Become a Professional Inventor 1653786256

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BECOME A PROFESSIONAL INVENTOR The Insider’s Guide to COMPANIES LOOKING FOR IDEAS.

STEPHEN KEY WITH JOHN C. LEE EDITED BY MADELEINE KEY & JANICE KIMBALL KEY

STEPHEN KEY MEDIA Copyright © 2020 by Stephen Key Media, LLC. All rights reserved Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. This publication shall not be construed under any circumstances, by implication or otherwise, as the giving of legal advice and/or the practice of law. ver ii Cover & Interior Design By: James Shehan

To Madeleine, my eldest daughter, thank you for giving me a voice.

“Coming together is a beginning, staying together is a process, and working together is success.”

— Henry Ford

CONTENTS Title Page Dedication Preface Acknowledgements Foreword Introduction PART ONE 1. Companies Are Looking for Your Ideas! 2. Licensing: The New Business Model Licensing Versus Venturing PART TWO 3. Behind the Scenes of the Invention Submission Process 4. Submitting Your Idea to The Right Company PART THREE 5. rotecting Your Ideas 6. What You Need to Land a Licensing Deal 7. Reaching Out to Potential Licensees PART FOUR 8. The Dreaded Silence 9. Reasons Why Your Product Idea Was Rejected PART FIVE

10. Preparing To Answer The Hard Questions 11. From Initial Interest to a Deal: Negotiating Licensing Agreements PART SIX 12. Where's the money? 13. Fighting to Get Paid PART SEVEN 14. 28 Interviews With Industry Insiders INTERVIEWS Toys Brian Chapman Ben Dermer David Small Sara Farber Bob Ruginis Jesse Faunce Hardware Corey Talbot Health and Beauty, Massage Apparatus, Travel Accessories Lawrence Cruz Pets Jonathan Zelinger Amanda Hutton Ward Myers Cannabis Jonas Matossian Arkady Grigoryan

Juvenile and Baby David Contract Dental Mike Parlante Novelty Gift Sam Hurt DRTV Trish Dowling Hospitality David Middleberg Sports Medicine Donald Bushby Music Justin Norvell Bob Kasha Kitchen Brendan Bauer and Hilton Blieden Automotive Atul H. Patel Golf Simon Touma Ed Holda Organization Jeff Gawronski Packaging Barry McKillip Product Development Louis Foreman 15. Increasing Your Chances of Success

How to Be a Pro: A Case Study PART EIGHT

PREFACE What does it mean to become a professional inventor today? I guess it depends on who you ask.

me, it means you have created something new and unique that people T otruly want – and had enough determination and persistence to actually bring it to market. The tough part? Bringing it to market. Aka commercialization. There are many inventors who have patented their inventions, and they should be extremely proud of that. It’s an accomplishment. But personally, to me, having a patent is not enough. Like my patent attorney John Ferrell once said, “Protection is easy. Selling is hard.” My first true invention was a rotating label that delivered 75% more space. Before that, I licensed toys and novelty gifts; products that were just fun and intended to put a smile on people’s faces. But after reading an article in The Modesto Bee about how there wasn’t enough room for important information on medicines, and as a result people were becoming sick and dying, I set off to come up with a solution that very day. I had previously created and licensed a rotating cup and canteen for children. Could I apply the same concept to a label? And would it result in more space for important information? I remember walking over to

Walmart to purchase a container off a shelf and then walking back across the street to Kinko’s (the printing chain) so I could begin building a rotating label using the copy machine. To my amazement, I created something that truly had value. When you place a second label that has a window cut out of it over a first label and spin it, additional information printed on the base label is revealed as the container is spun. It was a fundamentally simple idea to use two labels. the top label had a window. When spun, that window revealed information printed on the base label. I couldn’t believe I had truly invented something. Becoming an inventor was something I was sure I could never possibly do! So, of course, I sent my creation to my patent attorney. They couldn’t believe this was a new idea. They had seen some of my previous ideas; they knew I wasn’t really an inventor. But when they did a prior art (patent) search, nothing came back. I remember John calling and saying, “Steve, you’ve invented something truly useful.” I was so proud! I was an inventor! I had invented a new label technology. But I soon discovered – in a very awkward meeting at Procter & Gamble’s technical corporate office – that I was not the true inventor of this idea. During this meeting, Procter & Gamble’s legal team slid over a list of numbers and said, “Mr. Key, we’re not going to pay you one penny for this idea. It’s already been invented.” They were right. You see, there was prior art on my idea. Prior art that had not been uncovered by my legal team. the invention I thought I created was actually invented and patented back in the 1950s. I thought to myself, “How can this be true?” I felt embarrassed and totally deflated. At that point, I guess most people would walk away and give up. But not an inventor. I kept asking myself, “If this has been invented, why has it never come to market?” It bothered me. this was a great idea! Why, even though there were patents, had it never made it to market? Very intelligent, caring people told me to give up. I wouldn’t. And that’s when I became a true inventor.

I needed to know the answer to my question so I could solve my problem. And that’s what inventing is really all about. the hard parts. Making discoveries, making changes, making mistakes, pushing through obstacles, being determined, and never giving up on finding a solution, even when everyone is so tired of hearing about it. When everyone else is ready to throw in the towel, you push through. There’s simply something truly special about being an inventor. There is something burning inside of you that just can’t be extinguished. You can see things that most people miss. Figuring out why this innovation hadn’t come to market was a pure exercise in inventing. I studied label manufacturing techniques. I studied what kinds of materials were used to produce labels. I had samples made. I wrote dozens of letters to potential customers, until I found one. I pushed through rejection after rejection. I pushed through the uncertainty of filing patents on a technology you are not sure is ever going to generate a dime. I believed in myself when everyone else wondered if I was losing it. And in the end, I obtained 20 patents on this very same technology. We sold tens of millions of labels and won 15 packaging industry awards, as well as two Edison Awards in New York City the same night Nike and Ford were honored. I still remember making that first prototype of a rotating label at Kinko’s in Modesto, California. I showed it to the employees. They thought it was very clever, and so did I. I’ll never forget the feeling of walking back into Kinko’s years later when Alex Trebek was on television showing my rotating label and it was selling in Walmart stores across the country. That day, everyone in the Kinko’s applauded. Proving to myself that I could do this was the greatest gift I have ever given myself. Now, I was truly an inventor. That was decades now. Now I’m 63, and part of a team that is going to turn the packaging industry on its head. We’ve developed a solution to the plastic rings often seen on six packs of beverages. there’s far too much plastic in our oceans and landfills. I’m proud to be part of Fishbone Packaging. After years of developing the concept, working on different materials, building samples, attending trade shows, and reaching out to

companies, I just flew out to one of the largest beverage companies in the world to make a presentation. There are a lot of obstacles for us still to overcome. We’re pushing through. And I’m ready! It’s exciting and nerve-racking. It’s the most amazing experience ever. And I’m so happy to be able to do it again. Because an invention doesn’t mean much if you cannot bring it to market and share it with the world. “My job is not done until I see that idea implemented and shipped.” – Vinodh Gopal, Senior principal engineer at Intel and the company’s 2019 Inventor of the Year. More than 170 patents granted. Being an inventor is all about the journey. The struggle. The failure. And yes, the success when it finally happens. Through it all, I’m on the edge of my seat. I’m alive! I love being an inventor! In this new book, I’m going to share with you what it takes to become a fulltime professional inventor. I hope you enjoy the ride too. One more thing. Holy shit! 486 pages? How can anyone read such a long book? That’s what I would say if I picked this up. But I’m here to tell you, I wanted to cover this topic as thoroughly as I could. And I felt the only way to really do that was by interviewing companies that are looking for ideas and including those interviews in the book. So, I did! the interviews included cover no less than 17 different industries, adding nearly 200 pages to the book. I encourage you to read these at your leisure and return to them. They are not required reading. What you’re left with is the typical length of a business book, which is 300 pages.

ACKNOWLEDGEMENTS is nothing like bringing a product idea to market. To see your T here product on store shelves, on TV, and people using it is one fantastic feeling. Helping others achieve invention success is equally as rewarding. I could not have had such a wonderful career without the help of so many. I’m going to start off by thanking first and foremost, my wife Janice. She has believed in me since the first day we met. I’m not quite sure what she saw, but she saw something in me when everyone else had their doubts. Including myself! As she has said many times, I was a “diamond in the rough.” I hate to say it, but she is still polishing my edges even today. I cannot even begin to thank you for everything you’ve done, Janice. Not only in my personal life but also for my career. I couldn’t have done any of this without you. I ask myself every day, what did I do to deserve you? My eldest daughter Madeleine: Thank you from the bottom of my heart for putting up with everything. When we were sitting in our kitchen in Modesto, California a decade ago and you said to me, “Dad, I’ll write for you,” I had no idea where this would lead. You have been my voice for more than 10 years. I wouldn’t have the voice I do today in our inventing community without you. Thank you for making me look good and helping me make better decisions. Andrew Krauss, my partner at inventRight: When we met at an inventors group meeting you hosted at Santa Clara University 20 years ago, you saw potential. You kept believing in our mission to help other

inventors. In fact, your intentions have never wavered since day one! Without your commitment, dedication, and vision we wouldn’t be leading the inventing industry today. Thank you for handling the day-to-day operations while I dream! I am indebted to everyone at inventRight! Our team is amazing. With your help, inventors are becoming more successful. We have a voice in our community. And for that I cannot thank you enough. Jon, thank you for making everything run smoothly with all of the calls we receive daily. You make a wonderful impression on everyone you meet and are truly an ambassador for our company. Heather, you truly amaze me with all of the talents you have. We’re just now beginning to discover even more of them! I appreciate you helping me with all the daily calls, but also for organizing other events outside your daily duties. Thank you for keeping me on track. Sylvia, thank you for joining us. Identifying potential students that we can truly help with their inventions isn’t easy. Thank you for guiding them and making good decisions for them and for us. Terry, thank you very much for helping our coaches do the best job possible helping our students. Your commitment and dedication inspires me. Paul, you’ve been impressing me since the first day you became a student. Thank you for handling contract negotiations and keeping your students on track to achieving licensing deals. Judy, thank you very much for staying with us during your journey traveling and living in another part of the world. You have such a calming effect on your students and are truly an asset to us. Arleta, thank you for doing such a great job with our students in addition to handling other responsibilities in the company. I can always count on you to look out for their best interests. Ryan, I don’t know how you do it. You have a serious fulltime job and are still such a positive and influential part of our inventing community. Somehow, you squeeze more out of 24 hours in a day than most people could even dream of. You are a true leader. Brayton, you have a wonderful sense of humor. You’re going to have a excellent career. Thank you very much for being part of our community.

