Personal Business: Inventing
Oklahoma insurance broker Michael Grant plunged into the world of inventing four years ago, when his 6-year-old daughter was being treated for leukemia. In the hospital, he noticed that when the girl was given intravenous medication, the nurses taped a piece of cardboard to her arm to keep her wrist from bending, then wrapped more tape around a small cup over the needle. Whenever the nurses had to inspect the site, they had to unwrap everything. Grant reckoned that a board with adjustable straps would be more practical. After showing a sketch to hospital staffers, he was convinced he was onto something.
Grant has since spent about $15,000 trying to convince others. He has been issued two patents (another is pending), and he raised some cash by selling a piece of the action to friends and family. By enlisting the Oklahoma Commerce Dept.'s Inventors' Assistance Program, Grant found a small Tulsa medical-products company to license the armboard. Grant's royalty is 71 2% on wholesale revenues--there have been no sales yet. And throughout the odyssey, Grant has kept his day job.
NO RESPECT. As Grant and other would-be Edisons have discovered, coming up with an idea is the easy part. Trying to turn that "aha" into a commercial success requires resources and skills beyond the scope of most independent inventors. While long odds face any inventor, the obstacles may seem insurmountable to the little guy. First, part-timers have trouble getting taken seriously. The attitude is: Truly meaningful innovations will emerge from a corporation, government lab, or university. The small-time tinkerer is seen as an eccentric toiling away in the garage on a perpetual-motion machine.
Before even pitching their widgets to the outside world, inventors should ask themselves some critical questions. What problem will the idea solve? Is the solution faster or cheaper than what is already available? Who is the competition? Is anyone else on the planet apt to care about the darn thing?
Inventors should run a patent search to make certain no one has beaten them to the punch. You can handle the search yourself by visiting the U.S. Patent & Trademark Office in Arlington, Va., or a Patent & Trademark Depository Library around the country. But it may be worth spending $500 to $1,000 to have a patent attorney do the search and interpret the results for you. For example, you may uncover 10 patents that your gizmo appears to infringe on. A smart lawyer can help you avoid stepping on anyone else's turf.
Once you're confident you have something unique that other people will spend money on, you should apply for protection. Some experts recommend that inventors compile a bound logbook, displaying key product-development dates, such as when you first sketched the idea or changed a design. You should have someone witness the event and sign the page. U.S. patents are presently issued under the "first-to-invent" principle. There have been rumblings recently about switching to the "first-to-file" concept used in most other countries. Such a switch is currently on the back burner, but if it ever goes through, it will place a further burden on independent inventors.
Securing a patent is expensive, time-consuming, and often dicey. You may spend $5,000 to $15,000 on attorney and patent fees and wait 18 months or more to see if your application will be approved. "The patent is a marketing maneuver set up to exclude competition," says Thomas E. Mosley Jr., author of Marketing Your Invention ($19.95, Upstart Publishing, Dover, N.H.). He advises petitioners to try to get as broad a patent as possible so as not to leave the door open for another patent seeker with a similar idea.
Federal patent examiners will try to reject many of your claims, so it makes sense to look for an attorney or agent who will duke it out with them. Patent fees for individuals are half of what large corporations pay. Filing for a "utility" patent costs $355 for individuals and small companies; if granted, you'll fork over an additional $585. After that, costly maintenance fees are due every few years. Utility patents cover unique and "useful" machines or processes and are good for 17 years from the date they're issued. Design patents are cheaper--$145 for filing, $205 when issued--and cover only the aesthetic appearance of a product. They're good for a 14-year term.
BUDDY SYSTEM. By the patent-pending stage, it's time for inventors to search for companies to license and mass-produce the product. It's rare when the creator also has the skills to build a commercial venture around an idea. "I'm resigned to the fact that the best way to get my product on the market is through an established hardware manufacturer," says New Hampshire inventor David Brown, who concocted a foldable sawhorse for builders. Brown pitched hardware companies with a professional three-minute video he had made for $720 and claims several are interested.
In general, inventors seeking licensing partners should train their sights on small companies, where they have a chance of hooking up with someone in a corner office. Most large corporations won't even look at unsolicited inventions, in part because they don't want to hamper any of their own research and development efforts. (They may already have something similar in the pipeline.)
Toy giant Hasbro will not entertain unsolicited toy-and-game ideas from outside inventors, but the company will provide them with a list of brokers who work in their industry. The Small Business Administration's Small Business Development Centers, which are usually housed on college campuses, may also provide the names of key businesspeople in your area, along with basic
financial, marketing, and technical assistance for folks who cannot afford private counseling.
Inventors are also banding together to help each other. "I have a data base of manufacturers throughout [my] state that are interested in working with new inventors," says Clayton Williamson, president of the Kansas Association of Inventors, one of several such self-help groups. You can find a local inventor group by contacting the United Inventors Association of the U.S. in St. Louis (314 721-3842). These groups run seminars, workshops, and trade shows. The Minnesota Inventors Congress recently held classes on "Licensing to Established Manufacturers" and "Guerrilla Options to Financing."
The groups also steer inventors away from organized invention-marketing scams, which take in about $200 million a year, according to the Inventors Awareness Group in West Springfield, Mass. These scams prey on inventors with false promises to promote their ideas. In April, the Federal Trade Commission charged the Invention Submission Corp. of Pittsburgh with "misrepresenting the nature, quality, and success rate" of its promotion services while charging fees ranging from hundreds of dollars to around $5,000. The case is pending.
PRECIOUS GRANTS. Finding financing is the bane of most inventors. Banks rarely lend money to inventors before they've got a patent, if even then. And their business must be fairly far along to get venture-capital funding. The Energy Dept. and the National Institute of Standards & Technology are joint sponsors of the Energy-Related Inventions Program, a grant given to inventors who find ways to save energy or produce nonnuclear power. In recent years, the average grant has been $83,000, though the chances of obtaining one are slim: Out of 30,000 proposals since 1975, some 450 have received funding.
Inventors can always try matchmaking. The Technology Capital Network at MIT (617 253-7163) is a kind of computer-dating service for investors and entrepreneurs. Both sides put up $250 to get listed on the network for six months. Inventors submit a summary of their product and business plan. The financiers describe the types of companies they're willing to invest in. TCM gives inventors' names to the investor, and after that, it's up to the investor to make the first move.
But for inventors, it's best not to sit idly by the phone. Just because you've fallen in love with your concoction doesn't mean that suitors will soon be beating a path to your door.TAKING AN INVENTION BEYOND THE GARAGE
-- Determine if the idea is feasible. Conduct a patent search and, if
appropriate, have the product technically evaluated by an independent
consultant. Be careful who you show it to early on: Your idea is vulnerable
until you've applied for a patent or other legal protection.
-- If the idea makes sense, seek intellectual property protection by applying
for a patent or copyright. Expect to spend $5,000 to $15,000 on the process.
-- Conduct basic market research. Ask a librarian to run a search through
on-line services such as Dialog or DataTimes to identify key players and
-- Find a manufacturer to build a prototype--perhaps by enlisting the help of
a local inventors' group--or determine how to make the product yourself. Add up
the cost of materials and parts.
-- Show your prototype to industry experts. Ask buyers, sales reps, and
consumers what they think.
-- In most cases, you would want to license your product rather than start
your own company to make and market it. If you choose the licensing route,
contact a licensing agent to shop the invention around.
DATA: THOMAS E. MOSLEY JR., AUTHOR OF MARKETING YOUR INVENTION
Edward Baig EDITED BY AMY DUNKIN