High Risk Patent
October 16, 2007 12:29 PM Subscribe
I had an idea that, if patentable, would be worth quite a bit. However the chance of it being patentable is low (about 10-20%) and wouldn't be marketable by itself and would most likely require sale to a computer manufacturer. Are there any businesses that handle these kinds of ideas for a % of ownership in the potential patent?
I'm looking to not pay anything up front, but am willing to lose a fairly high percentage of ownership over my idea. Does anything exist?
If this is patentable, assume that it would clearly be worth, at the bare minimum, $5 million, but probably much more. (More on top of that if the patent was intentionally trolled, which I would personally like to avoid.)
Being local to Austin, TX would be preference, but I realize it's questionable that anything exists.
I'm looking to not pay anything up front, but am willing to lose a fairly high percentage of ownership over my idea. Does anything exist?
If this is patentable, assume that it would clearly be worth, at the bare minimum, $5 million, but probably much more. (More on top of that if the patent was intentionally trolled, which I would personally like to avoid.)
Being local to Austin, TX would be preference, but I realize it's questionable that anything exists.
[note: I work for a government agency and help startups with just these very questions]
How did you get the $5M valuation? Is this figure based on a specific methodology?
Anyway, assuming it is actually feasible to do so, patenting your idea may not be the best idea - once patented, your idea is open to the world through online patent searches, etc. People can then take it, modify it enough to create a new patent, and then commercialize what was originally your idea. Believe it or not, it is extremely difficult to commercialize an idea, so you're probably safe just talking about it, rather than protecting it.
What you really need help with is information about how to develop and market your product.
If you're in Austin, and you would like more information, why not contact someone from the technology transfer office at the University of Texas?
http://www.utexas.edu/enterprise/techcontacts.html
They may have funding to help you create a prototype, etc.
However, ideas themselves are not marketable. You yourself should have two of these three competencies:
1) technical competency: do you yourself know how to create this new, unique and potentially patentable technology?
2) business expertise: do you understand your market? do you understand how develop a strategy for commercializing your product? do you have the industry connections you need to make this venture float?
3) capital: do you have startup capital? do you know how to go through a friends and family round to raise capital?
You need two of these three.
As for companies buying a percentage of a patent, I would love to hear about them and how they stay in business.
posted by KokuRyu at 1:41 PM on October 16, 2007 [1 favorite]
How did you get the $5M valuation? Is this figure based on a specific methodology?
Anyway, assuming it is actually feasible to do so, patenting your idea may not be the best idea - once patented, your idea is open to the world through online patent searches, etc. People can then take it, modify it enough to create a new patent, and then commercialize what was originally your idea. Believe it or not, it is extremely difficult to commercialize an idea, so you're probably safe just talking about it, rather than protecting it.
What you really need help with is information about how to develop and market your product.
If you're in Austin, and you would like more information, why not contact someone from the technology transfer office at the University of Texas?
http://www.utexas.edu/enterprise/techcontacts.html
They may have funding to help you create a prototype, etc.
However, ideas themselves are not marketable. You yourself should have two of these three competencies:
1) technical competency: do you yourself know how to create this new, unique and potentially patentable technology?
2) business expertise: do you understand your market? do you understand how develop a strategy for commercializing your product? do you have the industry connections you need to make this venture float?
3) capital: do you have startup capital? do you know how to go through a friends and family round to raise capital?
You need two of these three.
As for companies buying a percentage of a patent, I would love to hear about them and how they stay in business.
posted by KokuRyu at 1:41 PM on October 16, 2007 [1 favorite]
If you file the provisional application, you (or the prospective company you sell the idea to) have one calendar year to file a non-provisional application, or you lose all rights to the invention. Additional info and warnings at the USPTO website.
posted by lilnemo at 1:43 PM on October 16, 2007
posted by lilnemo at 1:43 PM on October 16, 2007
caddis has some good advice there. I will add that the USPTO has a search page to find patent agents and attorneys - it shows hundreds in Austin. You might be able to find one to help you prepare a patent application on a contingency basis for an ownership share, but I expect it would be difficult.
KokuRyu says: once patented, your idea is open to the world through online patent searches, etc. People can then take it, modify it enough to create a new patent, and then commercialize what was originally your idea.
The new patent has no bearing on whether there is infringement of the first patent. A patent is the right to exclude others, not a right to operate.
posted by exogenous at 1:47 PM on October 16, 2007
KokuRyu says: once patented, your idea is open to the world through online patent searches, etc. People can then take it, modify it enough to create a new patent, and then commercialize what was originally your idea.
