You have options—including buying the product, licensing or forming a joint venture
More than 90 percent of patents never make any money, so there is a good chance the patentees aren’t selling or haven’t licensed the product.
BY DON DEBELAK
Inventors know the disappointment of coming up with what they think is a novel, profitable idea—only to learn it has been patented.
But this may not be a deal-killer. First, look carefully at the patent and see whether it really describes the same thing your idea does. If not, or not exactly, consult a patent lawyer to see whether you can patent around this existing patent and still have reasonable protection.
What if someone patented your idea exactly?
Check to see whether the product is available. Check the internet and stores to see if you can find it.
If not, try to contact the names or company listed on the patent. Ask them if they are selling their product or if they have licensed their patent. More than 90 percent of patents never make any money, so there is a good chance they aren’t selling or haven’t licensed the product.
The fact these people are not selling the product doesn’t mean the product is not a good idea.
The main reason most patents don’t make money is, it is difficult to bring a product to market. Maybe the business behind the idea was run poorly, or the product wasn’t formulated and packaged in a way that would excite customers.
If the inventor or company listed in the patent says they aren’t selling the product and no one else has licensed the idea, tell them that you may be interested in licensing the idea or forming a join venture with them. But before moving forward, consider:
- Does the patent holder have the capability to manufacture the product? If he or she does, this is the best scenario for you: It cuts down your investment and you can just purchase the product from the patent holder and sell it on commission, often at 10 percent to 15 percent.
- Did the patent holder create a package? If so, was the package effective? If not, can you create a better package? Be sure to test your package with potential buyers and retailers to see if it really is an effective selling tool.
- If the patentee can’t manufacture the product, you need to find a manufacturer who will, and determine what those costs will be.
- Decide where and how you can sell the product. Once you create a sales strategy, create a sales budget and ensure that you can fund that budget.
- Do some market testing with potential users and retailers to ensure they feel the product has potential.
- If possible, try to attend an industry trade show and meet some manufacturer’s sales reps who might be able to help sell your product.
Contacting a patent holder has many benefits for a person looking to introduce a new idea. The cost, and effort to obtain a patent is already covered; the patent holder who has given up on his or her idea will be eager to make a deal, and in many cases will also help you fund the launch in return for a share of the business; the patent holder probably made several mistakes, and you can cut your learning by understanding what those mistakes were; and typically, the patent holder will be supportive of your efforts.
You have many ways to move forward. You can take on a license and arrange for all the manufacturing and sales yourself. You can cut your investments by forming a joint venture where the patent holder shares in the investment required to launch the business, or you can sell the product for a 10 percent to 15 percent commission.