Congratulations, you have just created your first innovation! You can not wait to conquer the US market, sell to thousands of customers and make millions of dollars. Do you believe you won’t need intellectual property? Or do you think you can get to the market first and maintain your competitive advantage? Think again!
Did you know that an innovation that is not protected can be legally copied? That a dishonest manufacturer can apply for a patent before you, then accuse you of stealing his idea? Or that a product that is not protected by a patent can be copied in China in 2 weeks and land on the US market in one month?
For all these reasons and many more, I present to you today 3 roads to the market in the United States. These are:
- Drop It If You Don’t See Commercial Potential
- File a Patent Application and Manufacture and Distribute the Invention Yourself
- Try to Sell Invention to a Manufacturer With a PPA
These roads come from the excellent book Patent it yourself – Your step-by-step guide to filing at the U.S. Patent Office by David Pressman. I recommend it!
The opinions expressed herein should not be considered in any way as legal advice. For more information, please consult your patent agent or patent attorney.
1- Drop It If You Don’t See Commercial Potential
Abandoning an innovation is always a painful but necessary decision. Of course, you have invested a few weeks or even months of work but you will not lose anymore. It is better to realize that your innovation has no future for the moment, than to ruin your health and wallet to push a product that the market does not want. And marketing companies won’t help you assess the commercial potential of your invention, on the contrary! The idea here is to find the innovation that will generate the maximum profit for a minimum of risk and effort.
The good news is that the more you invent, the more skilled you become at inventing.
For example, my first invention, the Umbrella Arm Clip, took me 7 months to create the prototype and assess the market! The SnowClaw took 3, while the Abs Flippers took me one month.
Then there are many things you can not know in advance or anticipate. That’s why you have to find partners or a close friend who will give you a reality check about your innovation. And even then, there are mistakes you must make to change your perspective on the product.
Pro Tip: Avoid the highly regulated sectors of the automobile or aviation.
The reason is that there are so many different standards, norms and codes that it’s impossible to know them all. The last thing you want is for some government official to declare your invention illegal because it violates a regulation you did not think of.
For example, the SnowClaw is a product that allows cars to pull themselves out of the snow banks by being attaching to the drive wheels. The problem is that this is considered an illegal modification to the vehicle by Transport Canada.
Bonus Pro Tip: Follow the Startup Course offered by SAJE Montreal.
Lasting 330 hours, you will see the Business Model Canvas to clarify your ideas, the business plan, the financial arrangement, as well as the operation of a company.
The real benefit of this course is that you will start to see your inventions through the eye of a businessman, no longer as an inventor.
Thus, you will be able to judge very quickly if your ideas have commercial potential or not. Better yet, this $ 6000 training is free and paid by Emploi Québec. So why not?
2- File a Patent Application and Manufacture and Distribute the Invention Yourself
Very difficult road to start on for your first innovation. Here are the reasons:
- The cost of a patent, which can reach several thousand dollars.
- Obtaining a patent can take years, with much communication between you and the United States Patent Trade Office (USPTO).
- Despite all your research, commercial success may not be at there
- The learning curve and the time required to make, promote and sell your product all by yourself is absolutely gigantic! The next section will give you an idea of the workload that awaits you.
However, if you succeed and the commercial success is there, you will pocket the lion’s share of the profits generated by sales.
3- Try to Sell Invention to a Manufacturer With a PPA
This involves filing a Provisional Patent Application (PPA) with the USPTO before contacting any manufacturer. In addition, do not file until you have prepared your design book so you can prove that you are the inventor of your product.
3.1 The role of the PPA
Although the PPA does not allow you to sue a infringing company that has copied your product, it signals to said company that you could soon get a full patent. Therefore, an infringing company will lose its investment in machinery and manufacturing molds once you have your full patent in force and a court orders said company to stop producing and selling its copied product.