Amy Jo, thank you for your loyalty. I have asked you to do so many different things over the years. You’ve taken on each responsibility gracefully and handled it beautifully. There’s nothing you cannot do. Thank you for helping so many. Jeff, from the first time I met you you’ve been surprising me. I wasn’t quite sure when you first came on board how you would fit in; now, you bring so much to our company. Thank you for helping us rebrand and make decisions based on analytics. Scott, your positive outlook and desire to pursue opportunities inspires me. Thank you for helping so many students. Lynnsie, you have taken this company to a new level. The hard work you’ve put in establishing an amazing design program is helping so many people achieve their licensing success. Thank you for your dedication. James, back in the day when things were a little tight, I told Janice: “Whatever we do, we have to keep James.” Thank you for being with me for over 20 years. You’re probably one of the most talented people I know, and you ask for very little. There isn’t anything you cannot tackle and do. You’ve seen me at my worst and at my best. Please keep those secret. Courtney, you embrace the passion and dedication to this industry I have felt my entire career. Thank you for helping the next generation of inventors. Don’t ever change. Megan, I cannot thank you enough for being part of our team. You make things run extremely smoothly! Your attention to detail is amazing! Thank you for making me look good. Eli, thank you very much for joining our team. You have made a big difference in a very short period of time. Your enthusiasm is inspiring. Gene Quinn, looking back years ago we didn’t get off on the right foot. But I’m so happy to have your support and friendship now. You are truly one of the individuals on a white horse helping our inventing community. Thank you for everything. Benjamin Harrison, thank you for being such a good friend. You’re a great sounding board. Your support is amazing. I also want to thank our inventing community for all your support throughout the years. It brings me great joy when I’m on the road meeting you. Your enthusiasm makes me feel absolutely amazing.

John Lee, you surprise me all the time. Your talents are limitless. Thank you for stepping up and helping me write this book. You were truly

fearless! I am looking forward to seeing all of your accomplishments in your career.

FOREWORD Why I Wrote This Book

few years ago, while travelling with my wife Janice to speak at an inventor’s organization in Texas, I had the opportunity to interview Alex Lee, then-president of OXO. OXO is a leading player in the kitchen products industry, with more than 1,000 products on the market and numerous design awards. the company also has a long history of embracing open innovation, primarily working with design firms and inventors to find and develop its products. My wife and I were sitting in the car in a McDonald’s parking lot while I conducted the interview on my phone. There is one thing that really stands out in my mind about this interview. Alex shared with me that if it were up to the corporate attorneys at OXO, the company would never look at another outside product submission again. Their concern was that outside submissions opened the door for legal exposure. (Isn’t it great to know that while we worry about companies stealing our ideas, they worry about inventors suing them?) Alex said he would continue accepting product ideas, even as he lamented: “It’s a bit like going to a flea market. You see hundreds of items and only once in a while is there something worth looking at again.” Immediately intrigued, I wondered why that was. Why were so many submissions to OXO failing to meet the mark? What was going on? In fact, I couldn’t stop thinking about it. Years later, I discovered that this was a hardly an issue exclusive to OXO.

A

Let me explain. In 2017, I cofounded an organization called Inventors Groups of America (IGA) with my longtime business partner Andrew Krauss. Our goal is to educate inventors and provide free resources to help the inventing community. In one of our newsletters, we introduced our members to an open-innovation kitchen novelty product company called Fred (formerly Fred and Friends.) We included a link to submit products to the company in the email and within 24 hours, our contact there had received more than 100 product submissions — all of which were terrible , he told us. Please, he asked, do not share this link with your community again. Shut down the submissions. Delete the newsletter. How were the submissions terrible? Well, the ideas weren’t new or novel, for one: They could be found on the market after searching on Google for less than five minutes. How else were they terrible? Well, most weren’t a good fit. People had submitted toys, hardware, and pet products — to a novelty products company! The company’s time had been wasted, in other words. When a door like that closes, everyone loses. Most inventors believe that if they just knew who to contact inside of a company, they could land a licensing deal. Inventors believe it’s about access. It’s not. It’s about approaching this the right way. Which requires doing your homework, building relationships, and submitting products correctly. It’s about being more professional. These stories illustrate why I was motivated to write another book about licensing. As I hope many of you know, this is not my first book. Each time I have written a book, I have promised my readers that I will “give it all away.” What I mean by that is, I do not withhold information in my possession to try to get you to buy something else. I give you access to everything I know on a certain topic at the time I write the book. So, if you’ve read One Simple Idea: How to Turn Your Ideas into a Licensing Goldmine or Sell Your Ideas With or without a Patent you might be wondering, what else is

there to say? What else can I learn about product licensing and how to profit from my creativity? A lot! One Simple Idea provided readers with a basic outline of the 10-step process I developed to license product ideas. I’m very proud it has helped a lot of people do just that! But there are many more people who are still failing to license their products, and it’s not because they have a bad idea. Rather, I’m convinced it’s because they don’t really understand how product development and licensing works, both in terms of how to navigate the submission process as well as what’s actually going on inside companies reviewing their product. It has become clear to me that additional information and guidance is needed. And that’s why I wrote this book: To peel back the curtain on open innovation, independent inventors, and licensing. To give you an insider’s guide. To update you on the very latest trends and best practices within the industry. Since One Simple Idea and Sell Your Ideas were published, much has changed. I have learned a great deal more than I knew then. Those books largely focused on my own experiences as a product developer. I have now consulted with and helped thousands of other people license their ideas in industries that were unfamiliar to me. After interviewing a great number of highly successful inventors, I have a firmer grasp on what they all share in common. Perhaps even more importantly, I’ve taken the time to approach many companies that embrace independent inventors to ask them directly: What are you looking for in terms of your relationship with inventors? How do you want inventors to work with you? What should inventors do and not do? Through my columns for online magazine news platforms including Forbes , Inc., and Entrepreneur , I have been able to access decision-makers at leading companies across 17 industries. These industries include: Toy and game, hardware, beauty and health, pet, cannabis, juvenile and baby,

dental, novelty gift, As Seen on TV, hospitality, sports medicine, music, kitchen, automotive, golf, organization, and packaging. The 28 experts I have interviewed at these companies have been very candid about their experiences with inventors. I have included quotes from these industry insiders as well as others that illuminate and support my statements throughout the book. In Chapter 14, you will find longer interviews with each of these 28 insiders. So, you are not just getting my opinion after years of experience, you are getting the scoop from people on the inside and behind the scenes of the consumer product licensing industry. You possibly know that, together with my longtime business partner Andrew Krauss, I run a company called inventRight. We coach inventors on how to license their ideas, helping them through every step of the process. These days, we see a signed licensing agreement once a week on average. On our YouTube channel inventRightTV, we publish new videos about inventing and licensing weekly. Working behind the scenes helping our students get the best deals possible has exposed us to a lot of information and insight that is not readily available to others. Our students have licensed their ideas in practically every industry imaginable. I have seen the good, the bad, and the ugly about licensing. I know what you should do and what you should NOT do! Many of your product submissions are not going to the right companies. Many of your product submissions are not going to the right people. Many of you are not developing relationships with companies, or you are asking for things that are unreasonable, or pushing for the process to go too fast. If you really understood what’s going on, I think some of these problems could be eliminated. My goal in writing this book is to help you transition from an amateur inventor to a professional inventor. To do that, I am going to share everything I’ve learned — not only from my own experiences as well as my students, but also from the folks inside companies who are in the business of accepting or rejecting your product submissions. It’s all here. Your very own insider’s guide to the consumer product licensing industry.

Keep reading.

INTRODUCTION What You Will Learn From This Book!

ou are going to learn how to submit your ideas for products the right way! You are going to learn how to be professional at the licensing game. Here are just a few of the things you will walk away having learned from this book. The most important thing you will learn is how to build strong relationships with the companies you want to invent for, aka potential licensees. Most likely, this company will reject your first product submission. Maybe even your second, third, and fourth. But, if you take the time to develop a relationship with that company, you may be able to become an asset. You may find that the company begins to ask you to create in a certain category in which they need new products. To be successful at licensing, you need to be seen as an asset and not a liability. You do NOT want to be perceived as an amateur inventor. Both companies and inventors have told me just how important these relationships are.

Y

“In this business it’s all about relationships. Know how and know who.” — Richard Levy, toy inventor with over 100 licensed toy ideas, including selling 75 million Furbies from Hasbro. “95% of what we deal with in terms of new products comes through personal relationships.” — Ben Dermer, Senior VP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America.

