Know-How Exchange : Strategy

What's the value of any one license? For high-end non-commodities, the fee is whatever you can negotiate. People usually play with the terms and other little contractual perks so direct comparisons are tougher.

I'm thinking the license fee should be 10% of the retail value, all items total. For instance, if the total number of units to be sold are 10 units, and each unit sells for $200.00, the license fee would be $200.00. Would I be in the ballpark?

Your patent gives you a monopoly. Its value is in how much other people need to use your patent to make them money. If it's something 'must have' the patent has a lot more value than if it's something which is take-it-or-leave-it. If it's the later the price you can get will be low as you'll need to stimulate buyers interest - they'd be more likely to want to pay downstream than upfront.

If it's the former who need your patent you can set out for higher prices from the start as you have the protection of the patent, but you might also look at value-in-kind eg marketing support or promotion in lieu of licence or royalty fees. Fundamentally though its down to targeting the right customer who really needs your patent and then negotiating hard - there are no rules as such - the better you know how much your buyer needs your product the better you can work out where to pitch the price.

The value of your patent is based on 2 things: its perceived value and how well you defend it (from copycats). Unfortunately, there's no easy formula for value. Michael Goodman's given you wise advice - it's about the successful marketing of the item, rather than simply its uniqueness.

I greatly appreciate the feedback.

I'm with you, regarding the balance of marketing/licensing. I'm considering having a local company do a couple videos highlighting the product in one, and the sport in another. These videos could be included in promotional packages.

Currently, the design is being infringed upon, by more than one entity, in a few countries. Doing so by either advertising to US consumers, or selling to them. One entity is not only infringing on the patented design, but also calling it by the name that it's being trademarked under. Quite a few have ignored the notification that was given, when the application publication was posted. The design caught on quick, and now is considered to be the creme of the crop.

My handicap is finances. Personally, I'm in good shape. I just don't have the thousands to spend on marketing, and I'm not here looking for an investor. I'm sure you've heard this line before, but I'm confident the product will walk the walk, and talk the talk, if I get it into the right hands.

From what you're saying, your product/patent will make it (or not) based almost entirely on marketing.

I've heard/read from several inventors that "Patents are the right to spend a lot of money on legal fees to stop other people from doing what you wanted to do." The USPTO doesn't enforce anything; that's up to you and your lawyer.

Your priority now should be to develop a solid business and marketing plan to see if you are prepared to invest the time, effort and money to make your invention a commercial success.

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"I've heard/read from several inventors that "Patents are the right to spend a lot of money on legal fees to stop other people from doing what you wanted to do." The USPTO doesn't enforce anything; that's up to you and your lawyer."
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I'm fully aware of that, and that has been discussed. Seeing is believing, and the product has promoted itself very well. It started out slow because it went against the grain, but it's grown in popularity in snowball fashion. anyone in the market knows it by name.

The market is starting to expand to a more, mainstream demographic. I'm leading an advocacy campaign in my state, that will open the door for a certain group of outdoor enthusiast, to use the device. Several, official representatives within this group, have given it their blessing, are are behind me.

I have received compliments from folks around the world, from different genres...art teachers, machinist, engineers, and peers within the market. Not to mention customers who purchase the product. I cant tell you how many people have said I should be on shark tank, but for some reason I don't take that show too seriously, and I'm not convinced that the demographic the product appeals to, is big enough for the show.

It would be great if an investor showed interest, but I'm aware there are alot of people in my shoes that are wishing for the same thing.

Have you looked at kickstarter.com? Do you have a business/marketing plan?

No I haven't. I'm a single parent, with a day job. I have over an acre of ground to maintain. There just isn't enough hours in the day.

Given you have infringement and haven't spent the time/money to shut them down, a manufacturer might not be interested in taking on your product at all. There's already competition making knock-off products, and your licensing is an extra expense that the competition isn't incurring. In your presentations, full-disclosure upfront about the situation is called for. A manufacturer may be interested in buying your patent outright, and then using their resources to shut down the competition.

I have no problem disclosing everything. A good percentage will shut down with infringing, once I post the patent notification. There is only one craftsman selling my design and calling it by name. There are no more than five total, worldwide, that are infringing in some fashion, against the patent.

When I posted the application publication, 95% of the responses basically laughed it off, feeling it would be a cold day in .... that I would receive a patent. One of the most recognized notables in the sport, stated on his forum, that even if I got the patent, it would be for my specific shape and composition.


What 99% doesn't know, and what was a surprise to me, is that I was given a very broad patent. I'll compare it to a patent on building a hamburger. My patent is a hamburger, in between two slices of bread. However, I sell you a hamburger with a slice of cheese on both sides of the beef patty. It'll also be served to you with three toothpicks, strategically placed, to ensure the burger makes it to your hands, in the same shape. Claim 1 in the patent, states I have a patent on a beef patty in between two slices of bread, However, in the patent diagram, it clearly shows the layers of cheese, and the toothpicks. This was done to keep anyone from trying to patent around the idea.
Another factor, is how I cut away to present a certain shape of the product. The infringers, except for one, are selling a different shape.

My design, is the only design, that has been used to win prestigious events on different continents, and to be used in a Guinness World Record.

My apologies if I rambled on a bit...

I'm with Jay. The patent only has value if you defend it. It's possible for competitors to look at you and come to a conclusion that you wouldn't be able to afford to defend the patent. You might need to make noises about having a backer to give the patent teeth, or actually find backers to help.

I'm sure my competitors are confident, that I don't have the funds to defend the patent. I've made it known, how busy my daily life is. It's the reason I had to stop taking orders. In less than two months, I'll have my mortgage refinanced, which is going to save money. My mortgage will be my only debt. I'll be able to get a small, personal loan, to take what I believe is the next step, a well produced commercial (video). It'll be very affordable for me to do so. I figure that if it fails to produce an investor, it'll at least promote the product and market to a level, that I will have to hire some help to meet demand. Another option would be a different manufacturing process, that produces a more affordable product.

Would this thought process be correct?

The next step needs to be a plan of some kind, so you are not just randomly trying things. And it's not clear why making the product "more affordable" is the right strategy. If you're selling all you can make, the product could be UNDERPRICED. And maybe a video is right, but maybe it is premature. How/where will people see it? How will they find the video? Does the product require motion to demonstrate its uniqueness? If not, maybe some good still images will work just as well.

Net: Lots of questions. Better to start with a plan so you can track and measure results. It will be worth the effort.

And if it's investors you want, they'll need some indication of how much money you'll need, how you will spend it, what return they're likely to get (and how long that will take), what the risks are, and how you will deal with those risks should they materialize. All of these things should be included in the plan -- if not immediately then soon afterward.

A different manufacturing process may be of interest to investors - (perhaps) keeping the price the same, but (definitely) increasing profitability. If you don't already, hire a patent attorney - as a minimum - for having them send a cease-and-desist letter on their letterhead to your competition.

Thanks. I hired a patent attorney from the start. He even warned me of two, prior arts that could've kept me from getting the patent. He did a fantastic job with the application. He listened when I explained how the invention worked, and how the prior art was significantly different. He used the application in his resume', to get hired on with a large firm. He's always upfront and honest with his answers.

A patent plus a business plan plus proven sales means you have the potential for an investor if you have a business plan that shows potential future incomes. See if there are any local business advisors / chapters or business angels. Make contact, get a meeting and see them face-to-face. A video is too remote more for distance selling. You'll need investment to amplify your potential.