3.2 PPA, marketing and sales
Once your PPA has been granted, you will have one year to promote your product and test the market. During this period, you will have to use all the means at your disposal to sell your product. Kickstarter, Indiegogo, WooCommerce, Shopify, Google AdWords and Google Analytics are platforms with which you will have to familiarize yourself well before launching your product on the market. Here is a very brief explanation for each of them:
- Kickstarter and Indiegogo are crowdfunding platforms. In return for financial support, you will offer these first customers a limited edition of your products or non-monetary services that they could highly appreciate.
- WooCommerce and Shopify are online sales platforms. Thus, you will not need a physical point of sale to sell your stocks.
- Google AdWords is a platform that lets you test which keywords are generating the most search for your product. So you can try for a week a combination of different words and see which ones resonate the most with your customers.
- Google Analytics is a platform to get to know who your customers are and how to better target them. Linked to your website and to an online sales platform, you will be able to determine the profile of your customers, what sites they came from, how they buy, etc.
More on all these platforms in another blog post!
3.3 PPA, contract manufacturing and drop shipping
In addition, you will need to familiarize yourself with the concepts of contract manufacturing and drop shipping well before launching your product on the market. Once again, here is a very rudimentary explanation for each of them:
- Contract manufacturing is to sub-contract the manufacturing of your product to a factory that is not yours. Indeed, this method of manufacture allows you to have your product made without requiring from you investments in a business location, machinery, tools and manpower. If sales are not there, you will have lost only the value of the manufacturing contract, rather than being stuck to pay for a local and machinery that are now useless. Excellent way to test the market.
- With drop shipping, you delegate the logistics of delivering your products to a third party. This company will take care of contacting the factory with which you have a contract manufacturing agreement and will deliver your products to distributors or directly to customers. If sales are not there, you will have lost only the value of the drop shipping agreement, rather than being stuck with a now useless delivery truck. Once again, THE way to test the market.
More about contract manufacturing and drop shipping in another blog post!
The idea here is to generate a certain volume of sales while minimizing risks, then to turn to a reputable manufacturer in the field of your product.
3.4 Meeting a reputable manufacturer and signing the licensing deal
Armed with your Shopify or WooCommerce sales figures as proof of traction, raised capital with Indiegogo or Kickstarter, top keywords for SEO from Google AdWords, customers profiles with Google Analytics and factory production figures thanks to contract manufacturing and your PPA, you can then sign with them a licensing agreement infinitely stronger than going in naked!
A license agreement is a contractual agreement whereby a manufacturer agrees to sell a number X of units of your product in Y territory for Z years. In exchange, you give them the right to use your patent, while keeping ownership. You are the landlord, they are the tenants. They will sell and market your product, but under their company logo. This agreement may be exclusive or not.
Once at said manufacturer, here is what you could say:
With all the proof of traction that I just presented and knowing that my product will integrate wonderfully with your product line, would you be interested in signing with my company a license agreement?
I am ready to offer you exclusivity in the State of New York for one year with extension if a minimum of 1000 sales per month is reached. In return, I want 8 to 10% of sales.
Better yet, if your sales are not enough to convert your PPA into a full patent, you could agree with this manufacturer to have him pay for the patent in exchange for exclusivity. The licensing agreement is a whole different subject and I’ll cover it in another blog post!
All these steps for online sales give you an idea of the magnitude of producing, promoting and selling yourself! Hence the importance of finding partners to help you and signing a license agreement with a reputable manufacturer.
For your first invention, better a small portion of a big pie that 100% of no pie at all!
Congratulations! You have just discovered some of the routes leading to the commercial success of your product using intellectual property in the United States. Here they are:
- The dead end: give up and move on to another innovation if the first has no commercial potential.
- The one that pays the most: file a full patent before producing and selling yourself.
- The safest: submit your PPA application and once in hand, test the market for a year and sign a license agreement with a reputable manufacturer.
In the next article, I will discuss the main elements of a licensing agreement.