You will learn how to tell if a company is inventor-friendly or not. I will teach you how to read and assess submission agreements (which are required by most companies) so you can determine whether you should sign it and move forward. There are companies that say they want to review your ideas, but truthfully? They do not. They are not genuinely interested in working with inventors and the benefits of open innovation. Before submitting your invention, it’s important to read through the language on these agreements very carefully. There are other red flags to watch out for that I will point out. Sometimes there are “red flags” on company websites or that pop-up in conversation with a company – and I will teach you to watch for those signs. You will also learn how to determine which companies to submit your ideas to. I have already mentioned the horror stories of people submitting pet products to a kitchen goods company — and while that seems obvious, it still happens a lot. But there are other, less obvious, reasons why you might select certain companies over others for your product submission. “We don’t want to discourage people from sending in their items. But with that being said if they did their homework first and had their checklist to see what else is out there, we would have more qualified items.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. How to answer the questions you receive from companies. Oftentimes, inventors are so excited when they receive a positive response from a company that they start giving away all kinds of information too soon. Just because a company makes a request doesn’t mean you have to supply it right then and there — but of course, there are many questions that you do need to answer to keep your project moving forward. You don’t want the company to get frustrated and walk away. How to reevaluate and redesign your initial submission. Is no one getting back to you? Are you only receiving negative responses? I explain how to resubmit, tweak, and redesign your product submissions. This is an essential component of becoming successful at licensing. Rarely does anyone knock it out of the park on their first try.

“Typically, with our top inventors we give them live feedback on their idea and they say ‘Hey look, let me shape it a bit more and come back and re-present it’. Inventors who have the capability of taking an early idea and altering it to meet the needs of our business have a very high likelihood of that item going in the line and being produced.” — Brian Chapman, President and Head of Global Design and Development at Hasbro, the world’s largest toy company by revenue. “We typically can spot flaws — fatal flaws in either the marketing strategy or the execution. And if the inventor could be objective and just listen, then they can learn from that and hone their product to the point where it is more sellable.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. How to follow up with companies correctly. Unless you have been doing this for a long time, you probably don’t know what’s going on behind the scenes at a company after you submit your product. When and how do you follow up? How long do you wait? What’s the best way of asking questions? I help you navigate the dreaded black hole. The right way to make use of Non-Disclosure Agreements (NDAs). The re’s a lot of confusion about the benefits of NDAs. Sometimes, inventors ask for an NDA to be signed upfront. Sometimes, companies do. In my experience, it’s often better to wait until further along in the process. I will give you the information you need to sign an NDA at the right time.

“We always encourage inventors to sign the NDA because it protects the inventor and we don’t want to be liable or responsible for any sort of miscommunication in any way.” — Olyvia Pronin, Marketing Director at Wham- O-Toys, which has created and marketed many of most popular toys of the last 70 years. How to create strong marketing material. You do not have to submit a prototype of your product at first. You can and should use simple but powerful marketing tools such as sell sheets and one-minute videos to communicate the benefits of your product clearly. Powerful marketing materials can make the difference between a company loving your idea,

rejecting it, or not even bothering to review it. Frankly, if your sell sheet isn’t done correctly, they won’t look at it. “Make sure that you convey your idea to the point that anyone can understand it! It’s not about how fancy your sell sheet looks – it’s about how clearly you convey the idea. that’s the biggest thing.” — Atul H. Patel, former product manager with 15 years of experience at Bosch, GM, and Daimler, some of the largest automotive companies in the world. Which industries have the best revenue opportunities. I have analyzed the major industries that license consumer product ideas and do the math for you. Like I’ve always said, licensing is fundamentally a numbers game. This will help you make better choices about where to focus your creativity. In some, the opportunity is huge! this book is intended to help all of us — the inventing community — do a better job submitting products to companies. When we do a better job of submitting, we improve the chances of licensing our ideas, which in turn improves our chances of profiting from our creativity. Before we get started, I also want to explain what this book is not. One thing I have learned being a professional creative making money from my creativity is this: Sometimes I was just a designer and sometimes I had actually invented something. You can make money from your creativity regardless of what you call what you make, be it inventions, ideas, artwork, concepts — you name it. So don’t let the word “inventor” scare you. I think all of us can be inventive. Most of my ideas were not inventions. And my biggest idea? The one that produced the most revenue/royalty for me? That was an invention… invented by someone else long before me! Actually, it was a just a concept in a patent. I figured out how to manufacture and then license it. I guess basically what I’m saying is you can make a living from being creative with your ideas. It has nothing to do with what they’re called or if they even can be protected. (In fact, throughout the book, I use the words inventor and product developer interchangeably. It makes no difference what you call yourself. In the past, we advised inventRight students to refer

to themselves as product developers. These days, the term “inventor” is actually quite popular.) There are many, many books and resources about topics like building prototypes. This is not what this book is about, or many of the things people like to focus on when it comes to inventions. Because all it takes today is to be inventive . this book is about how to become a professional at creating ideas that generate revenue. But that’s not as sexy as the phrase “become a professional inventor.” Everyone can identify with that. At the end of the day, regardless of what industry you’re inventing for, there are things in common when it comes to licensing and collecting royalties from your creativity. You need a point of difference, and you need to present it well. Your value proposition or one-line benefit statement needs to be clear and concise. Building relationships is crucial. In the end it’s who you know and who knows you. They don’t care what you’ve done in the past. They only care about what you’re showing them today.

Selling the benefit first is always paramount. Sometimes a prototype will be required. But don’t forget, you can fake proof of concept to get interest. Try to act normal and be rational. Act like an asset in other words. Don’t embarrass the person who’s going to champion your idea within the company. You need to be prepared to answer the questions these companies are going to ask you. Invest in an industry and it will invest in you. Don’t jump around. Stop worrying about protecting your ideas. Be smart and focus on selling instead. Understand how the game has changed and use the tools needed to give yourself perceived ownership. As Andrew always likes to say, keep inventing!

PART ONE Open Innovation is More Popular Than Ever.

1. COMPANIES ARE LOOKING FOR YOUR IDEAS! need us. They need our ideas. Let me say that again! C ompanies Companies need us – in fact they need YOU. Now, you may wonder, “How is that possible? Why would a company need me? They have teams of experts in product development, engineering, and marketing. Why would they look to independent inventors for anything?” When I asked Mary Couzin – toy inventor and founder of ChiTAG, the largest toy and game conference for inventors in the world – why inventors are important to toy companies with inhouse designers, this is what she said. “Because all of the biggest brands and hits came from outside inventors! Nerf, Twister, Jenga – you name it. It’s not that inhouse designers aren’t good, it’s just that inventors have ‘outside the box’ ideas.” Companies have opened their doors so that creative people around the world can submit ideas to them for free. Yes, for free! It’s called open innovation and it’s growing by leaps and bounds! Companies in every industry are opening their doors and looking for new product ideas. Toys, hardware, kitchen tools, automotive accessories, medical technologies, packaging, and fitness are just a few of the many industries that have

embraced open innovation. Companies in these industries want to see your ideas for new products. To be fair, the toy industry has been in the open innovation game for a long time. Some of the world’s best-known toys and games were licensed from individual inventors including the Frisbee, Hula Hoop, Furby, Rubik’s Cube, Phase 10, Super Soaker, Teddy Ruxpin, and Bunch-o-Balloons. Because products from inventors have proven to be so profitable, toy companies have built online submission portals and created teams of people within their companies to review and handle outside product submissions. It’s fair to say that the toy industry is a bit further along than others in the way it deals with inventors. But other industries are catching up! Research has proven that all companies – no matter the industry – that have embraced open innovation are outcompeting their competitors by coming out with more and better products more quickly. It's no surprise, then, that open innovation is reportedly outpacing all other methods of product development. It’s a great time to be an inventor. “It seems increasingly likely that products and services resulting from the creative behavior of ordinary individuals may not only become more prevalent than those coming from experts or geniuses in particular domains, it many actually become the most important source of creative breakthroughs.” — Harvard Business School professor Teresa Amabile in her working paper “In Pursuit of Everyday Creativity.” Companies have realized that good ideas can be developed outside their walls. Smart companies realize that allowing independent inventors, like you and me, to submit product ideas gives them access to more ideas than their own employees could ever come up with!

Toy and Game Industry “Every year we are constantly looking for new products. And so much like the film industry relying on writers, the toy industry needs inventors to come up with concepts. So, we spend quite a bit of time and invest quite a bit in that relationship.” — Ben Dermer, SVP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America. Hardware Industry "We love to work with inventors because they are passionate about their ideas. They usually have real-life experience with them. The only thing left for us to do is flesh out the business aspect, and that's what we help with." — Corey Talbot, VP Marketing and Product Development at Hyde Tools, which sells more than 1,200 products. Health and Beauty Industry “As a company, we’re thankful that people give us a chance to consider their ideas. And we treat everyone with a lot of respect so that we have a good reputation and we’re trustworthy as a business partner.” — Lawrence Cruz, Chief Patent Counsel at Conair, the $2 billiondollar maker of small appliances, personal care products, and travel accessories. Pet Industry “We are an innovative group, we love design, we love invention, we love newness. We encourage all inventors to come see us – we always have a place to look for new products and to expand our horizons.” — Charlie George, Finance and Operations, Petrageous Designs Cannabis Industry “I’ve always thought that working with inventors would bring some fresh perspective, and, so far, it has. GPA prides itself on working closely with its clients to help make their products better. To get that secondary perspective on what the market needs as well? In my opinion, that’s invaluable.” — Jonas Matossian, Director of Strategic Development for the new cannabis sector of GPA, a global packaging firm. Juvenile and Baby Industry

“There was an inventor group that came to us seven or eight years ago with the concept of a food-maker that automatically steams and blends baby food. They had not developed the whole product; so, we took the concept, we developed the product behind it, and then launched it. That’s how our brand Baby Brezza got its start. Now we’re the leading brand of baby food makers.” — David Contract, Head of Marketing for the Betesh Group, owner of several of the most popular baby brands in the United States. Dental Industry “The smaller and midsize companies are hungrier and more likely to embrace niche items. For us, these kinds of items are a win-win. And since we have less market size, we’re hungrier, there’s less red tape, and so it’s easier to get things done and we’re more likely to jump on something new.” — Mike Parlante, Director of Business Development at DynaFlex, provider of orthodontic supplies. As Seen on TV “We love inventors, we want new products and we want you to bring your new ideas to us. We will help you bring your new idea to market. You’ll get to see the final product on store shelves and there’s nothing better than this type of success.” — Teresa Sinapi, Director of Brand Marketing at Allstar Innovations, the maker of hit products including the Snuggie. Hospitality Industry “There is a constant need for products that are more efficient, more affordable, and can provide benefits in terms of cost savings and that are environmentally sound. We are constantly looking for products and innovations in those areas. We are looking for simple things.” — David Middleberg, Director of Global Sourcing Star Linen USA and Star Linen UK Music “People on the outside visit our R&D department. There’s stuff we’re working on right now that came from the outside that we’re really excited about; it hasn’t been released publicly yet.” — Justin Norvell, EVP of Product at Fender Kitchen Industry

