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MenuI don't believe in the plan for execution of my partners, should I sell my % ownership in the company? Is it worth it to get a patent?
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First, please understand that you didn't "get" a provisional patent. Provisional patents are simply filed. They are not examined, and there is nothing to grant. All they do is establish a "Priority Date" enabling you to cite the filing in "Related U.S. Application Data" if and when you file for a utility patent (which, in due course, will be examined). Further, if you do not file within 12 months of the date on which you filed the provisional, your application will be deemed abandoned and you lose that priority date.
Second, when industry people said they'd buy it, did they tell you at what price? Because without a price range, their statements, while earnest, mean nothing. Even if they knew the price, is that price sustainable and achievable based on fixed and marginal manufacturing costs? I don't know and neither do they.
Third, you're correct that since you don't know the handtool market, and you have no desire to, you'd be crazy to stay involved. Nevertheless, if you were an inventor, why should you be cashed out now? Why shouldn't you hold on to a percentage for your contributions to date? I'm not saying you get the same share as the other co-inventors, assuming that, if they even get investors, they remain on in a meaningful capacity, but certainly you should get some share, representing your contribution to date. I also don't know how much time you have left before making a go/no-go decision on the provisional-> utility.
Further, if all of this comes to pass, how are they going to sell it? If it's via e-commerce, rather than through traditional sales reps, WDs, and the like, then perhaps there is a role for you. Not enough information to say, but certainly a consideration.
Bottom line: this product is certainly not assured of success. If you can be handsomely cashed out, you may very well want to take it. If you can't be handsomely cashed out, why should you accept nothing? You have the leverage and, depending on how much time you have left until the provisional expires, you may have time. If there's very little time left and you truly believe in the value, and you're willing to risk the $10K-$20K needed to patent this device, then list your co-inventors, cite the provisional and have an attorney write/file it.
You may say: What about the rights of co-inventors? Here is where US Law becomes very strange. See: http://ladas.com/rights-co-owners-license-patent-rights/ -- but by all means, consult an IP attorney -- this is just so you know the basics of your rights. But basically this means that if you did file a utility patent, you could, without any other co-inventors' permission, sell to a different entity than they! Confusing? You bet.
Last, while your post is professionally worded after the first sentence, please, for your own sake, never in writing should you, as a businessperson, use as a subject the egregiously wrong grammatical construction "me and my partners" (obviously, it's correct as an object). If you're going to be negotiating for equity or a cash-out with investors, you can't sound like a high school student sneaking a smoke in the bathroom. My partners and I -- impressions count -- and ell the more so when the error is the first thing I read or they hear! Someday you'll thank me for the tip even if you think I'm an ass for pointing it out.
Good luck.
It is very hard to build a business and the most important qualities moving forward are perseverance and commitment. both of these are impossible in view of your "disbelief" in the approach of your partners. Therefore, IMHO you will find it difficult to satisfy a key role until you agree with the plan or accept your position as an underling. Both of these are hard to do.
I suggest that you evaluate the business to decide if you want to keep or sell your shares independent of the decision to move on.
That said, often times people view their partner's plans as flawed because they do not fully understand them and English is a horrible language for communicating ideas and plans. So, don't jump before you have somewhere to jump and spend time trying to understand the benefits of the current plan. Maybe you will come onside and realise that it is you who failed to see the bigger picture. This has happened to me before and to people who worked for me.
Don't rush unless you have somewhere else to be!
To keep it short, def go for the licensing route if you're not comfortable getting into the manufacturing business. I've done it and it's tough. You should be able to shop potential licensors by going to the local hardware store and seeing the main brands on the shelf & going after them. You will need a good sell sheet. Listen to this podcast, bud, it will help: http://www.smartpassiveincome.com/how-to-get-paid-for-your-ideas/
Let's keep it short and simple.
1. You shouldn't bother about worthiness of the idea to get patented as in no way you feel attached to the same. You said, you're an entrepreneur that loves to hover around internet et al.
2. Your partners are good and trust able people. In my decade of experience I've seen so many of them struggling to cash out their owndership at one stage or another.