The new patent has no bearing on whether there is infringement of the first patent. A patent is the right to exclude others, not a right to operate.
posted by exogenous at 1:47 PM on October 16, 2007
You don't actually lose all rights to the invention when the provisional application expires, you just lose the filing date. Assuming your idea stays secret and there is no new intervening art then no harm, no foul. It is tricky enough that I stick by my recommendation to talk to a patent attorney regardless of which way you go. Don't show your idea to anyone who does not promise to keep it secret, and for that purpose you should use a confidentiality agreement. Again, an attorney can help here and it is cheap. An attorney is one person you don't need a confidentiality agreement with as they have a professional obligation to maintain client confidences which is sufficient to protect the novelty of your yet to be patented idea. Martindale-Hubbell is a good source for finding a lawyer. You will be better off with a lawyer rather than a mere patent agent. Lawyers tend to write better patents, although this is by no means universally true, and they can help with contracts etc. in approaching manufacturers. If you agree to sell or license your idea you definitely need a lawyer.
posted by caddis at 1:59 PM on October 16, 2007
posted by caddis at 1:59 PM on October 16, 2007
The new patent has no bearing on whether there is infringement of the first patent. A patent is the right to exclude others, not a right to operate.
But if you modify what was being protected by the original patent and then commercialize it, doesn't it make patenting a waste of time, anyway?
I'm just not sure what the point of patenting an idea is, if you have no ability to commercialize the idea; it seems like kind of a waste of money, which makes no sense if the object is to make money.
posted by KokuRyu at 2:04 PM on October 16, 2007
But if you modify what was being protected by the original patent and then commercialize it, doesn't it make patenting a waste of time, anyway?
I'm just not sure what the point of patenting an idea is, if you have no ability to commercialize the idea; it seems like kind of a waste of money, which makes no sense if the object is to make money.
posted by KokuRyu at 2:04 PM on October 16, 2007
Good ideas are a dime a dozen. Good implementations are one in a million. If it's a physical product, that means lots of design, manufacturing, marketing, and distribution - just to get to the point where you can test the market. For the investor, it's not just a potential windfall - it's also a potential disaster.
If you want a company to sink that many of their resources into your idea, you will NEED a working prototype. For one thing, a tangible demonstration is worth a thousand ideas on paper when it comes to a convincing sales presentation; for another, it provides them with a stronger starting point since you've already done a lot of work on the design.
I agree with KokoRyu's competency list when it comes to manufacturing and selling the product - but if you just want to sell the concept, the two things you NEED are a contagious vision and a prototype. It is still unlikely that you will find a buyer at the terms you are proposing - assuming you find an interested party, they will probably want to buy it outright, and for a lot less than you think.
posted by chundo at 2:16 PM on October 16, 2007 [1 favorite]
If you want a company to sink that many of their resources into your idea, you will NEED a working prototype. For one thing, a tangible demonstration is worth a thousand ideas on paper when it comes to a convincing sales presentation; for another, it provides them with a stronger starting point since you've already done a lot of work on the design.
I agree with KokoRyu's competency list when it comes to manufacturing and selling the product - but if you just want to sell the concept, the two things you NEED are a contagious vision and a prototype. It is still unlikely that you will find a buyer at the terms you are proposing - assuming you find an interested party, they will probably want to buy it outright, and for a lot less than you think.
posted by chundo at 2:16 PM on October 16, 2007 [1 favorite]
Also, the fact that you aren't willing to invest your own resources in the idea will speak volumes to potential investors. They will view it as a lack of confidence in the idea, or as a sign of financial weakness. The former could kill the deal, the latter will result in an extremely lowball offer.
posted by chundo at 2:24 PM on October 16, 2007 [2 favorites]
posted by chundo at 2:24 PM on October 16, 2007 [2 favorites]
JakeLL: Send me an email stan [at] aphids [dot] com, and I'll give you the email address of a good friend of mine who's a patent attorney in Austin. He can at least reply to a couple of quick questions and give you more guidance of where to go. Buy him lunch and you might get more service than that, but that's up to you and him.
posted by tippiedog at 2:32 PM on October 16, 2007
posted by tippiedog at 2:32 PM on October 16, 2007
But if you modify what was being protected by the original patent and then commercialize it, doesn't it make patenting a waste of time, anyway?
Not it the patent is broad and well written.
I'm just not sure what the point of patenting an idea is, if you have no ability to commercialize the idea; it seems like kind of a waste of money, which makes no sense if the object is to make money.
Let's see, the patent could potentially be sold for $5 million dollars and will cost $5k to $10k......, why would you want to patent it?
As for the prototype, companies buy and license good patents to useful inventions all the time without prototypes. If it is a brand new product then a prototype would help sell it. If it is an improvement to an existing product a prototype is not going to matter as much if someone knowledgeable about the technology can instantly see the value from reading the patent.
chundo's last point is most valid. For an idea worth so much, failing to invest some of your own money up front could be a big detriment in gaining acceptance. Marketing an idea to a company is hard, especially if you have no real cred in the industry or are unknown to them. Walking in with at least a patent application in hand is far better than just an idea. Walking in with that and a prototype which wows an audience is even better. You are selling here and every little bit helps.
posted by caddis at 2:44 PM on October 16, 2007
Not it the patent is broad and well written.