“I cannot emphasize enough how important innovation is and to bring us things that have not been seen before. Bring a steady flow of things that have not been seen before.” — Brendan Bauer, Cofounder Grand Fusion Housewares Automotive Industry “We want to grow our share of the market through the selling of innovative and different products. I feel, from experience, that there are probably an awful lot of ideas out there being dreamed up by people that belong in the marketplace. They’ve identified a problem they are having, they are scratching an itch to an extent, and we would like to be the recipient or given the opportunity to review a lot of these ideas.” — Luke Berry, Head of Innovation at Halfords Group, a UK and Ireland-based automotive retailer with 450 outlets and 350 repair centers Organization Industry “I love working with inventors. I mean that’s how I got started: With one product, one idea. I have a very soft spot for people starting off with one niche idea or one good idea. Really all it takes is one idea to get someone to follow what they love to do and make new products that help people.” — Jeff Gawronski, Founder of Dorm Company Corporation

If a company likes your idea enough it will license it from you. Licensing is a brilliant way to be rewarded for your innovation without having to start your own business. Sometimes people refer to licensing as “pay as you go,” because companies only pay you if your product idea sells. You collect a royalty on every item they sell. Essentially, you are renting your idea to the company. You still own it, but they are using it and paying you in return. Companies will rarely buy your ideas outright even if you have a patent. They would rather “pay as you go” because there’s far less risk. You’re providing ideas without costing the company large sums upfront and that’s why companies love this arrangement.

Companies today know that most products have a very short lifespan and so in order to stay competitive, they need to keep coming out with new ones. A company might have 10 inhouse designers on full time salaries, but if they open their doors to independent inventors, they could have countless more product ideas. It’s about being competitive by harnessing more creativity. And we’re in an age of open innovation not only because companies want more ideas, but also because companies want better ideas! Inhouse designers don’t always produce the best work for the companies they work for. Early in my career I had the opportunity to observe and work with inhouse designers on multiple occasions at different companies. I was surprised to realize that most of these inhouse designers weren’t particularly happy. They often worked on projects they’re weren’t excited about and rarely got the recognition they deserved. Designers and inventors create out of love of creation. There’s something magical about seeing an idea of yours come to life! I can tell you from experience, it’s a deeply gratifying feeling and it has little to do with money. Years ago, Disney connected me with a juice manufacturer to create a new product called Twist N Chill utilizing my Spinformation rotating label. My rotating label uses two labels and allows a consumer to see more information on a bottle by twisting the outer label. That additional space could be used to tell a story, and I was told by one of the top executives at Disney it was a perfect fit because they’re storytellers. Disney brought in three of their inhouse designers for our first creative meeting at their corporate headquarters in Southern California. I couldn’t believe it; I was at Disney working with their great designers. So, I was very surprised when I learned that the marketing manager for the project ultimately decided not to use their inhouse designers. They opted to hire me and another outside designer to do all the creative work for this project instead.

Why me? Looking back, I remember observing the faces of the three inhouse designers in our meeting and they didn’t seem to be particularly

excited about working on this project. For them it was just another task on a list that was probably a mile long. There was no enthusiasm whatsoever. On the other hand, I was very excited about the product and I am sure that it showed. It was more than a job for me. I wanted to see my Spinformation idea on store shelves. It was my idea and I passionately wanted to see it on the market where it would generate royalties for me. The marketing manager knew that working with fellow employees was going to require motivating them, whereas she could see the excitement on my face. It was a smart move on her part because she knew I would work extremely hard for her. I learned that independent product developers, in general, are more motivated than inhouse designers. Inhouse designers create ideas for their companies while on the clock. They punch out at 5 pm. Independent inventors like you and me think about our creations seven days a week. We never stop thinking about our ideas. We drive our spouses nuts talking about our ideas – trust me, I get it. Early in my career I started submitting my ideas to a novelty company called Applause. Even though they rejected my ideas, I built a strong relationship with Leslie Gross, Director of New Product Submissions. I was surprised when she started asking me to design products. They had a huge appetite for new ideas for every holiday and I quickly proved to them that I was able to come up with a lot of ideas. Soon enough, they started licensing ideas from me! I wondered why they were working with me until the day I got to visit their headquarters and meet their inhouse designers. All the designers were in the same room sitting at their respective desks. They looked very young and not particularly enthused. Their work was clearly just a job, nothing more. And here I was so enthusiastic to see my creations come alive! It made so much sense. I was motivated and they knew it. My phone never stopped ringing for new ideas even after I got out of that particular industry. I learned that I could “out design” inhouse designers. I could leverage a company’s manufacturing and distribution power to bring my ideas to market without struggling to start my own business. More and more companies are embracing licensing. Small companies to large corporations have realized the benefits of working with outside product developers like us. Companies are fantastic at things like

marketing, manufacturing, and advertisement, but creativity is something else. Innovation is not a science, it’s an art. Companies constantly struggle to innovate, so they have opened their doors to work with creative people like you and me. It’s a perfect situation for us. Let someone else do the heavy lifting of running a company. You can be an idea factory and profit from your creativity! “We have found that working with inventors who are properly screened and who have been briefed upfront about the process and expectations can actually increase speed to market and cut down on development costs.” — Corey Talbot, VP Marketing and Product Development at Hyde Tools, which sells more than 1,200 products. I know this works for lots of people because my coaching program called inventRight helps inventors bring their ideas to market and teaches them to become professionals. And while I’ve seen many successes, sadly, I’ve also seen countless failures. Our students have the highest rate of licensing success in the industry because of our coaching and membership materials. They ask me, “Stephen, we love inventing. How can we do this fulltime?” I asked myself the same question many years ago because I loved being creative, I didn’t want to have a boss, and I wanted to share my creativity with the world. ftat’s a big reason why I decided to write this book. I want to help you do this the right way. As independent product developers, we need to make sure we are assets to companies, not liabilities. We want to keep the doors of open innovation open! So, this book is about providing you with proven, successful strategies to win at the invention submission game and become a professional inventor. But first, let me spend a bit more time explaining how and why licensing is a perfect business model for us creative types.

2. LICENSING: THE NEW BUSINESS MODEL those of you who are already familiar with licensing as a business F ormodel – you can probably skip this chapter. But there may be folks for whom this concept is relatively new, so I wanted to include this material. Who doesn’t have an idea? Just about everyone on this planet at one time or another has had an idea for a product. But, and here’s the kicker, what are you going to do with it? In my opinion, this is where everyone gets confused. Most people think if you have a great idea the first thing you need to do is protect it. If you ask your friends and family, they will say, “You’d better get a patent on that!” Ask a patent attorney and they will likely tell you the same thing. “Hey that’s a pretty good invention, you better protect it!” If you think about it, that makes sense because that’s what patent attorneys do for a living: Protect ideas. Their legal mind has been trained to protect ideas regardless of whether they’re marketable or not. But many patent attorneys don’t realize that patents are not necessarily required to license ideas today. And of course, it may not be in their best interest to tell you that 97% of all patents never recoup the money spent to file them. Then again, there are many patent attorneys and patent agents who do have your best interests in mind. It’s not their job to tell you to do your homework. It’s not their job to determine if you have a marketable idea. Their job is to protect your intellectual property. When you need a patent attorney, they’re invaluable. It’s up to you to determine when you do.

Maybe you’ve watched reruns of the hit reality television show Shark Tank . Every time you hear a pitch, one of the sharks asks, “Do you have a patent on that?” Even the sharks would like to have “ownership” of a product through intellectual property protection. But then again, who wouldn’t? The truth is, ownership is nearly impossible today given our current patent laws and the lightning-fast pace of the retail environment. Perhaps you think that you need to start a company to bring your ideas to market. Maybe you’ve even gone down to the small business association to help you learn about starting a business from mentors. Most of these mentors are older and have been bringing products to market the traditional way for years. Maybe you joined your local inventors’ group and have been exposed to industrial design firms that offer services such as expensive prototypes or patent attorneys who sell protection. The traditional business model of starting a business to bring a product to market has been taught in all the major universities for years. Startups have become the latest craze whereas in reality very, very few become successful. The success rate of starting a new business has and always will be extremely low. It costs an incredible amount of time and money to build a successful company. And frankly, if you are successful at starting a business, it will be copied. Today, it’s all about speed to market. The traditional method of starting a product business requires that you write a business plan, raise money, manufacture, advertise, figure out distribution, hire people, file taxes, and a host of other tasks. Truthfully? Most of us do not have the desire, knowledge, skills, or money to start a business. I speak from experience because I once started a small company designing and selling guitar picks. It was a great learning experience and I have written about it in One Simple Idea for Startups and Entrepreneurs . I sold that company because it required too much of my time and energy and there were so many things involved that I wasn’t good at! It was profitable for me and my partner but it was also just too much work! “I did not realize the amount of capital required; I am still a believer of venturing at different times but I’m much smarter about understanding cash flow management than I was before I had this experience. We sold millions of dollars of SportShade. There was one point where we were $300,000- $500,000 in debt and we had been debt free prior to that. We are debt free people

– so it was a very painful lesson learned. It turned out to be a good product for us and we eventually got on top of it, but it was like crawling out of a manhole.” — Carrie Jeske, Inventor, President of Inventive Ideas, and Principal Consultant with As Seen on TV company Will It Launch My point is, there are many people who might try to sell you on the traditional path to commercialize your product idea. There’s an entire industry that has been built on selling services to help you start a business. And guess what? These services can be very expensive. If you are creative and have lots of product ideas, this traditional path is just not a great option for one obvious reason: There’s no way the average person can start a business for every one of their ideas. “It’s really an amazing risk-free opportunity for an inventor when it comes to licensing. A successful company in the DRTV industry nets about 10% profit after all expenses including salaries, advertising, manufacturing, inventory, fulfillment etc. Typically, an inventor is offered between a 3-5% royalty. That means an inventor is getting 30-50% of the company’s profit without having taken a risk at all! Why would you start your own business?” — Michael Weinstein, President of Digital at Bluewater Media and former Chief Marketing Officer for Allstar Innovations Most people and many organizations that advise inventors haven’t ever actually done this themselves. They don’t really have current information. The “traditional” business model of getting a patent and then starting a business never worked for everyone, even in its best day. I cannot tell you how many inventors I have met who have expensive prototypes and patents that they have not able to commercialize. You can spend tens of thousands of dollars and go nowhere. It’s very unfortunate. How many small startups end up with inventory they can’t sell and are in debt? “It’s almost always preferable to find someone who will license your idea. Do as I say, not as I did. I started my company from scratch, raised a lot of venture capital, hired marketing folks, and got into manufacturing. As an inventor, I would have been better off trying to license my technology.”

