO of Google Israel; and Michael Oran, head of IBM's Global Technology Unit in Israel; among others - chose 26 companies to participate in the contest. The companies are listed at the Exit '09 Web site. To introduce themselves, most companies have put up videos that either display their product (the contest accepted only Web applications for its initial run), or some other creative presentation that shows what they want to do (companies do not necessarily have to have a running demo of their project).

Viewers of the site get to vote on their favorite companies, and each week a winner is announced based on the number of votes. The winner gets to schlepp their votes to the following week, while everyone else starts at zero, hoping for better luck.

This goes on for four weeks (the contest is in its second week now). At that point, the four highest-scoring companies, based on viewer votes, get into the semifinal round, along with four other companies chosen by the judges. This is to account, says Hammer, for companies that for various reasons - such as not wanting to publicize their great idea - do not put up a video. The eight companies are then expected to produce a provisional application (with help from Sergata), if they haven't yet.

The judges will then pick the two finalists (this is set for August 23, known among tech wonks as IBM Innovation Day). They'll then go head to head - with help from all the service providers sponsoring the contest - putting the finishing touches on their application, drawing up a business plan, coming up with a marketing strategy and anything else needed to make their ideas shine. The judges will consider, decide and announce the big winner on September 13.

While the videos of the ideas and products that are on the Exit '09 site are fun to watch, the big show takes place during "hell week," when the startups work with their mentors to be the best. Portions of that process will be broadcast over the Internet, just like in a reality show, with the developers letting us peer into their lives, their hearts - their very souls.

So who are the candidates - and what ideas have they come up with? Some of the ideas in the videos looked very interesting, while others were probably not going to be declared winners, based on what I could see.

The contest, says Hammer, has attracted a mix of veterans - folks who may have been involved with a successful product in the past - as well as first-timers. Which is exactly what the Exit '09 people want, he says, adding: "All the ideas are good and have been checked for their potential, and all the applicants are reputable as well. The main thing we're interested in is innovation."

That said, there have to be losers when you're running a contest, but even the losers get to take something away, Hammer says.

"The second-place company gets to keep the application, business and marketing plans, and anything else the service providers helped them put together for the finals," he says, while those who don't make it that far get the benefit of having been exposed to tens of thousands of viewers, including VC people, many of whom are following the contest closely.

"Everyone has an equal chance, and every idea could be a life-changing one - for the winners, and maybe for the way we work or play," Hammer says. "For the first time, we're democratizing the process of getting on the hi-tech map, giving entrepreneurs access to experts they probably would not have been able to reach otherwise. And that's going to be great for innovation."

For more information please go to www.exit2009.com

And the survey says

Licensing is becoming more and more important to Corporations

Accoring to an ipPerformance Group survey, corporate intellectual property strategies are becoming more sophisticated including the growing importance of licensing initiatives.

One hundred and eight companies participated in the 2009 'Intellectual Property Management Strategies, Metrics and Tools Survey.' The survey was conducted among intellectual property leaders representing 23 major industries.

Survey participants were questioned on a range of topics, including:

* Strategy success metrics
* Key roles involved in developing IP strategy
* The key elements of the IP strategy
* Effective value indicators
* Effective metrics and methods for communicating value to executive management
* Success factors and best practices for measuring and communicating value
* Key roles responsible for managing the patent portfolio
* Methods used to promote IP program value to executive management
* Methods for aligning strategy with corporate goals
* Most senior person that is intimate with the IP strategy
* Popular tools used for managing the portfolio and level of satisfaction

Participating in the survey were industry-leading companies such as Freescale Semiconductor, Caterpillar, Navistar, Praxair, Eastman Chemical, ASM International, Abbott Labs, Nestle Purina, BD Medical, Swagelok, Polaris, Steelcase, Wm. Wrigley Jr. Company, Pratt & Whitney, and Dow Chemical.

The ipPerformance study reveals a variety of trends including:

54% of companies indicate that their written business plan explicitly incorporates IP strategies and goals.

Stakeholders for developing intellectual property strategy varied greatly across the survey participants. Technology and Legal leadership play pivotal roles, both in preparation and approval responsibilities.

The most popular metric is patent applications filed, 77% of companies indicate that patent applications filed is how they measure their program effectiveness. Other popular measures are number of patents granted and invention disclosure reviewed.

In addition, the survey found that 57% of companies indicate that they have a patent licensing strategy. Increase revenue and technology control are the two most important licensing strategies. The study revealed a 15% increase of companies from the 2007 study indicating that generating licensing revenue is a success criterion of their patent strategy.

A full report of the survey findings is available from ipPerformance Group at http://www.ipperform.com.

For more on licensing and how to make money from your IP, please click here.

Heads up to http://www.onlineprnews.com/

A Real Life Trademark Story -- with a Happy Ending

Inventors - Curb Your Expectations!

During a meeting with serial entrepreneur and investor Mike Berman, we discussed the expectations that inventors and entrepreneurs have when starting a new company around their patents and IP.

I told Mike a few stories about how most inventors have such high expectations -- like throwing a provisional patent on the conference room table and telling me "this is a 5 billion dollar invention."

After hearing something like this, I know right then and there that this inventor will not commercialize his invention -- his expectations are not in line with reality.

Mike told me that this reminded him of a Saturday Night Live episode where John Lovitz was scalping superbowl tickets. In his mind the tickets were worth millions of dollars and he was holding them way up in the air and screaming - two superbowl tickets only two million dollars (if anyone can find this on youtube, please send it to me).

