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THE ONLINE INVENTOR – July 2009 issue

Editor: Paul Niemann

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Dear Inventor –

Here’s the next issue of “THE ONLINE INVENTOR.” The first article is excerpted from Trevor Lambert’s program called, “INVENT SECRETS: How to Market and License Your Product Ideas,” and it is an excellent learning tool for inventors and entrepreneurs. You can pick up your own copy at http://www.inventsecrets.com

Trevor’s company, Lambert & Lambert, is one of the few companies that successfully licenses inventions. Best of all, they do it on a contingency basis if you meet their requirements. I highly recommend them. Their website is http://www.lambertinvent.com

We welcome a new contributor to our newsletter, Don Debelak. Don has become an expert on the process of bringing new inventions to market, and we bring you one of his many helpful article for inventors. Enjoy!

If you wish to distribute this issue, or any past issue to your local inventor group or fellow Product Developers, please forward the entire issue.

Now, on with this issue … and have a Happy Independence Day!

Best Regards,

Paul Niemann

http://www.MarketLaunchers.com

800-337-5758

217-224-8194

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CLEVER QUOTE: “Success is not final, failure is not failure: It is the courage to continue that counts”… Winston Churchill (1871 – 1965)
CLEVER QUOTE: “Stop telling God how big your storm is. Instead, tell the storm how big your God is!”… Author unknown
CLEVER QUOTE: “There are two ways of exerting strength: One is pushing down; the other is pulling up” … Booker T. Washington

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Article # 1: “Do you need a patent?”
by Trevor Lambert, President, Lambert & Lambert, www.lambertinvent.com
Excerpted from Invent Secrets, www.inventsecrets.com

In the evaluation and analysis of your invention, as discussed in chapter 2, there are many conclusions that you could have reached. Your invention could be inferior or superior to existing solutions, there could be issues related to safety, profitability, etc. Many of these can be resolved with further development and refinement of your invention so that it becomes a salable product. However, there are three critical issues that may affect whether or not you should file for the patent. They are:

1. Your invention (or something VERY similar) has already been issued a patent or several patents by various other inventors.

2. The size of the market segment or industry in which your product will sell is very limited.

3. The product life cycle is likely to be very short, meaning it is less than 2 years.

In any case you may elect to not seek patent protection for your invention.

In the first case, if you have discovered other patents that are identical or similar, it is likely that you may not be granted a patent; or if you are granted a patent, it will be so limited that it does not provide enough protection to keep out competitors or attract a licensee. It is important to note that Lambert & Lambert has licensed products that have similar patents on the market, so you should not simply throw away your invention if you find some inventions that are similar. Your invention may have a critical patentable improvement that makes the product a commercial success or extremely valuable in the eyes of a potential licensee, thus making seeking a patent a worthwhile endeavor.

If you are seeking to license your invention, it has been our experience that a design patent is nearly impossible to license. The reason is because the design patent only covers how the invention looks, not how it functions. It is very easy to change the “ornamental design” and still have a product that does essentially the same thing. As a result, manufacturers are very unlikely to license a design patent since they would rather change the design themselves rather than pay an inventor a royalty. Consequently, if an invention service provider or patent attorney says you are unlikely to be issued a utility patent but encourages you to file for the design patent in order to achieve a license deal, RUN AWAY! They either do not know what they are talking about or they are simply looking for a payday; they certainly do not have your best interests in mind.

In the second case, if the market size in which your invention would compete in is very limited, such as a specialty product, you may want to consider not filing for patent due to financial reasons. That is, if the product is unlikely to sell in significant quantities, your sales or royalties might not warrant the cost of filing the patent application and subsequent maintenance fees.

Finally, in the third instance, if the product life cycle is likely to be short, patenting may be unnecessary. An example of this is found in the toys and games industry where many products only last for one Christmas season. This is also good news for toy inventors because toy companies are always looking for new products to replace others that are no longer selling. Nevertheless, since it currently takes about 2 years (often times longer) for a patent application to be issued by the US Patent and Trademark Office (USPTO), a product with a short shelf life may have been rolled out and eventually discontinued by the retailer before the patent is even issued.

Of course, if you decide that it is not worth patenting, make sure that you perform thorough research on existing patents that may be issued prior to continuing with your development and manufacturing. There may be similar inventions that have been patented and the manufacturing of your product may infringe, leading to an unwanted legal battle.

Lastly, without patent protection you are welcoming competitors to the marketplace that will eventually erode your sales. Marketing principles suggest that those who enter a market first usually will remain the market leader, especially if you are able to forge a strong, recognizable brand. For instance, the paper tissue market is dominated by KLEENEX® who first introduced it. In fact, most people do not even call it “paper tissue,” rather it is referred as “KLEENEX®”. This is an extreme case but illustrates the value of entering a market first. Nevertheless, when considering filing the patent these are essential points to consider as you develop your commercialization strategy so that you can get the most out of your invention.