— Congressman Thomas Massie (R-KY). His startup never went public or was wildly successful, as he pointed out. So, my approach is to change it up! Flip the script! Don’t use the traditional business model. Don’t build prototypes, file expensive patents, or even start a business. Bring your product to market through licensing instead. I’ve built my whole career around licensing and have been teaching others about it for the past 20 years.

In today's market, do patents even matter? The reality is that patents aren’t as important as they used to be. Now don’t get me wrong. Patents can be very helpful if you have a large and/or complex idea that’s going to require significant time and money. For such ideas, you’re going to need ample capital, a great team, and a “wall” of patents, trademarks, and copyrights. These types of product ideas are usually in industries such as packaging, pharmaceuticals, automotive, and medical. Think about the time and money it takes to develop and bring a new drug to market – that needs a patent. Or what about making a change to an automobile? Think about the time and money involved to change the manufacturing equipment! That needs a patent. For most products though, because of their short lifespans in the marketplace, a patent is not needed. Why spend the effort to get a patent when there’s little guarantee that you’ll recoup the cost? “There are many products that the life of the product is shorter than the time it takes to examine and issue a patent.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. Most inventors can get by utilizing a well-written provisional patent application (PPA). This is something that is filed with the United States Patent & Trademark Office (USPTO) prior to submitting your product to companies. It’s affordable, creates what I call “perceived ownership,” and provides an inventor time to determine whether their idea is marketable. It also gives the inventor and/or the company that licenses the invention the option to file for a patent later on. Companies, like people, like options. Another reason why patents have less value for most consumer products is that it’s nearly impossible to stop copycats and infringers today. It’s sad but you see them pop up every day. I believe that retailers, especially Amazon, accept copycats as a way of life because Amazon is going to make money regardless of whether you buy the original or the copy. If Apple, with thousands of patents covering the iPhone, can’t stop copycats, why do we think we can? Sadly, new patent laws make it even more difficult to defend your patents. And, even before those new patent laws took effect, defending your

patents always took a lot of time and money. What do I mean by a lot of money? I mean a couple of million dollars! Do you have that type of money? Do you want that type of headache? “Even with all the patent protection in the world it’s almost impossible to protect things. If Apple cannot successfully protect the iPhone, what chance do the rest of us have really?” — Sam Hurt, Cofounder SUCK UK (Novelty gifts) Today’s business environment is not like it used to be. These days, companies realize it’s not as much about protection as it is about selling! Sure, many people think that it would be wise to own an idea – to have a monopoly on a product. But really, it doesn’t matter. You don’t need a traditional, expensive utility patent, but you do need something I call “perceived ownership.” If you’re going to license an idea, you need to establish that the idea is yours and not someone else’s. This will allow you to get paid for your idea. The good news is, you can create perceived ownership in a number of ways and without a patent. The new business model is: Create perceived ownership of your ideas and license them to companies that are already in business. Established companies already have manufacturing, distribution, shelf space, marketing, and sales. What they don’t have is a fresh supply of new product ideas. You can provide them with that! Companies need new product ideas to stay competitive and that’s why they love us independent inventors.

However, and this is an important point that I need to make to you, not all companies want to work with inventors because some of us are unrealistic, unreasonable, and quite simply a pain in the butt. There – I said it! Most inventors are “creative types” who don’t know how to act like professional product developers. Inventors are often too emotional or demanding when working with potential licensees. I call them highmaintenance inventors. If an inventor wastes a potential licensee’s time, the company can become frustrated and close its doors. That is not good for any of us! It takes time and money for a company to review product submissions from the outside. If a company sees too many poor ideas or deals with too many high-maintenance inventors, they will stop taking outside product submissions. I have experienced this firsthand. I have seen companies that are initially open to independent inventors close their doors after being flooded with ideas that are clearly not fit for their business. It’s a waste of

their time and money to review ideas that should never have been submitted in the first place. “Do your homework! Don’t re-present the wheel and say it’s new. Be respectful of the executive’s time.” — Richard Levy, toy inventor with over 100 licensed toy ideas, including selling 75 million Furbies from Hasbro. One of the main reasons I wrote this book is to stop this from happening! We want open innovation companies to keep their doors open! I will show you how to become an asset to companies and increase your chances of success with the licensing model. You will learn how to build strong, long-lasting relationships with these companies and leverage their strength in the marketplace to help you become successful. My philosophy is fairly simple. Sell the benefits of your idea before you do anything else. Do not file expensive patents, build prototypes, or start a business until you determine that your idea is marketable. I cannot emphasize this enough! If your product idea is not marketable, there’s no reason to commit the time and money involved in these other steps. You don’t need a prototype sitting on your shelf or a patent hanging on your wall if there’s no market for your idea! In today’s business environment, licensing is one of the fastest ways to bring your ideas to market. For us creative people, the goal is to be an idea factory! You should come up with lots of ideas and reach out to inventor-friendly companies using great, affordable marketing materials that introduce and explain your idea. You don’t have to spend a lot of money on any of your ideas! By using licensing to bring your idea to market, there is very little financial risk. You can come up with products anywhere and anytime. You don’t have to live in one particular place – you can do this part-time and enjoy other things in life! “I cannot believe how helpful you guys have been (at inventRight). You are teaching people how to do things the right way. When I first started out, I was venturing – I was making and selling my own product – and I had to raise about $250,000 which all came from friends and family! Licensing is a much, much easier path!” — Carrie Jeske, Inventor, President of Inventive Ideas, and Principal Consultant with As Seen on TV company Will It Launch

I’ve seen too many inventors fall victim to fear – fear that their idea will be stolen or that they don’t have the knowledge or funds to bring their idea to market. Don’t let fear keep you from trying! If you don’t try you can never succeed. My goal is to help you understand more about the consumer product licensing industry so you can be your own boss and achieve licensing success. For the first time ever I’m going to peel back the curtain and give you an insider’s guide to how companies evaluate your product submissions. I’ll teach you how to be an asset to these companies so you can go from amateur inventor to professional product developer.

Seeing my product ideas in the world – on television, on store shelves, and in people’s hands – is one of the greatest experiences I’ve ever had. I want you to have it too.

LICENSING VERSUS VENTURING Inventor: Michael Van Horst Product Licensed: Push & Hang by Hangman Products Background: Michael noticed that many people struggle to hammer two level nails to hang a large picture frame and had a great idea for a product that would help. Like many inventors, he was very excited about his idea, so he hired an attorney and filed for a patent. Michael looked into finding a manufacturer in China. He even started marketing his product on his own, but the venture quickly became overwhelming. After becoming an inventRight student, Michael successfully licensed his product, which is now in major stores including Ace Hardware throughout the country. He says that he would have saved a considerable amount of time and money if he learned about the licensing model earlier. Stephen: Describe your experience getting started with the Push & Hang. Michael: I was excited! I was going a thousand miles an hour and I let my emotions drive me. My emotions almost broke me financially. I went out and got a patent. I hired an attorney. I had a video made. I went crazy for a little while. I went through the gamut of trying to figure it out myself, trying to go to China myself. I didn’t know anyone. I was going to give up like most people do. I was going to throw this thing on the closet shelf twice in two and a half years. But I believed in the product, I knew it was going to make a difference, and I stuck with it. Stephen: What did you learn from that experience? Why licensing?

Michael: The number one thing I had to learn was who to trust – who to trust and talk to along the way. Once you have a product that might make it, everyone wants a piece of you. But they’re not really there to help you, they just want a piece of your company. When I started checking out China, I couldn’t get the price point low enough. And that was my biggest deterrent. With licensing, going through a company that’s done it many times before, we beat my cost in China by two thirds. And now I have a successful product on the market! Watch my interviews with Michael before and after his product launched on my YouTube channel inventRightTV.