The point is that inventors and entreprenuers must have realistic and real world expectations -- right from the start.

If an investor like Mike Berman is going to invest -- you need to convince him of your passion for the invention and that you are willing to do whatever it takes to commercialize the IP. Serious investors like Mike, who have started companies and exited successfully, know the value of your invention. The fastest way for any meeting with a serious investor to end is for you to show you do not have real world expectations.

So curb your expectations - this is a good first start to both raising money and commercializing your IP.

Is Your IP Hot IP?

If you have patents and other IP you would like to license or sell, maybe you should consider HOT IP.

Hot I.P. is a regular e-bulletin presenting technologies from universities and research institutions around the world. According to the company, all  submissions are judged as top-echelon, vetted innovations by the submitting organizations, and then are reviewed for quality, novelty, and likely market acceptance by Hot I.P.'s editorial staff prior to acceptance for publication. Each item links to a brief description of the technology, its inventor, patent status, and the business opportunity it represents, along with key contact information.

What makes Hot I.P. special (HOT)? 

According to its website:

"unlike the currently existing IP databases and listing services, rather than residing on a website that users must visit and search within to find IP of interest, the Hot I.P. service actively sends these innovations out to our database of nearly 200,000. These include research commercialization professionals, investors, attorneys, corporate IP managers, consultants, economic development officials, and research administrators worldwide. In addition, we ensure the quality of the IP presented by accepting submissions only from leaders of university TTOs and other research institutions, who vouch for its novelty and market potential and select only from the top level of their IP portfolios."

I have not used this service and I know that other companies like Yet2.com have similar offerings. For a list of such companies, click here.

The marketplace for this type of exchange is pretty dynamic and we will try to keep up with new entrees into the IP Playing Field

If you know of any that we have not covered here, please let me know 

A New Source For Selling Your Patents and IP

There is a new source to help you sell your patents and IP. Yet2.com – the premier online marketplace for patents and IP is now also helping companies and inventors sell their IP and patents anonymously.

According to Yet2.com, their new practice for anonymous patent acquisition was developed and refined quietly over the past four years by yet2.com personnel and is now fully operational.

“Today’s patent landscape is critically important to the business strategy of any company involved with technology,” said Phil Stern, yet2.com CEO and co-founder. “Tremendous IP assets are suddenly available worldwide. Those patent assets will trade. We’re seeing a set of Fortune 500 ‘strategic’ companies that are investing in buying these patents for strategic and freedom-to-practice reasons.

Brad Kullberg, vice president of yet2.com, heads the patent practice. Previously, Mr. Kullberg was vice president of corporate business development and general manager of intellectual property business at Polaroid Corporation.

A key advantage Yet2.com offers is that because they search the world on behalf of so many different acquiring organizations, they can offer superior access to IP assets.

For more information on Yet2.com click here

For more information on how to make money from your patents and IP click here.

Kfir Luzzatto's Presentation entitled:

Global Changes: An Opportunity for Israeli Biopharma R&D

In front of a standing room only crowd, Dr. Kfir Luzzatto delivered a very informative and entertaining presentation at the BIOMED Israel Conference

For those of you that could not attend, please email me - michaeln@luzzatto.com and I will send you a copy of the presentation

We will be posting video and pictures soon

Invitation to BioMed Israel Special Breakfast

A Special Breakfast follows the presentation

The presentation and breakfast reception will take place Tuesday, June 16th from 7:30am until 8:45am

Seating is limited - to reserve a place please email me - michaeln@luzzatto.com

Hope to see you there

Joint Venture Versus Licensing

Jack Welch's Winning IP Strategy

VISIT US AT INTA!!!

WWW.INTA.ORG

Visit our booths at INTA -- Booth numbers 835 and 837

We will answer any questions you may have about Trademark filing in Israel and on Intellectual Property Protection in Israel.

The Secret to Commercializing your IP

Are you trying to commercialize your patents and IP? Having trouble? Thought so.

Potential investors, buyers, licensees -- the money people - see great IP everyday and are enundated with offers to buy, invest in or license IP -- ad nauseum.

If you want to commercialize your IP and get the money - you need to have great IP, but you need something more -- Enthusiasm!!

From guru Tom Peters:

"1. Nothing is so contagious as enthusiasm."—Samuel Taylor Coleridge

2. Axiom: Enthusiasm is the sine qua non of success ... at anything."

When you are trying to commercialize your IP -- regardless of the route -- you must be enthusiastic about your IP and make sure that your enthusiasm spreads to the decision makers.

Sounds easy, but remember:

"You can't fake enthusiasm" ---Michael Neuvirth

Profit from your patents and IP via R&D Licensing Companies

You have cutting edge IP which can provide a paradigm shift in your industry. One lucrative and creative way for you to commercialize this IP is via an R&D Licensing Company.

R&D Licensing Companies are highly industry specific and will license your IP from you, conduct R&D and then incorporate the IP into their own products and technologies which they then license and sell.

These companies have been very successful and several are publicly traded.

For more details and a list of R&D Licensing Companies, click here.

Follow Us On Twitter!

For updates and more information about how to make money from your Patents and other Intellectual Property - follow us on Twitter:

@ipplayingfield

Learn the ins and outs of royalty monetization

Technology Transfer Tactics -- a great resource for technology transfer - is offering a pretty good deal on an audio conference dealing with royalty monetization.

What I like about the audio conference is that the participants have real life experience in the most recent royalty monetization deals -- including Emory’s $540 million monetization of its Emtriva royalty.

