Is a patent only as “good” as your ability to defend it? Many people, including inventors and lawyers, say this. Meaning, if you don’t have deep enough pockets to sue and eventually win for patent infringement, your patent isn’t worth anything. (To be fair, in my first article for this magazine six years ago, I said something similar.)
Before I sued for patent infringement and had to defend my ownership of my intellectual property in federal court, I more or less agreed. That was the big benefit of patents, right? They allow you to litigate. But when I experienced litigation for myself, I reached a different conclusion. Clearly, this was not a strategy I could depend on to monetize my patents — it was too expensive, there were too many unknowns, and there was absolutely no guarantee I’d be successful.
It was a priceless experience, because it helped me devise a different strategy for making money from my intellectual property. Patents can have tremendous value, but only if and when they are used correctly.
The reality is, most inventors will never have to defend their intellectual property because their patents aren’t worth anything. This is a much bigger issue for the inventor community to address than being able to sue and win for infringement. Basically, we are getting ahead of ourselves. Our ability to defend our intellectual property is not our most significant challenge. We need to be able to determine whether our ideas have value in the first place.
Typically, an inventor spends more money getting a patent than they ever make selling their invention. I often wonder why. Was there a market for the invention? Did the inventor know how to commercialize their invention? Did they try? What went wrong?
Making money from a patent without suing anyone isn’t easy, but it is entirely possible. So, perhaps the problem is an educational one. How do you determine which of your inventions are more likely to be profitable? In other words: How do you assess your ideas from a business perspective?
Patents offer benefits to entrepreneurs that have nothing to do with litigation. For example, patents help you build a team by convincing others you might know what you’re talking about. When you receive a licensing agreement, having patents helps you negotiate. Patents also help you raise more money for your startup. And if your company is acquired, patents give your company more value.
Here are three basic steps to help you make good decisions that increase your odds of having your invention become a profitable product.
Step 1: Solve a problem that people are demanding a solution for.
Many inventions solve a problem. But how significant is that problem, really? You think you’ve got a great idea, but you don’t know for sure. The solution is to test your idea for market demand. Put simply, show it to someone who just might want it and get their feedback.
How much interest does your idea generate? Does anyone care? Testing is incredibly important — one of the most important things you can do to make money with a patent, undoubtedly. Unfortunately, inventors often skip over this step.
One way to test your idea for market demand is by trying to license it. You can also seek out an end-user, like a retailer or a distributor, who can tell you whether their customer might see value in it. When compared to products already on the shelf, does your invention offer a strong enough benefit? Let the experts give you their perspective. What you learn may help you refine your idea.
You don’t need much to test an idea. Keep your marketing material simple by using a one-page advertisement, which I refer to as a sell sheet, or a short video. If there’s no interest, why bother developing the idea further?
Step 2: Design your solution so that it can be made as affordably as possible.
Can your invention be manufactured and sold at a price point that your costumer will accept? Figuring out how much your invention will cost to manufacture before you file a non-provisional patent application is extremely important. Think about it. Your invention will have to compete with existing products. If it cannot be sold for the same price as those existing products — or even better, less than — you are going to be fighting an uphill battle the entire time.
Unfortunately, most of the patents I read do not take manufacturing methods into consideration. As an entrepreneur, my perspective is: Why file a patent in the first place without a plan to go into production? After someone expresses interest, the next hurdle is always price. This is why knowing about manufacturing is so important.
You can acquire manufacturing knowledge by hiring an expert who is familiar with the inner workings of the manufacturing line. Make sure to have them sign a non-disclosure agreement that includes “work-for-hire” language so that you own the rights to anything they provide.
Don’t overlook this critical aspect of commercialization.
Step 3: Develop a robust plan for bringing it to market.
Turning an idea into a product is difficult, period. For most people, it’s going to be extremely difficult. This is because they don’t have the experience, time, or resources. Even with the best intentions, if you’re not prepared for what to expect, making money from a patent is going to be difficult. The process of turning your invention into a product is going to take more money and more time than you imagine.
I highly recommend studying all of the different ways to bring an idea to market today, including both venturing and licensing. To save yourself time, money, and heartache, I also highly recommend partnering with someone who commercialized a new product many times and still has a smile on their face. Learning “along the way” is a recipe for disaster.
If you want to turn an invention into a product, you need to consider the business perspective first — not after your patent issues.
For the vast majority of independent inventors, the problem isn’t whether you’ll be able to defend your patent in federal court. It’s making sure you have an invention worth patenting in the first place. Remember, only successful products are copied. That’s why getting ripped off is actually great news. Congratulations: You invented something of value.