PART TWO Understanding Companies Looking for Ideas

3. BEHIND THE SCENES OF THE INVENTION SUBMISSION PROCESS I share with you the right way to approach licensing your idea, I B efore want to pull back the curtain just a little bit. I want to explain to you how the invention submission process works and what’s really going on inside of a company after you submit your idea. I am hoping that this information will help you realize why the steps that I outline later in the book make sense! Okay, here’s the scenario: You came up with a great product and you submitted it to a company that’s looking for ideas. Maybe you reached out to the company on LinkedIn, perhaps you found an invention submission portal on their website. We will talk about all of those methods of getting in later. You think it’s a great idea, but you don’t hear back. Communication goes silent. You wonder, “Did they receive it? Did I get to the right person? Are they going to copy my idea?” Everything is racing through your mind. Before you know it, weeks go by and you’re panicked. I’ve seen this scenario play out more times than I can count. I call it “the dreaded black hole.” Your product has slipped into a dark mysterious place and you have no idea what could possibly be going on – and so you imagine the worst. What should you do? “Our product sources mean everything to us and we have a very organized formulaic process internally for looking at hundreds of

products. We try our very best to get back to everyone in a timely manner. Sometimes we do, sometimes we don’t.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. First, let’s talk about what is likely happening behind the scenes. The invention submission process I think most companies are very poor at working with inventors. There are a few companies that have been accepting invention submissions for years that have a process in place that’s easy to understand. But these companies represent a small minority and even if you’re working with one of these inventor-friendly companies, you still need to understand what’s happening behind the scenes. You must realize that your idea is not the most important thing at this moment to these companies. They’re extremely busy selling their existing product lines, filling orders, taking care of customer service problems, fixing manufacturing issues, advertising, social media – the list goes on and on. It takes a lot to run a successful company and there are fires to put out every day. New product development is not always on the top of the list. Yes, creativity is extremely important to be competitive in the long run, but in the day to day operations of a company, new ideas are most likely not the top priority. “Product development managers constantly have to put out fires with product, quality control or any number of other issues they are responsible for… they are often forced by management to prioritize other projects. That takes time away from inventions.” — Atul H. Patel, former product manager with 15 years of experience at Bosch, GM, and Daimler, some of the largest automotive companies in the world. Now, for a brief moment, let me step to the side and talk about the toy industry. As I mentioned before, this industry relies heavily on inventors and has been practicing open innovation for a very long time. Toy companies tend to have very well-defined processes set up to review your product. The process is typically documented on their online submission portal. They will get back to you more quickly than what I am about to describe. New products are their lifeblood.

“The toy industry is a fashion business. There is always lots of change. Every year there are new products on the market, so toy

companies have to look to outside freelance inventors to come up with products to feed this huge appetite for new items in the market.” — David Small, toy inventor and Cofounder of Shoot the Moon, a company that has licensed more than 100 products generating $4 billion in retail sales. When companies do review product submissions, it generally requires a team of people as well as significant time to do a thorough evaluation to determine whether your idea is worth the investment required to bring to market. If the company is small enough, it may just be the owner or CEO who evaluates your idea. But with companies that are big enough to have good distribution in place, the process requires a much larger team to review your ideas. People from sales, marketing, legal, and manufacturing need to weigh in. Gathering all these people together is often a logistical challenge if there aren’t already good practices in place for evaluating outside ideas. People take vacations. Sometimes employees live in different parts of the country. Most companies just don’t meet regularly to review product submissions because individual departments usually prioritize their own obligations. If a company meets as frequently as once a month to discuss potential new products, they’re in the minority. There are a few different industries that actually meet quite regularly such as DRTV (direct response television). I was told by an industry insider that his company meets once a week and every team member is required to bring 10 ideas to the table. I just want you to know that this is an exception to the norm. The DRTV industry is unique in that it only takes one or two good ideas a year for a company to be successful, so they prioritize looking at many ideas. And, as amazing as it sounds, few products are developed on the inside – the majority of DRTV products come from an outside inventor! “Once you have a process in place for working with inventors, it’s much easier. Without a process in place it can be grueling and results in a lot of wasted time for both the inventor and the company. The process and speed have changed more recently. We are taking in more information online – it’s easier for us to collect it and it’s easier for the inventor to submit their inventions.” — Corey Talbot, VP Marketing and Product Development at Hyde Tools, which sells more than 1,200 products.

When you submit a product to a company it needs to be cataloged, so ideas usually get funneled to one person – someone who manages all the submissions. Too often, inventors want a shortcut or a special contact, someone else “on the inside.” In my opinion, trying to get around the gatekeeper is usually a bad idea. Your idea will almost always get sent back to the person identified as being in charge of the process. You want to show a potential licensee that you can be a team player. You don’t want to give the impression that you’re difficult, or even worse, uncooperative by not following their procedures. “Don’t bypass the submission process, because that can really stall an idea. If you know someone who works at Hasbro, don't send them your idea – send it in to the global product acquisitions team.” — Brian Chapman, President and Head of Global Design and Development at Hasbro, the world’s largest toy company by revenue. You simply must learn about a company’s process of reviewing submissions. Without this information, you’re in the dark. The review and evaluation process could take place once a week or once a month, or even once a quarter! It simply depends on the company. Knowing a company’s timing and procedure for reviewing product submissions is an important step to avoiding panic and making the right strategic decisions. If a company doesn’t state its process online, reach out to someone in product development, sales, or marketing and ask about their invention submission process so you thoroughly understand how it works. You must play by their rules! Later in the book we’ll discuss best practices for communication, including some situations where you might have to reach out to multiple contacts. How companies evaluate your ideas Like I mentioned, there is likely to be a team of people reviewing your product idea. Each of these people is looking at your idea from a unique perspective depending on what their role is in the company. Understanding these perspectives is critical! Sales and Marketing “Each manager in each department has their own sense of which products are selling and whether or not there’s a need and whether or not it’s something that they want to take a chance on…. There are lots of

factors. Sometimes it’s timing. Sometimes it has to do with the conditions of competitive products or the willingness of people to put money in and their personal experience on the line to develop the market.” — Lawrence Cruz, Chief Patent Counsel at Conair, the $2 billiondollar maker of small appliances, personal care products, and travel accessories. Sales and marketing people are tasked with growing the company. If, in their opinion, your product has any chance of helping increase business, they are likely to be positive about it. If they see that it complements something else in their existing product line or fills a gap in the company’s product offering, they are likely to be positive about it. If they’re smart, sales and marketing teams will want to test the waters with your product idea to see if their opinion is correct. They’re going to want to show it to potential buyers, in other words. That’s why the marketing materials that you use to pitch your idea must be polished and look professionally produced. The benefits of your product should be crystal clear to anyone who views your marketing material. You don’t necessarily have to spend a lot of money to produce these materials. I’ll go into much more detail about sell sheets and product videos and provide some great examples to help you accomplish this. “If I believed in an idea, I’d run it by our salespeople, other product managers, and engineers. Their feedback would help me determine whether to pitch a project up the line or not.” — Atul H. Patel, former product manager with 15 years of experience at Bosch, GM, and Daimler, some of the largest automotive companies in the world. On the other hand, if sales and marketing people do not get excited about your idea, it is unlikely to go any further in the submission process. If it’s not a good fit for their product line, if the item already exists on the market, if your marketing material is confusing and the benefit is not clear you are likely dead in the water. Manufacturing/Engineering “When an idea submission comes in, the inventor relations people sent information about the product to the different groups, like electronics and mechanical. The costing group measures the item and

figures out the manufacturing costs. The labor and mechanical people will look at the mechanism and see whether it is producible. And the electronics team will take a look at the electronic designs.” — Bob Ruginis, former Director of Electrical Engineering at Hasbro The person who represents manufacturing or engineering has to figure out how to make your product at a price that makes sense. They will most likely have to get a price quote from whomever manufactures their products. (Sometimes companies have their own manufacturing facilities, but others utilize contract manufacturing.) In order to produce your product at a reasonable cost, they may suggest changes in material, sizing, or other product specifications. Often, if you have a prototype, they may send it over to a manufacturer in Asia to get a quote. It’s the smart thing to do on their part, and of course that process is going to take at least a month. Some companies will have manufacturing experts inhouse to evaluate your idea. Here’s a pro tip: A working prototype or CAD drawing will make it much easier for a company to evaluate your idea. But these things cost money. It’s unwise and probably impossible to create a prototype or CAD drawing for every idea you have. I would recommend proceeding with these tools only after you’ve generated legitimate interest in your product from the sales and marketing folks. Legal Legal departments are often a pain in your side. They might require you to sign a non-disclosure agreement (NDA). They will probably attempt to verify that you are the rightful owner of the idea you’ve submitted. They might do a prior art search to see if anyone else has come up with this idea before. They’ll check for patents. You are not required to have a patent to establish ownership. 99% of the licensing deals I’ve seen take place without a patent. There are many other tools to establish what I refer to as “perceived ownership” of an idea. For example, a well-written provisional patent application and the ability to clearly articulate your product’s point of difference from other items on the market when asked. Chapter 5 will dive into strategies to establish perceived ownership – but please, again, you are not required to have a patent.

So, all of these people representing all of these departments are going to evaluate your idea from a different perspective. A good evaluation of an idea takes time so you must be patient. Don’t jump to the worst conclusions if they’re not getting back to you as quickly as you think they should. Learn which companies want your ideas! Every company has a different invention submission process. They are not all created equal. In many cases, you can determine whether a company is friendly to outside inventors by studying the tone and language of their inventor submission agreement. I consider this an absolutely critical step that will greatly increase your chance of success. I’ll discuss a perfect example of an invention submission process from a company that is friendly to inventors. OXO: OXO is a manufacturer of kitchen utensils, office supplies, and housewares based in New York City. Finding information about how to submit your product idea to OXO couldn’t be easier. Just scroll to the bottom of their homepage and there’s a link titled “inventor submissions.” Read this page and there are clear signs that they want ideas from outside inventors and product developers. All the pertinent information is provided. They have specific requests for the information they need to review your idea such as a written description, hand drawings, photographs, a video demonstrating product use, and a website about your product. They ask if you have any intellectual property that has been filed or if you have disclosed your idea to any other companies. They clearly explain their policy on NDAs – they do not sign NDAs because of the chance that they might be working on a similar idea. This is standard practice and avoids the potential for confusion if you see down the road that they release a product that is similar to an idea you previously discussed with them. The submission agreement also gives you a clear time-table for evaluation, 6-8 weeks. They also state that everyone who contacts OXO with an idea will receive a response for their submission. Obviously, depending on how busy the company is this time frame can and does vary – but overall you can tell that OXO wants to see your ideas. this is a model example of a straightforward and inventor-friendly submission process. And I know from personal experience they do indeed get back to everyone. In my opinion, OXO’s process gets an A+. Not all companies are inventor-friendly

Unfortunately, not all invention submission processes are as easy to work with as OXO’s. Some companies are just not friendly to inventors. Just as OXO’s invention submission portal is very clear and welcoming to outside developers, others can be written in such a way that’s just not inviting. The tone and language of an invention submission agreement can give you invaluable information about a company’s attitude toward independent inventors. I’ll start with some examples of red flags you should avoid: “Your submission and its content automatically become the property of compensation of any kind owed to you.”