The program costs $197 and here is the link.

For background information on royalty monetization click here

10 Tough Questions To Ask Yourself Before You Market Your Invention

Ok, you have a great idea and maybe you even applied for a patent application. However, before you think about spending time and money marketing your invention - ask yourself these questions. If you can answer them honestly, you will know if you should proceed -- or not.

1. Did you conduct a patent search?

2. How is your invention better than what is on the market now?

3. Can your invention be priced competitively?

4. Are there any standards or regulations (like FDA) you need to comply with?

5. How will your invention be manufactured?

6. Who are your competitors and don't forget status quo?

7. What is your marketing strategy?

8. Do you have the experience and expertise to market your invention yourself?

9. Do you have the time to market your invention yourself?

10. Do you have the money to at least produce prototypes?

Take the time to answer these questions honestly and then you will be positioned to know whether or not you should invest the time and money to market your invention.

For more information on marketing your invention, click here

Angelina Jolie versus Robert Kearns

Image Source: www.people.com

In life you need to make some pretty tough choices. On an international flight I had to choose between the latest Angelina Jolie movie or A Flash of Genius the story of the inventor of the intermittent wiper blades and his lawsuits against the Big 3 and other car makers for patent infringement.

I think I made an excellent choice. The movie is a must see for any inventor as it shows just how hard it is for a sole inventor to make a deal with a major corporation and what happens when the corporation infringes on an inventor's patent.

As a patent attorney, inventor and entrepreneur, I watched the movie with great intensity. I had lived through similar experiences and could really feel for the inventor Dr. Robert Kearns.

A few take aways from the movies:

1. Don't ever put all your eggs in one basket - negotiate licensing agreements with several companies at the same time - not one after the other

2. Get the best possible experts to help you - Kearns' investors and advisors were neophytes and worse - were doing business with the big 3 and could not risk going to battle with them.

3. Take the money - Kearns was offered $30 Million by Ford during the trial - Kearns turned it down because there was no admission of infringement by Ford. Kearns ended up with a verdict of $10 million. Better to take the money and help other inventors than to risk everything for an admission of infringement

4. Make sure you have a paper trail - Keep great records, prepare and send meeting summaries with everyone you meet during any licensing discussions. You never know what will end up happending a few years down the road and you certainly will not remember everyone you met with and what they had to say

On the flight back home - its a no brainer - Angelina Jolie -- unless of course there is a new flick about patent trolls . . .I think Hillary Duff would make a great troll

How To Make Money From Your Patents and IP

Image Source: www.alliedexecutive.com

There are numerous ways to make money from your patents and IP. Money making routes include:

1. Licensing

2. Creating a new company from scratch around your IP

3. Selling your IP

4. Spinning your IP out of a Corporation or University

5. Litigation Finance

6. Royalty Monetizations

7. M&A

The key is to know the advantages and disadvantages of each route and to determine which route is best for your particular situation.

The best way for you to learn more about each route is to visit the section of the IP Playing Field Roadmap where we discuss each in detail.

You can also follow the Roadmap and you will get to both firms that can help you get to the money and firms that will give you money for your IP.

To Sell Your Patent or Not to Sell Your Patent -- That is the Question

One relatively quick and easy route to making money from your patent is to sell it outright. You get cold, hard cash and walk away.

Until a few years ago, selling your patent was very difficult as there were no real mechanisms in the marketplace for buying and selling patents.

This has changed in a really big way. Now, there is a whole new industry for buying patents comprised of companies that will buy your patents directly from you, and a slew of patent brokers who can help you get the best deal.

However, out of all of the options you have for making money via your patent – selling your patent outright is the only one where you have no upside. Yes, you get money for your patent – but keep in mind that the buyer expects to make money as well.

You need to weigh all of your options very carefully before deciding to sell and this is one of the reasons we created the IP Playground – so you can know all of the routes for making money from your patent and then decide accordingly.

So, please visit the money making routes in the IP Playing Field and then you can make the best possible – and most educated decision on whether to sell or not.

Reminder - Ocean Tomo Live Patent Auction

Ocean Tomo will return to The Ritz-Carlton in San Francisco, site of its first live IP auction, for the third time to kick off IP Markets 2009. The Spring Event, which will take place on March 26-27, 2009, includes a one and a half day conference focusing on cutting-edge IP-related issues, a Gala Dinner at San Francisco City Hall, and of course, the Live IP Auction.

The Event is well attended by approximately 500 IP and business professionals, including Fortune® 500 IP and licensing professionals, C-level executives from small and mid-size companies, investors, individual inventors, attorneys and press.

For more information and to register click here.

IP Deal Making Tip (3 of 101)

Tip number 3 out of 101 is:

Be a Bulldog

Image Source: www.sporthorsephotography.net

What does this mean? Never give up and never surrender. The Deal must happen and you will make it happen.

Don't confuse this with with being patient. Sometimes the best thing to do is nothing. However, you need to know how to wait -- but not how to quit! If the deal is really important to you (and it should be or you would not be doing it - see deal tip #1) then you must never rest until all avenues have been exhausted.

Real Life example: We found the perfect company to license our invention. Really win-win. The problem was that we could not get a meeting with the Executive we wanted to champion our invention. We tried everything - flowers and candy for his secretary, email, snail mail, Express Mail, phone calls, begging, you name it we tried it.

We really believed in our invention and that it was truly a win-win deal. So we built a very basic model, flew across the Atlantic and just showed up at the company’s main headquarters. We sat in the lobby all day demonstrating our invention to anyone in the company's lobby and to employees of the company who were wandering in and out.