This is an excerpt from a book recently written by Trevor Lambert, entitled Invent Secrets: How to Market and License Your Product Ideas. To learn more or order the comprehensive manual, which includes sample agreements, proposals and much more, please visit www.inventsecrets.com

Trevor Lambert is also the President of Lambert & Lambert, Inc., one of the leading licensing agencies involved in establishing royalty agreements on behalf of inventors and product developers. To find out how you can have them represent your invention, learn more on their website at www.lambertinvent.com

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Article # 2: “Selling On Commission”
by Don Debelak

Selling On Commission:

Inventors often have more ideas than money. The result is that inventors have a tough time figuring out just how to proceed. One option most inventors don't often consider is selling on commission. An inventor gets orders for his or her product and then has a manufacturer make the product. But instead of a license agreement, the inventor just becomes the sales rep and takes a commission. The inventor may have to surrender control of the idea, especially if the development costs are high, but they often still have a great deal of input and they can usually negotiate a long term commission agreement. This is often an easier deal for the manufacturer to accept and in the end the inventor makes more money at a 10% commission rather than a three to five percent royalty. The whole secret of success is land a big order, then manufacturers will be interested in talking to you, provided the product fits within their manufacturing capability. The benefit to the inventor is that he or she is selling the product with the backing of an established company. That backing both enhances the inventor's credibility and provides the funding needed to launch the product.

The Basic Points for the Sales Pitch:

You are selling only two points when going for sales on commission. The first is that you have an order or commitment from a significant customer. The second is that the manufacturer has available capacity and will only need to make minimal changes to its manufacturing process. A bonus for the sale is if you can also show that there is an easy-to-penetrate distribution channel to sell to customers other than the one who will give you a commitment.

You won't always know which manufacturers have the right equipment in place and need to add production to fill up your plants. As a result you may need to call on quite a few manufacturers before you find one that has the right equipment and the available capacity for your product.

Key Benefits:

Quick market entry. Having the product backed by an established company gives the product credibility and when you succeed, the manufacturer should provide the funding you need to expand sales.
Offers an option for products with limited patent protection. Some product ideas can't get significant patent protection because of earlier patents. This problem typically kills a licensing agreement but it doesn't mean as much for selling on commission, where the company is just looking to add extra sales revenue.
Inventors don't need financial backing. Inventors typically don't have to put up any money. The inventor's only expenses are defining the product, possibly making a model or prototype, and the cost of making his or her early market connections.

(continued after the break)

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ADVERTISEMENT:

MarketLaunchers.com builds web pages for inventors. Having your own web page allows you to show your invention to companies (potential licensees) when you’re unable to present it to them in person. It serves as your “online brochure.” Plus, it will be listed on our invention database where it can be seen by companies who search the internet for new products.

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Key Move:

The key to lining up a selling-on-commission agreement is to know who the key players in the distribution network are, and preferably to have their support for your product idea before you approach a manufacturer. That's the only way the manufacturer will be convinced that you can actually sell your product. Use trade magazines and attend trade shows to find the distributors and manufacturers representatives in your area. (Click here to read about how to find distributors.) Then talk to those contacts to see if they believe your idea will sell. You should be able to get a selling-on-commission agreement if you get these contacts to endorse your product idea, or better yet, if they let you know they will buy the product if and when it becomes available.

Pros and Cons:

Pros:

Requires very little investment by the inventor.
Can be the quickest route to full market penetration.
May produce reasonably quick income.
The inventor continues to have input into his or her product's success.
Provides instant credibility to customers.

Cons:

Inventors don't always have control of their product.
Doesn't establish an inventor's company or brand.
Requires sales and marketing enthusiasm and expertise.
Works best with products with large customers or a narrow distribution channel.

Items to Watch:

The manufacturer will expect quick results from you. Be sure to line up customers first before approaching the manufacturer to sell on commission.
The manufacturer won't automatically print brochures, attend trade shows, or pay for a marketing program. Be sure to propose a marketing program and get the manufacturer's approval before signing a commission agreement.
You may go three to four months before sales are made. You can ask the manufacturer for an advance against commissions to cover those costs, but the manufacturer won't be obligated to offer an advance unless it is part of your agreement.
The manufacturer might offer you its standard sales representative agreement, which pays a commission only on the products you sell personally. Insist on a commission on all your products, including an override (or commission payment) of several percent on any of your products sold by other salespeople or independent representatives.
The manufacturer will want to produce the product as cheaply as possible and may compromise some of the product's features. You'll need to monitor closely the manufacturer's design to prevent this.
The manufacturer will be reluctant to make immediate changes in the product once it starts production. Be sure to show a model or prototype to potential customers and get their approval before the manufacturer finalizes tooling and the manufacturing process.