, without any

Or “ may use or redistribute your submission and its contents for any purpose and in any way, including but not limited to using it in new product or services, or to improve existing product or services.” Or “Your submission does not grant any right to us under existing or future patent. However, except for claims of patent infringement, we will have the unrestricted right to use and disclose your submission. Since patents are sometimes inadvertently granted on ideas that are old or obvious, we reserve the right to contest the validity, infringement or enforceability of any patent.” I’ve seen submission agreements clearly state that you may not hear back from the company – they claim no obligation to respond! Sometimes an agreement will say that under no conditions will they give you feedback. Companies that use this type of language don’t look like great potential partners to me! Some companies refuse contact by certain means such as email or phone. Some companies want you to send your submission form in the mail, not online. This obviously makes the process more difficult. Some invention submission opportunities are community-based. They’re called co-creation communities. The idea is that a company can cocreate value with help from their customers. Typically, these are contests. You may receive a small fee along with a very small royalty. For example, a single payment of $1,000 and half a percent royalty. In my opinion, this is not a desirable reward for a great idea.

Sometimes a company will only look at issued patents. I consider this old school. In today’s economy, products have very short lifespans, so it usually doesn’t make sense to commit to the years long process, not to mention the expense, of getting a patent. Companies know this. I think they’re not being serious when they require a patent to look at an idea – there are exceptions to this in certain industries which I will talk about later. Some companies even make you agree to a binding arbitration if there’s any dispute or controversy about your product submission.

Some companies use unfriendly language to turn you away. Take the perspective of your potential licensee. They obviously need to protect themselves. Companies that are looking at invention submissions do open themselves up to problems. A company’s size or business model may not be ideal for licensing. Often enough, strict guidelines for submissions or a seemingly unfriendly attitude towards outside developers is simply a response to a history of dealing with unreasonable inventors. Yet sometimes, they really just haven’t done due diligence in creating a welldefined process. You have to do your homework to learn about how a company works with invention submissions! Usually when invention submission agreements have a negative tone and language the company has had problems with outside submissions. It’s meant to convey that they do not value open innovation. I typically see this type of language from very large companies, but know that smaller companies can have similar attitudes. I would avoid these companies. If you come across an invention submission agreement that has a questionable tone or language, please read it carefully. If things are not clear, I recommend getting legal advice. Typically, when a submission process is easy to find and clear about its expectations, the company genuinely wants to look at your ideas. However, if an invention submission process is hard to find on the company’s website don’t immediately assume that the company is not open to outside developers. Many companies just don’t get that many product submissions and therefore do not have a procedure or department for handling them. It does not mean that they aren’t willing to license great ideas. I suggest that you always ask. Okay, enough of all this background! Let’s learn how to submit products the right way!

4. SUBMITTING YOUR IDEA TO THE RIGHT COMPANY a great idea that you’re extremely excited about. You believe Y outhathave you have found the perfect company to submit it to. You already use and love some of this company’s products and you think that your idea will fit perfectly with their product line. And, even better? They have great distribution. Their products are everywhere! Now you’re thinking, “I just have to get in, I just have to find the right person.” You go to their website and the first thing you do is look to see if they have an online submission portal. You look at the navigational bar at the top and you don’t see anything. You scroll down to the bottom of their homepage and bingo. You find it. “Do you have an idea? Click here.” You’re ready! You have a sell sheet and a one-minute video to market your idea. You start reading their invention submission form and you fill it out. Stop! This is the mistake 90% of inventors make. You have not done enough homework yet – not nearly enough! I’ve already shared with you the horror story of Fred & Friends receiving hundreds of product submissions that did not fit into their product line or maybe were even on the market already. I told you that this deluge of bad product submissions caused Fred & Friends to ask me to remove the newsletter highlighting their company from the archives of the Inventors Groups of America website. I’ve already shared with you aquote lamenting the fact that inventors do not do enough homework.

Look, I know you’re excited and that makes you want to hurry. Getting someone inside a company to look at your idea seems like the hard part and now you have access through this website! You want to pitch your idea now! Why wait? What if someone else comes up with something just like it? What you should do is slow down and do your homework to make sure your product is actually a good fit first. Inventors often ask me, “How can I become more successful? Why aren’t companies getting back to me?” Here’s what successful professional inventors who consistently license ideas do. They carefully look at a potential licensee’s website to determine if they’re a good fit for their ideas. Only after they determine that a company is a good fit do they submit their ideas. If they get rejected, they keep submitting more ideas to this company. They constantly work on building up their relationships with the companies they want to invent for. Both parties begin talking to each other and actually exchanging information. When you have a relationship with a company and they see you as an inventor who’s knowledgeable about their business, they start to listen to your ideas. They will ask you for your ideas! “The more you understand the industry, the more you understand the marketplace, the less chance you are going to be surprised by something you didn’t know.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. You have to be disciplined with your creativity and deeply knowledgeable about what a certain company is looking for, so you limit your pitches to quality ideas that are right for the company. You have to invest time with the company before they’ll invest in time with you. This is how you truly become a pro. It’s as simple as that. “Relationships are critically important. Once you establish one, you want to continue to work with that company. We love our inventors who are like an extended part of our team. And I think that’s when you have the most successes.”

— Brian Chapman, President and Head of Global Design and Development at Hasbro, the world’s largest toy company by revenue. I know you’re saying to yourself, “Well maybe it could be a good fit,” or “Maybe they should go in this direction, there’s opportunity they’re missing,” or “I can show them a new opportunity that they’re not taking advantage of.” I’m here to tell you, no! No, no, no! Honestly, if you send a company a product idea that’s obviously not a good fit, you just burned a bridge. They will not take you seriously. It doesn’t matter that you have a great idea, your idea only needs to be great for the company you’re pitching to. Not only are glaringly unfit submissions hurting your chances of successful licensing agreements, they are weakening the relationship between companies and independent developers. We inventors have a responsibility to act professionally so companies continue to welcome outside developers with open arms. You must determine if your product idea is a good fit for the company. You and only you. “Our time is valuable and your time is valuable. We want to make the most of these meetings and the more homework an inventor can do upfront, the more they can understand this industry and therefore the more they can understand our company. It's beneficial. They should take the time to look at our website, see the types of products that we're manufacturing, and understand what our price points are.” — Jonathan Zelinger, President of Ethical Products, a familyowned pet company for 65 years. This is not as easy as it sounds. Companies will rarely tell you exactly what they’re looking for because they might be sharing confidential information. They’re not going to just spell it out for you. You have to do the homework to figure it out. You have to read between the lines! I’m going to go take you through the steps to thoroughly evaluate a company to see if it’s a good fit for your product idea. I want to teach you how to read between the lines. These are the steps you have to take to build fruitful and long-lasting relationships with potential licensees. First, look at the company’s total product line. The re’s almost always a prominent link on a company’s homepage that takes you to their

“catalog” of products. Look at it very carefully. You want to understand the product line to the best of your ability. What do their products have in common? Then you have to ask some very important questions. Do they have any products that are similar to mine? Does my product idea have any points of difference when compared to theirs? Also, does my product idea have a point of difference compared to other related and similar products on the market? If your product is a clear improvement on an existing product, there’s probably a market for your idea. Your potential licensee will know that there’s a very good chance it can be manufactured at a cost that makes sense for their business. Remember that a new product really has to do two things: 1) it has to fit into the company’s existing product line and 2) it has to be unique – meaning clearly different compared to similar products that are already on the market. “Inventors need to put themselves in the shoes of the customer they want to buy the product. They need to ask themselves the same sort of questions as if they were standing in front of the shelf and had the opportunity to buy that product. Why are they going to buy it? What is it going to do for them? And is it going to do it better than what’s already available?” — Corey Talbot, VP Marketing and Product Development at Hyde Tools, which sells more than 1,200 products. The last thing you want to show a potential licensee is an idea that’s too similar to (or exactly the same) as a product they or anyone else is already selling. Why manufacture a “me-too” product? Companies will see through this very quickly. All it takes is a simple Google products search. I know because I’ve talked to these companies. They’ve repeatedly told me that they see this way too often from inventors – that people submit ideas that are already on the market. This marks you as a rookie and as someone who didn’t take the time to do a very professional job. They will not want to work with you and you have just made a very bad first impression.

“The problem is a lot of idea submissions to us can be found in a 15minute search.” — Olyvia Pronin, Marketing Director at Wham- O-Toys, which has created and marketed many of most popular toys of the last 70 years. “I see a lot of submissions that you just look up on Amazon and there’s 50 other sellers with similar items or you go to Walmart and

there’s a whole aisle.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. Next look at the company’s mission statement. This can tell you a lot about the culture of a company. Most companies have a mission statement that’s easy to find. Sometimes it’s just an “about us” tab at the top of the homepage. You can gather valuable information from this. I’ll use OXO’s mission statement as an example: “We believe in a better way. At OXO, we look at everyday objects and activities and we see ways to make things simpler, easier, more thoughtfully designed – better. We notice things. We notice pain points and pains-in-theneck. We notice problems people don’t realize are problems until we solve them. We see opportunities to improve a product or a process, or a part of everyday life, and we make things that make things better.” What you should take from this is that OXO specializes in improving existing products. This is the core tenant of their business model. It makes perfect sense from a business perspective. There’s a lot of risk in venturing completely new product categories. OXO’s strategy is to make products that we already use better. You should infer that they do not want you sending them ideas for novel or new gadgets!

