Has licensing become a streamlined way to turn an idea into a product that’s ready for sale? To get your product to store shelves, you have two options; Manufacture and sell the product yourself or License your Invention to a business with the ability to manufacture and distribute your product. For many inventors, licensing is the first, popular choice. To license, inventors rent, or license their invention to a company, which manufactures and distributes the product quicker and easier than doing it yourself, due to having the infrastructure in place. Many believe it to be faster, more affordable, and more lucrative than the other options, such as starting a new company to sell your idea, but earlier this year, we surveyed Product Scouts on the topic of licensing and it’s not as easy or as lucrative as one may think.
We spoke to an inventor who has been pursuing product development, on and off, for 20 years. Inventor Mike Fisher has been issued two US utility patents and one US design patent is currently pending. Mike has gone through and seen the positive and negative aspects of licensing. I asked him about his experience on licensing products.
Protecting Your Product
Mike told me about his initial thoughts on inventing, “I used to think I could just contact an invention company and they would do it all for me; ie: the patents, develop, market and sell the invention to the bajillions of people they told me would want it. Those first 15 years were a great disappointment and very expensive. Eventually I started to question everything. So I put a halt on writing checks and started reading everything I could find about inventing. I’m so thankful for the internet! Eventually, I better understood the process and that a person most likely will either venture the products themselves or license them.”
He did have a patent licensed several years ago, but the deal fell apart within the second year because he said, “I believe I went through about everything wrong those very first 15 years I was inventing.” Luckily Mike had help in the legal department. “Thankfully the attorney I’ve used over the later years, told me some of my ideas were not patentable and a loss cause, so I received the consultation I was paying for in those instances and learned a bit along the way.” And within the last year, Mike has licensed one of his patents to a large brand.
There are obstacles and risks when going down the path of licensing, and Mike’s biggest ones were time, effort and money. “There are many risks in my experience,” Mike told me. “Doing all of the work and they just walk away. Or I was going to have to walk away because there wasn’t going to be a fair deal. There is a risk paying attorney fees up-front and no deal is executed. It’s even still a risk after a deal is completed and it falls apart. Perhaps the licensee never pays the royalties? There is a risk that you go through.”
“We should educate ourselves on each process and try to truly understand the risks associated with each,” Mike conveyed when I asked his opinion whether inventors should license or manufacture their prototype? “Can you do any of the steps yourself or are you going to have to pay someone else for all services or even the majority? Do you know the competition out there and can you compete? Do you have lots of ideas or are you stuck on just one and have you researched the market? Ask yourself what you are looking to get out of either scenario. Truly spend the time to understand what it takes. Both cost money and take a long time in my experience.”
As a product developer, the most frustrating thing about bringing a product “to life” was not being educated on the process and having people persuade him they could do it all for him. “I now think finding resources for the true explanation of the process is limited. I’ve spent a lot of time reading or watching a “how to” video, only to find it was so vague or was no longer how the industry works. Thankfully, I’ve learned patience goes a long way, and nothing is going to happen over night. But I never stop reading up on current events in the industry.”
Working with products and licensing for 20 years, Mike has learned to network, a lot. “I reach out to people all the time to have a discussion about what they have accomplished or the struggles they are currently in. I figured this is a great way to educate myself, each scenario is different, but they all took lots and lots of work.”
Third Party Licenses
A common road that inventors tend to take are using 3rd-party licensing companies and coaches. Mike has used them but suggests you should be aware and careful.
“I have (used a 3rd party), and each one will be different. You have to be careful and realistic about what you are paying for. I have mixed feelings about them really. Some are great and helped accomplish a certain required step, but then couldn’t really deliver a licensing deal. One did help me with a licensing deal, but the deal eventually fell apart due to a combination of things. I’ve spoken with some and wasn’t able to afford their services upfront or felt like they were just in it for the scheduled payments I was going to have to make while they tried. It’s all a risk, so only risk what you can afford to lose.
Several licensing companies say that anyone can license their idea even with no patents when the success rate of people making money from a license agreement is extremely low and often no money made after the agreements are signed. What are the biggest misconceptions that are being taught?
“Generally, I feel that since people’s emotions run high with their inventions, due to success stories that are oversimplified, that they will make themselves believe anything.” In the community, several companies prey on inventors about licensing an idea without a patent and promising a big return. “This is a difficult process, it’s expensive and most likely will take a long time. Now, anything is possible and there are definitely exceptions, but we do it to ourselves by wanting to skip steps or find the easy way. Start on the least expensive path and who knows, it might work, but make sure to remove emotions and don’t allow people to talk you into them having the answer, if you just write them that next check.”
Is getting a license agreement the jackpot or more just the beginning of a continuous journey?
“In my experience, it’s a continuous journey. To me, each milestone achieved is more like a mini graduation ceremony and that is what I tend to focus on. To me great success is subjective. I had to learn this, but I’ve evolved over time to feel good about the incremental progress moving forward. Everyday that I see the product is still available to buy online or in stores, through the licensee, is a great AND successful day for me!”
Give your product a shout out… what can you tell us about your invention and where can folks buy it?
“Most recently, I developed a button hook on the end of a collar stay, to help people button up small dress shirt buttons. Small shirt buttons can be extremely frustrating for lots of people; myself included! Collar stays are kept in the shirt collar, so I felt this was a perfect way to always have a discrete button hook with me. Wurkin Stiffs is a very established and successful brand with their magnetic collar stays and other products, so I felt they were the best fit to pioneer my design to the market on the highest level.
Image credit: würkinstiffsinc
Story credit: Make48 team