We brought our own lunches and took separate bathroom breaks (the receptionist would not let us in or call the Executive, but she gave us lots of coffee).

Finally, after several hours, the Executive we wanted to meet ushered us in to his offices . . . and the rest is history.

The moral to the story is if you really believe it is a good deal for both sides - never give up and keep trying until the deal is done -- no matter what it takes.

IP Deal Making Tip (2 of 101)

As you can see from the title, we plan on providing at least 101 deal making tips for your IP related ventures. As you can see from the picture -- our second tip is:

Keep Your Eye on the Ball

What does this mean -- focus on your goals and objectives in doing the deal and don't worry about side issues or what the other side is getting. You need to know what you want out of the deal and have a continuous laser like focus on your objectives.

IP Deal Making Tip (1 of 101)

As you can see from the title, we plan on providing at least 101 deal making tips for your IP related ventures. Our very first tip is:

It is better to negotiate the right deal badly - then the wrong deal well!

For example, if you decide to sell your patent, it is better for you to negotiate "badly" with a deep pocketed firm that has a track record for paying big money to inventors - then to hammer out a great agreement with a finder who may not even sell your patent in the end.

Another example, suppose you want to license your patent. Is it better to negotiate "badly" and agree to a lower royalty rate with someone who will champion your invention inside the company or to get the rate you want and then find out that the person you dealth with does not have enough clout in the company to push your invention?

I think you get the picture

The Very Best Advice For Any and All IP Business Transactions

LISTEN, LISTEN LISTEN

Let the other side talk

Mark Twain said it best: "if you are talking your not learning!

Are Inventors Crazy?

Found this great article on Inventors at Radio Man's Blog. Here are some highlights:

Segway scooter inventor Dean Kamen freely admits it: He often suffers sleepless nights wrestling over whether to quit a project that's not panning out.

Knowing when to quit a fruitless project is difficult, says the father of the Segway, Dean Kamen, left.

"You end up lying there saying, 'I'm not stopping. It would be an act of shallow cowardice. Or you decide to quit and you say, 'This is one of those ideas that just isn't going to work,' " said Kamen, speaking by phone from his home office in Manchester, New Hampshire.

When to quit -- said Kamen, also the inventor of health care technologies and the Slingshot water purifier -- is "the toughest question there is" for any entrepreneur who survives on creativity and instinct.

"It's not nearly as glamorous as people think to keep working on something and to keep hitting roadblocks and to keep going," he said.

Stubborn, delusionally optimistic, creative, fearless, flexible and focused are some of the ways psychologists and business people describe the personality of an entrepreneur. Surprisingly, another word is ignorant.

"You need to be in denial or in ignorance about the huge challenges you face," laughs Guy Kawasaki, a former Apple executive and entrepreneur who's starting the self-described "magazine rack" alltop.com. "You have to believe that it wouldn't be hard for you to succeed." 

In a recession that has forced employers to eliminate 2.6 million jobs in 2008, people who might otherwise start a business at a time of their own choosing find themselves being pushed into entrepreneurship.

"More people often become self-employed in tough times like this," said John Challenger, CEO of a top employment firm for executives and middle managers.

Between 5 percent and 7 percent of clients at Challenger, Gray & Christmas are choosing to start their own businesses, he said. Workers are more open to starting a small business in the dot-com era, Challenger said. "I think we're in a more entrepreneurial period than we were in the '80s and '90s," he said.

Recessions can be "crucibles" for at-home start-ups. "Some of the best new businesses start in recessions because what they have really makes a difference if the market is interested in it," Challenger said. "There's not a lot of easy money to go around, and they have to fight their way forward."

Great entrepreneurs, said Kawasaki, do more than just fight hard to win their market share. They have vision. They ask what he calls the "fundamental question": Wouldn't it be neat if ... ?

Kawasaki said Apple would have failed without the unique contributions of its co-founder, Steve Jobs. "He asked the question, 'Wouldn't it be neat if people could carry all their music with them wherever they went?' " Result: the iPod.

Jobs described fond memories of his California childhood during an 1995 interview with the Smithsonian Institution, saying his father "spent a lot of time with me . . . teaching me how to build things, how to take things apart, put things back together."

Kamen, who works hard to inspire future innovators with his FIRST program to promote high school math and science, said every entrepreneurial innovator he's ever seen shares a few characteristics.

"It's not that they're brilliant or well-educated," Kamen said. "They work all the time. They don't let failure demoralize or destroy them. They pick themselves up and keep going and eventually, every once in a while, one of your ideas actually breaks through and works, and it makes all that stuff seem worthwhile."

Questions From Our Readers(Con't)

A prominent feature of our blog will be to answer questions submitted by our readers. Please feel free to submit your questions and we will answer them as quickly as possible.

Question: What is the biggest mistake a patent owner makes when licensing his invention?

Michael: Tough to come up with just one! Let me give you one from a successful deal I was involved in. Short answer - don't put time constraints on the licensor - let her work under her own time table. In my case, the patent owner pushed me to pressure the licensor into closing the deal and wanted (heaven forbid) me to make an ultimatum - do it now or never. The patent owner pressed me, but I let the licensor get back to us in her own time, and yes it took a long time to close, but we did.

People are busy and licensors have their own very full plates before they are contacted by 3rd parties. Relax and work with your licensor without undue time constraints.