Success Tips:

Identify the market. Your job is to identify the key customer groups who will buy your product, the distribution channel that can be used to sell to that market, and the key players in that distribution channel. Then you need to uncover the industry's price structure, which includes discounts to wholesalers and retailers, packaging required, key buying periods, and important trade shows.
Own the market. The manufacturer or distributor who hires you on commission is really buying your ability to sell the product. You will improve your chances to land a deal with each additional person you know who is either in the distribution network or a major customer. Other tactics you can use to generate support include call reports, which you write after you interview key buyers; letters of endorsements from those same buyers; and provisional orders, which are orders people give you with a provision that they can cancel if the product doesn't meet your promised specifications.
Produce results. The manufacturer or distributor will be watching your sales results to be sure you can back up your potential sales claims before investing significant amounts of money. You should have one or two customers presold before approaching a manufacturer. That way, you can produce immediate results.
Land the monster account: Nothing succeeds like having a big account in hand to land a selling-on-commission deal. If you pre-sell a customer like Home Depot, you will have offers rolling in.
Orders first, production second: You want the credibility of the manufacturer, and the manufacturer wants the extra business. But the manufacturer doesn't want to spend a ton of money on the product before it knows whether or not the product will sell. One solution to this concern is to have the manufacturer agree to let you represent it while obtaining orders. The manufacturer will go into production after you produce enough orders. This is a win-win situation for everyone. You will get the credibility of the manufacturer to help sell the product, and the manufacturer minimizes its risk.

Don Debelak has been working with inventors for over 25 year. He and a team of expert associates run the One Stop Invention Shop, http://onestopinventionshop.net

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“Kids invent the darndest things”
by Paul Niemann

I received a call one day from a nice lady who works for the Arlington Heights , Illinois , Daily Herald newspaper. She told me they were looking for someone to give a talk to a group of kids at a school-day soccer game of Chicago ’s pro indoor team, and she asked me if I would be interested.

I said “Sure,” since I figured that it couldn’t be all that hard speaking to a few harmless little kids, right?

After I committed to speaking to this group, I asked her how many kids would be in the audience. She replied, “3,500.” Yikes! But I figured that as long as they’re all in the same age group (like 4^th through 6^th grades), that it wouldn’t be too hard, right?

It turns out that they ranged from Kindergarten all the way up to 12^th grade – double yikes!! Wanting to make my talk relevant to these kids, I created a presentation about kid inventors. So this story features several inventions that were created by kids ages 11 – 19 ….

On a cold night back in 1905, 11-year-old Frank Epperson of San Francicso left his fruit-flavored drink outside on the porch with a stirring stick in it. The drink froze to the stick and tasted good. Frank initially named it the “Epsicle.”

At first, there wasn’t much interest in the Epsicle. By the time Frank finally applied for a patent for his “frozen ice on a stick” and put it on the market 18 years later, he had a wife and kids of his own. One of the kids convinced him to re-name the Epsickle as the Popsicle. Two years later, in 1925, Frank sold his Popsicle rights to the Joe Lowe Company of New York . Good Humor now owns the rights to the Popsicle.

Philo Farnsworth of Rigby , Idaho , invented a product in 1920 that he rarely used, but we use it every day. In fact, he even discouraged his kids from using it because he didn’t think the product did much good. Philo was born in a log cabin in 1906, he rode his horse to school every day, and his grandfather settled with Brigham Young.

But wait, there’s more!

His product was so revolutionary, so far ahead of his time, that when he drew it on the chalkboard for his high school chemistry teacher to see, the product was too complex for the chemistry teacher to understand! Yet it was the simple design of his family’s potato fields that provided him with his “ Eureka ” moment. Philo saw how the rows of potatoes formed horizontal lines – the same kinds of horizontal lines which television sets use.

How old was Philo Farnsworth when he figured out how this new product called television should work?

(continued after the break)

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Only 14 years old! He became the father of television, winning a lengthy court battle against RCA to establish that he was the real inventor. His wife, Elma, became known as the mother of television because she was the first woman to appear on TV, in 1927.

Our third and final inventor was Chester Greenwood, who was just 15 years old when he put Framington , Maine , on the map in 1873. The local residents still celebrate his birthday every year with a parade. What did Chester invent?

While ice skating outdoors one winter day, Chester was trying to protect his ears from the cold weather. He wrapped his head in a scarf, but that wasn’t enough, so he asked his grandmother to sew fur onto a pair of connected ear-shaped wire loops. In the process, he invented Greenwood ’s Champion Ear Protectors and went on to build his own company to manufacture them.

They now go by the name of Earmuffs, and his hometown is the Earmuff Capital of the World. The local residents still celebrate his birthday every year with a parade. Chester Greenwood earned more than 100 patents overall, including the steel-tooth rake.

While anyone could have created Popsicles or earmuffs, it took some real ingenuity to invent the TV – especially since there was no programming at the time! When you’re stuck, try taking a look at life’s problems – and its solutions – through the eyes of a kid.

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Paul Niemann runs MarketLaunchers.com, building web pages for inventors, and he also writes a syndicated newspaper column.

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