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MenuMy friend and I started a new business to patent and license a new piece of equipment. What kinds of pitfalls should we avoid?
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Below is a link to a resource I provide my investors. The 50 questions are specific to product design/development but the 15 categories are questions that apply to any industry.
If you can answer these questions about your deal you will have gone a long way to avoiding the common pitfalls in the product commercialization process.
http://www.jaredjoyce.com/freetreats/50questions.pdf
Once you have answered the questions for your deal if you'd like to call me I can evaluate your answers, educate you on what strategies are available that would be the best fit for you, and then help you execute your strategy.
Both the founders should have clarity with regards to ownership of the technology, product, corresponding IP (patents, trademarks) and terms of licensing.
One way is to assign all rights to the company, file all patents, trademarks on behalf of the company, and the execute licensing agreement as a legal entity (company) and not individually.
With a view to safeguard interest of each co-founder, you can also execute co-founders agreement among yourselves that will define all terms of collaboration, and what will happen in case one founder decides to exit midway.
Hope this is helpful. For further advice, feel free to get in touch.
Patent costs are ongoing and somewhat variable, so be sure you each have a clear understanding of the costs so you can share them fairly as time goes on. The initial preparation and filing is significant, but so are maintenance fees, foreign filing costs, etc.
The most common pitfall I see is that both people don't want to pay for later stage work that is required and the person not paying still wants their 50% of the patent profits. Be clear as to what happens in case of bankruptcy, non payment, etc.
Related Questions
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I have an idea of a hardware product, that has received good feedback until now.Should I fill for a provisional patent or start an indiegogo campaign?
The answer: do both. The first thing you need to know about patents is that the U.S. now has a first-inventor-to-file system after the American Invents Act (AIA) went into effect in 2013. I have to disagree with Dan above: for hardware inventions especially, a patent is an important part of the business plan. The first inventor who "races to the patent office" now is typically the winner. This means if you do not file for a patent on your invention, you can lose the rights to your invention much easier than before the AIA. The next step is to think about how a patent fits into your business plan. A patent application is but a tool in your bag when starting up. A crowdsourcing campaign on a site like Indiegogo can validate the idea. But it also puts the idea out to the public and starts the 1-year clock ticking on when you can get a patent. For hardware startups, however, if you're not thinking about a patent upfront -- you're likely leaving a massive amount of your product's value on the table.JP
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I have an idea for a simple household kitchen product (under $5). Where can I get good advice on the process of bringing it to market?
Hi! The quick answer is that simple invention ideas are great as they are the fastest and least expensive to develop, yet can still be highly profitable. I run a consumer product firm which has developed hundreds of inventions for home-based inventors or small product firms - Essentially we take it from Idea to Store Shelves. The best advice I can give is to ONLY do what is absolutely required to sell product... There are lots of great services out there that are beneficial; however, if you're on a limited budget, stick to only what is necessary to make a sale, which is: 1. Industrial Design / Engineering, 2. A manufactured sample and a manufacturer who can produce product, and 3. A provisional patent. Essentially what you need is a real, physical, and fully functioning unit of your product, the prices to manufacture that product and a manufacturer who is ready to produce units, and intellectual property protection so that your idea is not stolen. Once you have these 3 items, you can start to present your product to wholesalers, retails, distributors, etc. If someone likes it and the price is reasonable, they can place an order, and your business and dream product starts to grow. From there, there is a whole world of possibilities, but the most important thing for now is to develop your product from 'idea' into 'real'. Whatever you do, do not get caught up in the idea of 'licencing' your idea. An idea is almost impossible to licence unless it is CURRENTLY being manufactured AND being SOLD through stores. If someone or a company says that they will help licence your product idea for royalties, etc., then they should be willing to do that for FREE, no charge, no fees. Many people attempt to charge fees to licence a product idea; however, if you aren't currently selling in stores, it will almost be impossible to get any form of monetary payment, so they usually are just trying to get your fees for their 'marketing' services, which are almost useless for an undeveloped product, and they know this. If you would like more information on some of the details of product development, we have a free Invention Guide on our website, check it out here: http://www.makoinvent.com/free-invention-kit/ Cheers, Kevin Mako President, Mako Invent www.makoinvent.com www.facebook.com/makoinvent www.twitter.com/makoinventKM
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Do I need an International Patent for a Kickstarter Campaign if there is a similar product in Spain that holds an EU Patent already?
You should ask a patent attorney.CH
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How can I validate my product idea in the most cost efficient way possible?
Great question, many entrepreneurs are stuck before launch because of this hurdle. I have helped many individuals turn full time entrepreneurs through succinct consecutive coaching in various industries. Here are my suggestions, but keep in mind they are generic because you didn't provide any details. 1. If you have a prototype or design, re-design it with the intentional focus of removing certain features. Making trade offs are critical and simplify your introduction, pitch, and value proposition as well increase the chances of people being 100% impressed with the limited featured offering rather than semi impressed and focus on what is done wrong. 2. aim for simplicity in your pitch, avoid jargon and create a simple story on how to present the problem solution your 1 or 2 features is offering. - go to older family members for this, not friends or coworkers. 3. go to Fiverr.com and maybe if needed look there for a cheap and quick prototype mockup. 4. create simple landing page to present as if you are a fully working startup. go to www.instapage.com for quick landing pages and if you want a domain go to www.unthinkhosting.com for cheap domains - use code unthink for discount, it should give you some savings there. 5. go to startup weekend events instead of all 3/4 above and just create a simple pitch (under 1 minute) to present your problem and solution idea. if selected you get a team for a full weekend to validate something together. 6. Or create a facebook product page, upload some images (not sales pitches) of problems w/ problem story descriptions... post a lot of those... randomly posting images of your product (already simplified in features) and launch a small budget campaign, say $15.00 for paid advertising featuring your simplified product image, little or not text in the image but with a very short story and solution as header. trust me, is critical that you remove features. If you are not willing to make trade offs, from my experience you are not ready to try entrepreneurship at all. I hope this helps and look forward to seeing you succeed! Humberto ValleHV
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Can i create and sell my invention before filing for a provisional patent and maintain my rights to the invention?
The answer is yes, but it always depends. Let me begin by saying that the more knowhow, etc. involved, the easier it is to sell something without any patent protection. Otherwise, you are trying to sell something without protection and you get no protection until the patent issues, which may take years. The acquirer may just run with it (I would) without licensing knowing there is no cost until your patent issues. Then, when you file, they will see your claims and try to modify their product around your claims. It is slightly vicious in nature. That said, I may not act much different if you file first, unless I can buy your patent or the license costs are very inexpensive. Secondly, many countries have absolute novelty and you will not be able to protect your invention there ever, even if a licensee arises and wants to enter those markets. This too, is a serious limitation for licensing. My conclusion would be that you are underfunded to address your IP and that I can get away with murder. Filing the application is your way of telling people that you are serious. That said, it is not necessary and I have a lot of clients that file later or never file.GF
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