I'm just not sure what the point of patenting an idea is, if you have no ability to commercialize the idea; it seems like kind of a waste of money, which makes no sense if the object is to make money.
Let's see, the patent could potentially be sold for $5 million dollars and will cost $5k to $10k......, why would you want to patent it?
As for the prototype, companies buy and license good patents to useful inventions all the time without prototypes. If it is a brand new product then a prototype would help sell it. If it is an improvement to an existing product a prototype is not going to matter as much if someone knowledgeable about the technology can instantly see the value from reading the patent.
chundo's last point is most valid. For an idea worth so much, failing to invest some of your own money up front could be a big detriment in gaining acceptance. Marketing an idea to a company is hard, especially if you have no real cred in the industry or are unknown to them. Walking in with at least a patent application in hand is far better than just an idea. Walking in with that and a prototype which wows an audience is even better. You are selling here and every little bit helps.
posted by caddis at 2:44 PM on October 16, 2007
Let's see, the patent could potentially be sold for $5 million dollars and will cost $5k to $10k......, why would you want to patent it?
I would still like to see how that $5M valuation was determined...
posted by KokuRyu at 3:41 PM on October 16, 2007
I would still like to see how that $5M valuation was determined...
posted by KokuRyu at 3:41 PM on October 16, 2007
As well:
companies buy and license good patents to useful inventions all the time without prototypes.
Where are these companies? Just let me know, and I'll start sending 90% of the people who come in my office their way.
posted by KokuRyu at 3:56 PM on October 16, 2007
companies buy and license good patents to useful inventions all the time without prototypes.
Where are these companies? Just let me know, and I'll start sending 90% of the people who come in my office their way.
posted by KokuRyu at 3:56 PM on October 16, 2007
Response by poster: Well this has certainly generated an interesting response. I'll try to address a few things.
First off, this idea alone is not a marketable product. It isn't a new technology, it would be a combination patent that would incorporate several different technologies that I believe have never before been brought together to create entirely new functionality. I don't know if the way I'd like to combine is within the scope of a combination patent however.
Second, because this patent wouldn't be able to alone support a product, it would need to be purchased by a company already making products of this type. I may be able to get a patent on it and eventually sell or license it, but I don't plan to get into manufacturing of electronic devices. It's not feasible for me to start a business over this idea. It would take MASSIVE capital in attempt to achieve what many other companies have already achieved.
Third, if patentable I have no doubt to the high value of the patent, thus I asked my fellow MiFi's to assume a minimum value. Because I can't exactly explain the idea here, there was no reason to debate it's actual value. I just wanted to know if there were any businesses that work with such ideas.
To satisfy curiosity, I'll add a little more. The only thing I can say, is that given the availability of current products, and the resulting hypothetical one utilizing my idea, (which should be able to be produced at similar costs) comparing them it's relatively clear that most people would prefer to buy my hypothetical configuration. I promise this isn't wishful thinking by a delusional inventor. It's the type of thing that most people own and costs a fair amount of money, and my idea adds significant versatility to home and office uses.
It's a good enough idea that I have trouble believing someone hasn't thought of it before, however.
Once I've pursued this to whatever end I reach I'd be happy to let you all know what the idea was and then you could all have a field day debating it. If you care to know, post your email here or just check this every month or so...
Lastly, I didn't write my question to debate my valuation. The only thing I care about is to get this to someone who can evaluate it's patentability and how I can derive value from it, if it is.
posted by JakeLL at 4:43 PM on October 16, 2007
First off, this idea alone is not a marketable product. It isn't a new technology, it would be a combination patent that would incorporate several different technologies that I believe have never before been brought together to create entirely new functionality. I don't know if the way I'd like to combine is within the scope of a combination patent however.
Second, because this patent wouldn't be able to alone support a product, it would need to be purchased by a company already making products of this type. I may be able to get a patent on it and eventually sell or license it, but I don't plan to get into manufacturing of electronic devices. It's not feasible for me to start a business over this idea. It would take MASSIVE capital in attempt to achieve what many other companies have already achieved.
Third, if patentable I have no doubt to the high value of the patent, thus I asked my fellow MiFi's to assume a minimum value. Because I can't exactly explain the idea here, there was no reason to debate it's actual value. I just wanted to know if there were any businesses that work with such ideas.
To satisfy curiosity, I'll add a little more. The only thing I can say, is that given the availability of current products, and the resulting hypothetical one utilizing my idea, (which should be able to be produced at similar costs) comparing them it's relatively clear that most people would prefer to buy my hypothetical configuration. I promise this isn't wishful thinking by a delusional inventor. It's the type of thing that most people own and costs a fair amount of money, and my idea adds significant versatility to home and office uses.