Questions From Our Readers

A prominent feature of our blog will be to answer questions submitted by our readers. Please feel free to submit your questions and we will answer them as quickly as possible.

Question: I read your post on companies raising money during a recession and while it gave me some confidence I am still getting rejected left and right by investors. What is your advice?

Michael: First of all, the fact that you are getting rejected "left and right" probably means that you are shopping your buisness plan around to any investor you can find. If this is the case please stop and focus. You must use a targeted - sniper - approach and not a shotgun. Secondly, you need to understand that investors are investing but very slowly and very carefully. The golden rule of venture capital is "whoever has the gold rule." So you must be patient but also try to be creative and maybe you can consult in the same field while you build up your company. You can also try raising from business plan competitions and government sources. Sorry - there are no magic bullets. You need to hang in there and bootstrap for as long as possible.

I will answer some other submitted questions in my next post

How to Choose Your Patent Attorney

The most important step in obtaining the best possible IP protection is to choose the best possible intellectual property attorney. Choosing the right patent attorney is one of the most important decisions you can make in protecting your invention.

Here are some tips to help you choose the best patent attorney for your invention:

1. You should select a patent attorney who is also an engineer. Both skills are needed to construct a good patent document.

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 practiced patent law, how many patents he 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 a patent attorney that hires an independent professional patent searcher. An in-house searcher would provide a conflict of interest, leaning towards making the patent search 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 a patent lawyer 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 provisional patent – it could save you some money.

To find out how many and what types of patents the particular attorney has prosecuted, you can do a search for free here. Under “field” choose “Attorney or Agent”.

To find out if the patent attorney have a good reputation among other attorneys click here.

NO NDAs!!!!!

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 pending patent and don't insult the intelligence of the company by asking them to sign your NDA.

The Best Invention Pitch

When pitching your invention to companies, don’t focus on you and your invention. Don't focus on the patent issues and don't focus on the money you want.

Instead, show specifically how your invention will help the particular company grow and prosper.

Always keep in mind this quote from Tom Peters

“He had done nothing to sell me on his business, yet he had given me the most powerful sales pitch in my life because his sole concern had been my welfare and the success of my business.”

Is Your Invention a "Have to Have"?

I divide inventions into three categories:

1. Me too

2. Nice to have

3. Have to have

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 a patent search or even received a patent does 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 Inventions

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
contact.

A bonus #4 -- Inventors throw around the word "patent pending" as if it
will really impress the licensee. Licensees want patents -- issued
patents. They also want prototypes and working models. You will not
impress them if you only have a pending patent -- even if it is a car that runs on bull shitake.

Google's CEO on Intellectual Property

Google's CEO Eric Schmidt gives his take on Intellectual Property protection in this video.

Pretty insightful stuff -- if you ask me

The Ten Commandments of Business Plan Development 

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. 

Save Costs, Not Quality

Dr. Kfir Luzzatto reveals his tips for an economically sound IP management, which will help you navigate through lean times.

These are difficult times for IP owners. The economic pressure they feel daily is inevitably passed on to the patent law firms that manage their intellectual property. Faced with the need to accommodate their clients’ demand for reduced costs, many patent law 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-run patent law 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 the IP field 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 a patent law 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. Many patent law 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.

download the full article in pdf

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. 

Many Great Companies Were Formed During a  Recession!

Common wisdom says that now is probaly one of the very worst times to raise money. But don't let that stop you. Many great companies were formed during a recession.These include:

HP

GE

Sports Illustrated

Trader Joes

MTV

CNN

LexisNexis

Microsoft

IHOP

Hyatt

Burger King

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!

Money Talks - Bull Shitake Walks

This post will conclude our series on creating the best possible business plan for your start-up. Our final topic is your financial projections.

Financial projections that must be included in every business plan include cash flow, revenue, and profit and loss statements. All of the forecasts must realistic - they cannot exceed accepted norms. For example, if you are in the software business, your margins should not exceed those of Microsoft®.

Find a Comparable

A very good way to build realistic financials is to find a publicly traded company that you can use as a comparable. Go here. To find the annual and quarterly reports of publicly traded companies. Download the financials of your comparable and then customize them to fit your specific business.

The Process Itself Is the Key

The process of preparing the forecasts is just as important as the forecasts themselves. Investors want to know that you went through the process to make sure you have dealt with the real-life issues you will be facing as you try to grow your company. They want you to consider very carefully your best and worse case scenarios. Investors want to see your impressions on where your company will be in five years.

Bear in mind that your financial projections are the result of your strategic planning. You can only prepare proper financial projections after you have conducted market research, analyzed the market, determined the human resources you need, your production costs and other capital issues. Only after this exhaustive work is finished will you be able to prepare competent and realistic financial projections.

Each and every number will have to be supported with credible data. The data you use should be logical, well researched and carefully put together. It should also be based on multiple sources.

Impress Investors - Show You Know Cash Is King

If you take the time to prepare realistic cash flow projections (monthly or quarterly) you will be doing your company a great service and you will also impress investors and be in a better position to persuade them to invest in your company. Remember, it is their money you are going to be using - so show them you are prepared to guard it as if it were your own.

Your cash flow projections are the difference between the money you expect to take in, and the money you expect to spend. Never forget that cash flow involves money in the bank. It does not include orders or invoices. Cash expenditures are cash that is taken "out of the bank.". A bill is not an expenditure until your check has cleared your bank account.

Watch Our For Accepted Industry Practice

Too many start-ups fail to take into consideration the fact that in most industries, invoices are never paid upon presentation, but usually at least 1-3 months later. In addition, many start-ups fail to realize that it will take them several months to even get their first sale. Both of these standard industry practices have an obvious effect on cash flow forecasts.