3. Yes, go ahead and sell your ownership. This will be of help to everyone involved with the concept.
4. Do you need to discuss anything further please feel free to reach out to me.
Hope above help!!
Founders conflicts account for a majority of startup failures, so your storyline is not uncommon. The way other founders have dealt with the same thing can vary depending on their comfort level with the team, the plan, and the risk. From your vantage point, whether you as a group sell/license your design or you "cash out" when your team gets investors to develop the product themselves, the net effect is about the same because the second option is basically you selling your % to them. (Assuming you get a fair price for your shares.) There are a few questions you want to ask yourself:
1. A provisional patent is not a patent, and should the group ever get an actual patent, do you want to own a % of it? Do you really want to be on the patent for the next 14 years? There are pros and cons here. If you leave the team, my guess is that they won't want you on the patent. With only a provisional patent filed, timing is an issue b/c they could just wait for the provisional patent to expire before filing a full patent. If you were on the patent, it might give you lingering rights to the design that would devalue their product. However, if you were on the patent, you could generate a royalty stream from an exclusive license to their ongoing company (regardless of whether you own shares in the company). This is a very basic summary - there are intricacies here that would be best explored with a patent attorney.
2. Before you go and sell your %, make sure that you and your co-founders have the organization, shares, terms, etc. of your company documented properly. Otherwise, "selling your %" could mean relatively little (especially to investors who would rather not have to pay you out when the time comes). What do your organizational documents, if any, say? This is my area of expertise, and I would be happy to chat further about your particular circumstances.
3. It comes down to what is more valuable to you - the cash you get in leaving the company, or the possibility that sticking with it and contributing in your own way (which you could discuss with your co-founders) might result in something great? You certainly don't want to be a deadweight, but everyone plays their own role - and there may be decent options for you within the company.
This is typically a longer conversation with no easy answer. Let me know if you want to chat.
Related Questions
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How can I sell my app idea, and do I need to get it patented?
This is a little hard to answer because it is so vague. It depends on the area, the market and the strength of innovation. I know that The App Guy has a terrific podcast at http://www.theappguy.co/ and is also trying to organize a community for App developers to sell their ideas. Let me know if I can be of further assistance to discuss patentability in terms of its value to getting a sale or license. What ever you do, don't spend money filing a full patent, just a provisional. Good luck.TH
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Where do l go to sell my patented idea?
First of all, what you have is a provisional patent **application**. For now, the provisional patent application is not publicly available. This can be a big advantage to you. You can use this time to improve your invention and file additional provisional applications. If you don't plan on making/practicing the invention yourself, you should make sure to try to think of everything possible regarding how that invention can be improved. This would (hopefully) come naturally to a practicing inventor. When you file your non-provisional application, your disclosure will be made public ("published") 18 months from the filing of the non-provisional. While your applications are not publicly available, I suggest waiting until you file your non-provisional application(s) to talk to others. Quite often, provisional applications do not have the detail or the scope that the non-provisional will have -- due to the time spent on getting drawings accurate and making sure everything is included in your non-provisional applications. It is best to have a complete application before talking to practicing companies. Sophisticated companies will take advantage of information not disclosed in your provisional application to file their own patent applications. If your applications are not publicly available (or even they are published), you should sign confidentiality agreements (non-disclosure agreements) with anyone you talk to about licensing or buying your invention. Keeping track of who you talked to with confidentiality agreements can be the basis for "notice" of the invention by an infringer -- when they eventually steal your invention. You can sell your idea anytime, but a provisional application is worth a lot less than a non-provisional application which is worth less than an allowed application or issued patent. Provisional applications are generally not as complete as they could be -- and require additional time and finesse to complete the non-provisional application. In terms of appearances, if you are not willing to put in the money to file the non-provisional application, the invention is likely not worth that much money. Companies as well as non-practicing entities may look at provisional applications, but not for long, and will not give you the kind of money that you may get from selling a fully examined patent. Of course, it depends on how good your invention is.AP
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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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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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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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