It's a good enough idea that I have trouble believing someone hasn't thought of it before, however.
Once I've pursued this to whatever end I reach I'd be happy to let you all know what the idea was and then you could all have a field day debating it. If you care to know, post your email here or just check this every month or so...
Lastly, I didn't write my question to debate my valuation. The only thing I care about is to get this to someone who can evaluate it's patentability and how I can derive value from it, if it is.
posted by JakeLL at 4:43 PM on October 16, 2007
Response by poster: Oh and by the way, I'm sure everyone thinks their idea is a "Wave of the future" kind of thing, but it would be hard to imagine all manufacturers of this type of product not being interested in using this idea. Think the kind of thing that demands patents have a limited lifetime.
posted by JakeLL at 5:04 PM on October 16, 2007
posted by JakeLL at 5:04 PM on October 16, 2007
Good luck JakeLL. I hope you make the five million, or more, and get a nice lake house next to Sandra Bullock.
posted by caddis at 5:28 PM on October 16, 2007
posted by caddis at 5:28 PM on October 16, 2007
Response by poster: Thanks. It would be nice. I'm not expecting it to be patentable, but I figure I better make sure.
posted by JakeLL at 5:39 PM on October 16, 2007
posted by JakeLL at 5:39 PM on October 16, 2007
if it's a mouse with a bottle opener on it, i'm way ahead of you, my model will be in the market while you're still doing R&D!
seriously though, talk to a lawyer, preferably one who has good knowledge of technology. solicit some advice on the viability of this product, and if the feedback is good, take out a loan. patent it yourself. without the patent, you'll have jack if you make it to the bargaining table. as others have said, a patent <> instant riches.
good luck!
posted by Dillonlikescookies at 5:45 PM on October 16, 2007
seriously though, talk to a lawyer, preferably one who has good knowledge of technology. solicit some advice on the viability of this product, and if the feedback is good, take out a loan. patent it yourself. without the patent, you'll have jack if you make it to the bargaining table. as others have said, a patent <> instant riches.
good luck!
posted by Dillonlikescookies at 5:45 PM on October 16, 2007
Think about All-in-One Printer type of thing with scanner/fax/printer/copier. It is much cheaper than all four functions together, takes less space, and easier to use...
I don't know who or what company had idea to combine all but.. in retrospect, It was/is a great idea.
I'll say try to google around and see how idea like that became about and who/how one got benefited from it.
maybe you can learn some lesson from it.
Also, take a note on situation now about these all-in-ones... still a great product (i think) for most users... but look how many companies are producing.. and was there any patent on such thing before?
posted by curiousleo at 6:20 PM on October 16, 2007
I don't know who or what company had idea to combine all but.. in retrospect, It was/is a great idea.
I'll say try to google around and see how idea like that became about and who/how one got benefited from it.
maybe you can learn some lesson from it.
Also, take a note on situation now about these all-in-ones... still a great product (i think) for most users... but look how many companies are producing.. and was there any patent on such thing before?
posted by curiousleo at 6:20 PM on October 16, 2007
With the small amount of detail we have available now, all the advice you can expect here is to start working with a patent lawyer. Only someone who knows patent law AND the idea can advise on you whether your idea is patentable. You should be prepared to sink at least $5000 into this process.
Given that it sounds like a combination of existing technologies and not a brand new invention, your only course of action is to 1) get a patent, and 2) start networking in the industry. If #1 falls through, your idea is worth $0 unless you decide to manufacture it yourself.
posted by chundo at 10:18 PM on October 16, 2007
Given that it sounds like a combination of existing technologies and not a brand new invention, your only course of action is to 1) get a patent, and 2) start networking in the industry. If #1 falls through, your idea is worth $0 unless you decide to manufacture it yourself.
posted by chundo at 10:18 PM on October 16, 2007
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There are invention promotion companies out there who claim to file patents and promote your invention to manufacturers. They are almost all, if not all, scams. Avoid them like the plague.
If you have absolutely no money, and no one who will lend you money, and nothing to sell to get money, then one possible alternative is to prepare and file on your own a provisional patent application. This is essentially a placeholder that expires within one year. It is not examined, it will not issue as a patent, it just holds the date for when you file the real patent application. In theory it is designed for your situation. You now have something that you can take yourself to companies. One thing you might ask for if someone shows interest is financial help to get the patent prepared and filed by an attorney, your attorney, in exchange for some period of exclusive negotiations with you in which you won't go to other companies with the idea. In any event, the people you want to pitch it to are probably going to be in New Business Development. Even if you are going to go this route it would foolhardy to not at least seek a short consultation with a patent attorney on how to do this.
posted by caddis at 1:19 PM on October 16, 2007