Also, it is standard practice for start-ups to have negative cash flow - if you do not, something is wrong with your forecasts. The negative cash flow will give you and investors an idea of the financial support you actually need.

Projecting cash flow expenditures is easier than trying to predict cash receipts. Therefore, you must keep reviewing and updating your cash inflow. When raising money, you should ask for at least 25% more than your forecasts indicate that you need. The point here is to insure you do not run out of money - it is not a negotiation tactic for you to use with investors. Experienced investors will know when you have "padded" the numbers.

Do Not Be Too Optimistic

Your cash flow projections provide investors with insights into your common sense and your understanding of the difficulties facing you as you grow your company. Excessively optimistic projections will ruin your credibility and will turn off potential investors. The key point is to try to find out just how much money your really need and for how long. Once you have got to this point, you can prepare various scenarios. Remember, if your basic assumptions are correct - the scenarios will be helpful and realistic. If not, you are just wasting time - yours and the investors.

Our next posts will deal with helping you raise money for your startup.

Investors Bet on the Jockey - Not the Horse

Your Management Team will play a critical role in both growing your startup and in helping it raise money. Investors typcially like to "bet the jockey and not the horse" This means they will invest in an "A" team with a "B" technology and not the other way around.

However, having a great management team at an early stage is tough for a startup. Also, founders like you probably want to be the CEO - but you probably do not have a management experience.

Sophisticated Investors understand this and while they really want you to have a top notch management team already in place – they know that you probably will not have such a team yet.

To solve this dilema - you need to tell them straight that you know this and that you are doing everything in your power to attract track recorded management. Your first step in proving this is to build a very attractive advisory board. In doing so, you need to make sure that your advisory board is not just window dressing -- but is filled with experienced executives – who are track recorded and known -- who are willing to roll up their sleeves and help you.

Use your social networks to build your advisory board. Go through your contacts and their contacts and find attractive candidates. If there is a connection – even if 3rd party – use it to try and make contact.

You should also ask your service providers if they can personally introduce you to potential members of your advisory board. This is no time to be shy. You must be aggressive and use any resource possible in order to build a highly attractive board.

You need to compensate this board and this is typically done via stock options. Typically, you will have to set aside a certain amount of stock for key employees and advisors. Your attorney can help you decide on the exact amounts.

Once you have an advisory board in place, you can state in your plan that you understand the need for track recorded management and you are doing your best to build a superior team. In the interim, you will rely heavily on your advisors and directors to help you run your fledgling enterprise. You must also state that you will step aside as soon as you find an experienced CEO.

If the investor really believes in you – then this will satisfy her “checklist” for track recorded management – because she believes that you will be able to attract and build a high quality team. 

In my next post we conclude our section on the business plan for new companies.

Is Your Company a Purple Cow

As we continue with the 4 P's of marketing, we call upon marketing guru Seth Godin who has added an exceptionally important new P to the list: Purple Cow.

Seth came up with this new P as follows:

"While driving through France a few years ago, my family and I were enchanted by the hundreds of storybook cows grazing in lovely pastures right next to the road. For dozens of kilometers, we all gazed out the window, marveling at the beauty. Then, within a few minutes, we started ignoring the cows. The new cows were just like the old cows, and what was once amazing was now common. Worse than common: It was boring.

Cows, after you've seen them for a while, are boring. They may be well-bred cows, Six Sigma cows, cows lit by a beautiful light, but they are still boring. A Purple Cow, though: Now, that would really stand out. The essence of the Purple Cow -- the reason it would shine among a crowd of perfectly competent, even undeniably excellent cows -- is that it would be remarkable. Something remarkable is worth talking about, worth paying attention to. Boring stuff quickly becomes invisible.

The world is full of boring stuff -- brown cows -- which is why so few people pay attention. Remarkable marketing is the art of building things worth noticing right into your product or service. Not just slapping on the marketing function as a last-minute add-on, but also understanding from the outset that if your offering itself isn't remarkable, then it's invisible -- no matter how much you spend on well-crafted advertising. "

Adding the Purple Cow “P” will enable you to create and sell something remarkable. You will be able to create products and services that are worth marketing in the first place. It is a plea for originality, for passion, guts, and daring. Not just because going through life with passion and guts beats the alternative (which it does), but also because it's the only way to be successful. Today, the one sure way to fail is to be boring. Your one chance for success is to be remarkable.

You can learn much more about how to be a purple cow here.

In my next post we continue with our animal theme and focus on betting the jockey and not the horse - your management team.

Do You Know Your Business Model? 

What Is a Business Model?

Quite simply, your business model is how your company will make money. By answering the following questions in detail, you will be able to develop a viable business model for your company:
1. What is your value proposition?

2. Who are the specific customers that your value proposition addresses?

3. How will you reach these customers so you can offer them the value proposition?

4. How does your customers’ money make its way into your bank account?

5. Who are all of the members of the chain between your customers’ money and your bank account?

6. Can you follow the money from your initial contact with customers until the money reaches your bank account?

Marketing Strategy – 4Ps Plus a Purple Cow

Your marketing strategy is quite simply how you plan to market your product and get paid!

Typically, companies rely on the 4 P's of marketing in putting together their marketing strategy. The 4 P's are Product, Place, Price and Promotion. We are adding a fifth – a purple cow.

