Selling Invention Ideas

Should you commercialize or license?

Selling invention ideas. If you have new invention ideas - have you thought about how you will implement them?

Commercialize or License - One of those patent myths. I am trying hard on this site to avoid interjecting too many personal opinions. I want this to be a "we inform - you decide" portal of information. But beware - I am going to give some opinions on this subject.

I work with a lot of independent inventors - often first timers. Because I want to. I like them. And I want to help. But it often happens when working with a first time inventor that somewhere in the conversation they will say - "I don't want to commercialize this - too expensive. I want to license a patent to a big company."

They have the decision defined well. Basically, in selling invention ideas you can make money by either bringing it to the market yourself or licensing it to someone who can. Or some combination of the two. But let's be blunt about this - getting a patent and then trying to license an undeveloped (meaning no customers) invention to a company is a very poor investment of your money. You would be better off sticking to your day job and putting your money into a safe investment.

One in a Thousand?

I don't know the exact probabilities of this - but am pretty sure that your chances of selling invention ideas with a pure license play are less than 1 in a thousand or worse. I would not put any of my money into that.

I am already hearing an objection - "But I know of someone who did that". Sure you do. When that happens it gets publicity. Just like a lightning strike.

But let's talk reality. People with money to invest did not get that money by investing in untried technologies. In the first round of questions you get from a potential investor or licensee you will probably be asked if you have a patent (or patent pending). Because that is important to them. But the very next question will be - "How many have you sold?

Nothing happens until there is a paying customer.

Market research is important. But a paying customer validates a market. Without that no astute investor will have much interest. 

Another Myth

A related myth for selling invention ideas goes as follows: "Company XYZ is big so they are sitting on lots of cash and they are bound to be looking for good ideas. I can license to them easily. I just need to talk to the right person"

Reality - there are no companies, big or small, sitting on hoards of cash and desperate for ideas.

Let me relate a personal story. For many years I was a Vice President of R&D for a very large and always profitable company. Because of my position all letters that came in offering a new technology to license came across my desk, roughly one or two a month. I actually read every one of them - just in case. I then put every one of them in file 13 (that round file under my desk).

Why? Not because they were bad ideas. But when we went through our budget process every year we had to reject three good ideas from our own organization for every one we finally funded. We were never short of ideas - we were always short of resources - people and cash. And we were a successful company - and a successful R&D organization. Many of those internal good but rejected ideas were patented by us - because they were that good and we did not want competitors to use the against us.

So Should You Commercialize or License?

I am not trying to discourage you. Develop you invention. Prototype it, build it, create a customer. Once you have done that you might then be in a stronger position to license.

That will take money. Some of your money - hopefully some from interested investors. It will almost always take enough money that the cost of going through the steps for getting a patent will be justified. And if your answer is that you cannot justify spending any money on your invention - stick to your day job because this is not going to work.

So if you want to get into the business of selling invention ideas the decision tree for commercialize or license is really the second one shown at the top of this article.



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Mike Ervin
Mike Ervin - Cost Effective Small Business Patent Protection.

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