Developing and Protecting Your Invention
From the Slinky to the iPod, a new invention is often the starting point for a successful business. But the journey from an idea or prototype to a product on a store shelf can be long and difficult. Inventors need to be prepared for many steps, including protecting their idea, planning the manufacture and distribution of their product, obtaining financing, and marketing and promoting their product.
If your invention exists only as a sketch, simple model, or even just an idea, your first step is to express it in concrete form—a set of manufacturing drawings or a scale model that can be demonstrated to others while you fully research your idea and evaluate its commercial potential.
To succeed in the market, your product must solve a problem for the purchaser in an original and cost-effective way. Your research and evaluation phase must confirm that your product:
- is original and demonstrably better than competing products, so that it can be protected with a patent
- is marketable, so you will be able to attract venture capital and interest retailers
- can be manufactured, with cost and quality of the component parts allowing it to be produced economically
- offers a unique selling proposition, and you have the resources to reach the target market.
You have ownership rights to your original creation that allow you to exploit it commercially. However, unlike copyright on a book, song, or work of art, these rights are not automatic and must be secured by registration. This means filing a patent claim for your new product. (Remember that it is the actual product that is protected, not the original idea.) You may need the services of a patent lawyer or agent to help you confirm that your idea is patentable and assist you with the process.
You'll need to do plenty of market research to work out the value and potential of your product. You can try this on your own, but if you can afford it, hire a market research agency to assist you.
You'll need to do qualitative and quantitative research.
- Qualitative research should show you what people think of your idea or product—its visual appeal, its practicality, and its perceived acceptability. It should also show what people perceive your product as lacking, and what improvements they think need to be made. This research can also help you choose suitable names, colors, shapes, package sizes, and an acceptable price range for the product. Remember that the comments and answers you hear during market research do not necessarily indicate how well your product will sell. Actual sales may depend upon other factors, such as competitive activity or fashion trends.
- Quantitative research evaluates the sales potential of your product: how many people would buy it, how different pricing levels would affect projected sales, whether there would be demand for different versions, and so on.
You may need to hire a professional designer or engineer to perform a component analysis and to determine specifications and quality levels for every part of the product. You will need to research availability and price stability of raw materials, labor costs and skill required for production, and other factors.
The unique selling proposition (USP) simply means that your product is uniquely desirable in its market space. The USP is what puts your product ahead of a competitive field.
Having decided on your product's USP, you should draw up your marketing plan, centered on that proposition. The plan should include your best informed judgments on:
- Product name. What will you call it?
- Packaging. What should the product look like for display purposes? Will it be disposable or returnable? Are there any relevant packaging regulations?
- Distribution. Is the product for consumers or businesses? Will it be sold regionally, nationally, or internationally? Through direct, retail, or wholesale methods? Will you use your own transportation to deliver it or use outside carriers?
- Advertising and promotion. Which media will be the most appropriate—newspapers, magazines, pamphlets, direct mail, the Internet, posters, radio, television, or point-of-sale material? Could you display at exhibitions and trade fairs? Should you have your own sales force or use agents?
- Price. What sales volumes can you expect at different price levels? How would different volumes and prices affect cash flow? Should you offer special promotional prices?
Once the research has shown a potential market for your product, you have several options available:
- Manufacture and market your invention yourself.
- Outsource production, but distribute and market the product yourself.
- Find an established partner company that can handle production, marketing, and sales.
- License the rights to the invention for others to make and market it.
For any of the first three options, you will need to decide if you have sufficient skills in manufacturing, marketing, and distribution—plus the time to give each area the attention it needs. The licensing option may well be preferable if your real interest is in developing new ideas and innovations and letting others take those ideas to market.
Once you've established the marketability of your idea and you have decided on the basic approach to its development (see above), you will need to lay out a business plan to guide your next actions. Importantly, anyone you may approach for investment funding will more easily be persuaded to fund a well-structured business venture with an attractive and totally developed plan.
The most common avenues for funding inventions are:
- A business loan from a bank. This is the most common and readily available funding source for most inventors. The bank you choose will lead you through its requirements for documenting the soundness of your idea.
- Private equity—using your own funds and/or funds from others who agree privately to support development of your invention. This is a broad term generally referring to any funding not secured through freely traded public stock and bond markets. If you raise private funds from others, you will need agreements in writing on amounts to be committed to the project, distribution of returns, etc. An attorney experienced in the field can help you.
- Venture capital. This is a subcategory of private equity that generally refers to higher risk funding of start-up companies by investors who seek above-average returns and/or a percentage of ownership of the company. Pursuing this source involves researching potential funders and making agreements with venture partners. Make sure you fully understand all of the terms of any such agreement.
Do not describe your invention to anyone other than your attorney or other trusted advisor before filing a patent application. If you must discuss your invention with others before filing (for example, if you need to talk to an engineer about manufacturing your product), ensure that each person signs an agreement not to discuss the idea with anyone else.
Remember the objective is to maximize the revenue from your invention. Consider the option of simply licensing your design to others to manufacture and market, an approach that can save you a great deal of anxiety and expense while ensuring you a perfectly acceptable financial return on your idea.
Docie, Ronald Louis.
Monosoff, Tamara.
Reese, Harvey.
InventNET.com: www.inventnet.com
United Inventors Association of the United States of America: www.uiausa.org
U.S. Copyright Office: www.loc.gov/copyright
U.S. Patent and Trademark Office: www.uspto.gov
U.S. Small Business Administration: www.sba.gov
World Intellectual Property Organization (WIPO): www.wipo.org