Product
In your marketing plan, you must focus on differentiating your product from other products in the industry. This is a broad issue, and there are many ways to go about it, including through:

• Features
• Fit
• Styling
• Reliability
• Packaging
• Sizes
• Service
• Brand Name

It must be stressed that the choice of any one of the above product differentiation techniques affects the entire marketing process because it lays the groundwork for all of your promotional efforts.

Place 
This section involves choosing appropriate distribution channels - making sure that each fits with the product and your intended buyers. You must focus on determining a specific distribution strategy, and the basis for choosing your distribution channels.
Commonly cited channels include OEM (original equipment manufacturers), Wholesalers, Distributors, Sales Representatives, Sales Forces, Retailers, and others.

A simple boilerplate listing of channels may fill up a page in your business plan, but it will not even pass the first skimming of your plan by an investor. You must focus on determining the channels that make the most sense for your specific market, and they must match your business model.

Choosing the exact distribution channels will depend on a lot of factors including product specifics, the need for control, and the margins you are expecting. Ask yourself the following questions:

1. What is the level of attention needed to make the sale?

2. How much will I have to motivate the channel to carry my product effectively and appropriately?

3. Where are the margins at each level in the distribution system?

Promotion

Here, you must describe in detail the program you will use to get and keep the attention of your potential customers. This includes public relations, trade show participation, trade magazine advertisements, direct mailings, and the preparation of promotional material. Try to be as specific as possible, including the exact trade shows and the exact nature of your participation. Are you simply attending the trade show, or are you going to make presentations? Do you have a booth, and if so, what special features does it have to set you apart from others at the particular event? What trade journals are you advertising in? Are you writing articles or white papers, and if so how will they be distributed?

Pricing

This section demonstrates why all of the sections of the business plan must inter-relate, if the business plan is truly going to make sense. For example, many entrepreneurs will stress the superiority and the competitive advantages of their product in the product description and competition sections. Yet, in the pricing section, they will state that they will sell their products for less than the competitors.

This is a major "turn-off" for investors, because it demonstrates that the entrepreneurs are either stretching the real advantages of their products, and/or that they do not understand that costs are typically underestimated, and that if you start too low, it is difficult to raise prices if costs go over budget. It is always easier to cut prices than it is to raise them.
Pricing is one of the hardest decisions for entrepreneurs to make. You must brainstorm over the various pricing strategies you have until you come up with the one that is convincing both internally - and to investors.

As you brainstorm, focus on the rationale for your pricing.

1. What does your competitor charge?

2. What will the market tolerate?

3. How will you price the whole product - software license, per seat, support, fees for projects, etc.

4. Can you justify higher prices based on factors like newness, quality, faster return on investment, and user benefits? 

In my next post we will find our if your company is a Purple Cow and why it needs to be one.

Probably the Most Difficult Section of Any Business Plan 

The Market Analysis and Competition Block is probably the most difficult section of the business plan. While it is difficult, it is also crucial for several reasons. First, for internal use, you must determine your precise market, the status of the market, and how much of the market you can capture.

In addition, you must demonstrate to investors that you do indeed know your market, and that the market is large enough to absorb the unavoidable mistakes you will make along the way. Finally, this section is also crucial because the business model, choice of strategies, tactics, and financial models are all derived - in whole or in part - from the market analysis.

Therefore, you must be prepared to devote substantial time and effort to this section and to prepare it as early in the development process as possible.

Analyze the Market Top Down

You must demonstrate your thorough understanding of the market, whether the market is large and growing, and if it can accommodate your expected growth.

In preparing this section, you must identify, describe and analyze your entire market - from the top down. Specify the size of the total market in both units and dollars.

You should also segment the market and include the size of the particular niche that specifically applies to your particular product. The potential annual growth of the market must be covered and market projections for around 5 years should be included. The data should be conveyed to the reader both in text form and in easy to read, dynamic charts and graphs.

You need to make sure that the markets are clearly defined - who are the major purchasers, where are they, why do they buy? You must also address issues like the significance of price, quality, service, personal contacts, seasonality, and buying habits of potential customers.

This section must also include a discussion on the forces driving the market, current and future trends, and the major players.

You Always Have Competition

The market analysis should conclude with a detailed and realistic assessment of your competition. Analyze the market share, positioning, and strengths and weaknesses of the competing products, including the managerial and financial aspects of the competitor companies. Include a detailed comparative table.

Take great care to avoid the "no competition" statement. Serious investors are wary of companies who claim not to have any competitors. With today's information overload, it is very easy to "mine" the data and find your competition. Be sure you do it - and not the potential investor. Also, remember that the Status Quo is a major competitor of yours.

In my next post we will deal with the business model and market strategy block.

Building Blocks of Your Business Plan

Our quest for making money from your IP via creating a new company continues . . .

Our topic is creating the best possible business plan for your start up.

The focus of this post is to provide you with the basic building blocks of a business plan. We have included them for demonstration purposes and not as suggested boilerplate chapters for your plan. Your plan must be tailored to your own specific company.

Please note that the content for each should not be written in a vacuum. Each section must be self-sufficient, yet interrelate with all of the others.

Executive Summary

Technology & Products

Market Analysis And Competition

Business Model & Marketing Strategy

Management Team

Financials


I. Executive Summary Block

Guy Kawasaki says: 

"The executive summary is often your initial face to a potential investor, so it is critically important that you create the right first impression. Contrary to the advice in articles on the topic, you do not need to explain the entire business plan in 250 words. You need to convey its essence, and its energy. You have about 30 seconds to grab an investor’s interest. You want to be clear and compelling."

Guy says to forget what everyone else has been telling you. The key components that should be part of your executive summary can be found here:


II. The Technology and Product Block

This block should cover your technology, products, research and development, and manufacturing issues. Your main challenge in the technology section is to use layman's terms to inform the reader that you have superior technology that is on the leading edge. You cannot take it for granted that potential investors will have strong technological backgrounds. Moreover, the business plan should be written with all of the members of the management team in mind – including those that are not engineers.

To ensure that laymen can understand, try to use pictures and diagrams to explain the technology. Do not inundate the reader with too much material here. If you have white papers or other publications concerning your technology, you can include them as an appendix. Also be sure not to expose any proprietary information.

When you describe your product(s), you must focus on user benefits and not on the technology involved. Highlight you product and its competitive advantages in a simple, straightforward way. In doing so, consider the fact that investors look for truly market driven products, that meet an unsatisfied or emerging market need.

Focus heavily on user benefits and the needs your product will serve. Explain how your product differs from and is better than its competition. Include a section on product features and their advantages and disadvantages. Discuss the product's price, quality, and reliability. A chart summarizing the user benefits could also be included.

If the product is already on the market, or if it is being used at Beta Sites, include customer recommendations and references. For development stage products, provide a discussion of current status, and development schedules and milestones.

In the Research & Development section you need to focus on both on-going R&D projects, and future plans. Key points that investors look for include: the relationship of R&D to your market, how your R&D relates to product upgrades and new releases, and whether the development schedules and timetables make sense. You should also include information on the R&D team.

In developing your time tables, keep in mind all regulatory approvals – they can cause major headaches and delay product launches if they are not factored in at the earliest possible date. For example, medical companies need to pay close attention to sequential timetables, and the completion dates of clinical trials required for FDA approvals – if not, US sales may be delayed.

In the Manufacturing section, you should discuss the manufacturing facility, equipment needs and recruitment issues. Quality assurance standards and similar issues also need to be addressed. Do not simply state that manufacturing will be done by "best of breed" subcontractors. Try to be as specific as possible. 

In my next post, I will cover the rest of the blocks in more detail.

Starting a New Company - Step One a Proper Business Plan

If you think you can be a successful entrepreneur and want to create your own company from scratch, the first thing you need is a business plan.

Why?

In today's highly competitive, fast-paced, global business arena, if you fail to plan you are planning to fail. Successful companies grow and prosper because they know where they should be going and have a specific, fine-tuned plan for getting there. A plan that exists in your mind is not enough; the plan should be put in writing. The best place to put your mental plan in writing is in a business plan.

Two Key Functions of Your Business Plan

A business plan has two principal functions: Strategic Planning and a Tool for Capital Raising.

Strategic Planning

As you develop your plan, you must force yourself to think through all of the aspects of your venture. The discipline involved in putting your plans into a structured document will enable you to organize your thinking and make fundamental strategic decisions. You are not only forced to deal with business realities, but you may save the time, energy and resources you would have consumed through trial and error.

Once completed, a proper business plan enables you to know where your company is heading and measure progress. To properly monitor your business, you will have to determine the reasons for deviations from your plan, and then correct them. Early detection of such deviations will also impact scheduled financing and help identify potential cash flow problems.

Capital Raising Tool

A business plan is the first step in the investment process. A well-written, hard-hitting business plan will encourage serious investors to meet with you. The plan is your company's ambassador to potential investors, and it should speak to them in the language that they understand.

You only have one chance to make a good first impression, so your plan should be highly professional and customized to show your company's unique advantages and abilities. Investors look at myriads of business plans; yours will have to stand-out and be flawless if you want to get and keep their attention.

Moreover, your business plan is your company knocking on the door of potential investors. In addition to the business and financial information it contains, the plan will also convey to investors your:

• Organizational Abilities
• Thoroughness
• Analytical Skills
• Perceptiveness
• Realism
• Ability to See the Big Picture

In my next post, I will list 12 questions you need to ask yourself before you prepare your business plan.

How to Make Money from Your Intellectual Property

Greetings. Today we begin a series of posts that will teach you how to make money from your Intellectual Property (IP).

There are numerus ways for you to make money from your IP - ranging from selling you patent to creating a new company from scratch.

We start our series on making money with the hardest route - creating a new company from scratch around your IP.

Creating a new company from scratch based on your IP has both the highest risks and highest rewards. Company building takes a lot of money and a lot of time. You are responsible for everything – from idea to market and everything in between. If you pull it off, you will have both made a difference in the world and created a lot of wealth for you and many others.

However, be aware that if you choose this route then you are in essence becoming an entrepreneur. You will have to quickly become very proficient in everything from capital raising and human resources, to manufacturing, marketing and distribution.

So, before going any further, lets look at some of the characteristics of successful entrepreneurs.

• Drive and energy level: Entrepreneurs have the ability to work long hours for long periods of time with less sleep than normal.

• Self-confidence: Entrepreneurs really believe in themselves and their ability to achieve their goals. They also believe that you they can control their own destiny.

• Long-term commitment: Entrepreneurs dedicate themselves to projects that could take up to 10 years to complete.

• Risk Taking: Entrepreneurs take risks and make the difficult decisions involved in doing so.

• Learn from failure: Entrepreneurs fail a lot, but they learn from their failures and then succeed in a big way.

Now, to find out if you really have what it takes to be an entrepreneur click here. 

In our next post we will cover company creation and why you need a super start business plan.