Sometimes a mission statement is not easy to find. That mission statement from OXO wasn’t conveniently located at the top of their homepage. They actually don’t even have an “about us” link. But it’s certainly not secret information. You just have to do your homework. I searched “OXO brand” and the first video result I found was an “OXO Brand Video.” It’s less than two minutes long and the mission statement is the entire script for the video. Next, look at the price points of the products that the company sells. Is the estimated price point of your product within the range of retail prices of their existing products? Companies very rarely introduce products that are out of that range. They already know their customers’ spending habits. They know that a given product category has an established price range. If you’re product is a “Cadillac” and your potential licensee sells “Kia” your idea is not a good fit for that company. Most of the time you can estimate your retail price point by thinking about materials and doing some research about products that are similar in size and scope that are already on the market. If not, have a contract manufacturer give you a price quote.

“The number one thing is to really understand the business. Know exactly where the toys are sold and what categories they are in and their price points.” — Ben Dermer, SVP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America. Now, look at the materials the company typically uses. Can your product be manufactured using the same materials? If not, this could potentially be a problem. You want to make it easy for them. You want your product to be compatible with their existing manufacturing process. If your product is made out of materials that they’re not already using, it could very well be a red flag that your idea is not fit for them.

As an example, most of OXO’s products are made from materials such as silicone, glass, and plastic. If you’re submitting to OXO, make sure your product uses those types of materials. “When we present an item to our clients, we present not only the idea but a lot of background as to how it’s going to be manufactured, what the cost is going to be, and the best way to manufacture it along with the best components to use. I think that having the knowledge of manufacturing dramatically helps us to license products.” — David Small, toy inventor and Cofounder of Shoot the Moon, a company that has licensed more than 100 products generating $4 billion in retail sales. “We’re in the commodity business. The first thing that the hotel is going to ask me is how much it is! Because it’s a tight market – and in a competitive market you have to keep that cost down.” — David Middleberg, Director of Global Sourcing at Star Linen US and UK (Hospitality, Hotel and Healthcare) “The biggest things that inventors need to know is that their idea is going to get “costed” as submitted. Engineers do not have the time to redesign everything before it gets manufactured. So, inventors need to look at how their product can be made most efficiently.” — Bob Ruginis, former Director of Electrical Engineering, Hasbro Does this company have a blog? Read it! A company’s blog can tell you a lot about its products and strategy. It may share its vision for the

future. Sometimes you’ll find the mission statement in the blog posts. OXO maintains a company blog called The Good Tips Blog , which is easy to find at the top of its homepage. The blog has many articles about the design process of different products. There’s even a behind-the-scenes section with an article titled “OXO by the Numbers” which gives you details about ideas they actually tested.

this information is incredibly helpful to have! Combined with OXO’s clear mission statement and a thorough understanding of its product line, you should start to get an understanding of their business strategy. Good job! You’re starting to read between the lines! Don’t forget to Google the company. This may seem obvious, but I’m finding that many of you are not making the effort to learn as much as you can about your potential licensees. A simple search may turn up recent articles about the direction the company is headed. Industry experts or executives from inside the company might even discuss trends. You can gain a clearer picture of the company and its goals. You might even find that the company is selling off the division that your product would fit into! It’s probably not a good time to submit a new idea. What else should you look for? What kinds of things about this company might influence whether or how you submit your idea? Are they privately held? If so, they can make decisions fairly quickly. Or are they a large publicly traded company that’s probably more riskaverse? Know that smaller companies are more likely to look at ideas that might expand their normal product category. They’re willing to tolerate more risk because they’re looking for products that will help their business take off. They want to take market share away from others. Big companies are often just trying to protect what they already have. Are they a young company with an entrepreneurial spirit? Are they actively looking for ideas? Or are they an older company that’s set in their traditional ways? Older companies already have market share and established relationships so they’re far less likely to take risks with new ideas. Market leaders have more to lose and they have the power to buy up ideas (or even whole companies) once they’re tested by smaller players. My wife worked for E&J Gallo Winery as a vice president of marketing. She saw firsthand the shift inside the company from developing their own products (time-consuming, expensive, and risky) to simply buying companies that had already taken the risk and proven demand for a new product or brand.

Does the company have a history of lawsuits and complaints from inventors? Or do they have a good reputation for working with outside product developers? I always tell my inventRight students to type the company’s name into their search bar followed by “lawsuits and complaints.” You’ll be amazed at what this might turn up and how it might influence your decisions. (Truthfully, you should also employ this tactic when researching consultants, attorneys, and anyone who you do business with.) Are they looking for the latest gadgets? Or do they stay in one particular established category? When I visit trade shows I can tell right away if a company is open to product submissions just by looking at their product mix. If they have a lot of stand-alone products in different categories, they’re probably working with a lot of outside product developers. You can learn invaluable information from this kind of homework. You might determine your product idea is too new. Your potential licensee might not take those type of risks. Maybe they’re just averse to gadgets. By understanding the company you’re submitting your product to, it allows you to start building a relationship. You can determine if your product idea is a good fit – not just with their product line but with their culture of innovation. Use what you have learned One of the biggest benefits to slowing down and studying your potential licensee carefully is that you’ll have helpful information for creating effective marketing material to pitch your idea. You want your invention to look so similar to the products in the existing line that it could fit right in tomorrow. In other words, when you submit a product to a potential licensee you want it to look and feel like theirs. Look at the colors they use for their products. What fonts do they use in their marketing materials? What is the style of their marketing (contemporary, classic, minimalist)? Look at how the features of their products are presented. It’s not about your product. It’s about how your product fits into their business. “The quality of the presentation is obviously important. You can tell if someone has seriously thought-out their product, and if they haven’t it’s a dead giveaway and the product is getting kicked down the line.”

— Ben Dermer, SVP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America. Again, OXO offers a great example. Their website uses a very clean white background with simple descriptions and benefit statements about their products. There’s no distracting graphics at all. It’s easy to see a product and understand its features. If you’re pitching to OXO, your marketing material should be similarly concise and simplistic in style. Use these types of observations as a roadmap when you’re designing marketing material for potential licensee. Material that’s too generic does not show your product well. Chapter 6 will dive deeper into creating effective marketing material. “If the inventor hadn’t had such good marketing material I most likely would not have moved forward.” — Atul H. Patel, former product manager with 15 years of experience at Bosch, GM, and Daimler, some of the largest automotive companies in the world. Doing your homework upfront will save you valuable time and greatly increase your chances of landing a successful licensing deal. I can’t emphasize this point enough. Don’t just throw your ideas up against the wall to see if they stick! Do your part to fairly and objectively evaluate your product idea. It’s critical to understand that you should play the “long game.” The most successful inventors I’ve known in my career take this approach. They focus their creativity on a particular company’s product line. They know these companies’ products inside and out. They study Amazon reviews to see what problems customers are having. A company will typically stay within a certain product category at a specific price point because they have a customer base that they already know well. To successfully license ideas, you need to understand this information as well. Pitching an idea that’s too new, doesn’t fit an existing product line, is too similar to other products in the market, or inconsistent with customers’ needs will not increase your chance of success. In my experience, inventors get way too emotional. I get it, you’ve invested time and money in your idea. But you have to make sure you’re

utilizing the right strategy. I want you to manage your expectations so you can act rationally. You have to slow down! “Many inventors fall in love with their ideas way too early. It may solve a problem they have personally but they don’t do the research to determine if it’s really feasible.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. If you stay in one industry long enough, you’ll get to know all the players, product lines, trends, and business strategies – everything you need to successfully target your next creative project to the right companies. Follow these guidelines and your potential licensees will consider you an asset. You have to invest time with them before they will take you seriously as an outside product developer. Work to build good relationships. You want to be a professional product developer, not a high-maintenance inventor!

Finding the Right Potential Licensee Inventor: Chuck Lamprey Products licensed: Rock n’ Roller, Super Treadz, Roaming Runner, and many, many more. Chuck Lamprey has been a successful product developer in the pet toy industry for 10 years. It took some time for Chuck to get traction licensing product ideas, but he now licenses products regularly, typically a couple of ideas every year.

Stephen: Why pet toys? Chuck: I come from a high-tech background. I’m here in Silicon Valley. About 10 years ago, I got kind of burned out. I said I’m not that excited about this stuff anymore. It’s fast-paced, you have to always be thinking. I had seen (Stephen and Andrew) speak before at the local inventors’ club and loved the concept (of licensing), so I decided, what the heck, I’ll give it a shot. And I thought, what really interests me? What is fun? Fun was a big factor for me. I thought dogs, cats, why not? I know a little bit about them, I’ll just jump right in. Stephen: What’s made the biggest difference in your success? Chuck: For me, it’s been getting to know people. Getting to know the ins and outs of what’s needed in the industry. My biggest issue was not understanding that cost is big factor; that durability is a big factor in the pet industry. Stephen: Any advice for the next inventor? Chuck: The most important thing is persistence. There’s a lot of rejection so just stick with it. Don’t do something crazy like mortgage your house. But stick with it as long as you can. I have a hundred ideas a day. If one doesn’t sell, I move on to the next one. Check out my full interview with Chuck on my YouTube channel inventRightTV. We talk about co-branding and licensing, trade shows, and branching out to different industries.

Finding the Right Potential Licensee Inventors: Dr. Christopher Cetta and Dr. Richard Kaye Products licensed: Precision Aligner Button, by MAO (Mid Atlantic Ortho) Orthodontists Dr. Christopher Cetta and his partner Dr. Richard Kaye are inventRight students who have licensed multiple patent-pending designs for the dental industry. Their most recent idea is a solution to frequent problems their patients were having with the metal pieces used to secure rubber bands for teeth straightening and bite alignment.

Stephen: Tell us about licensing your first product. Dr. Cetta: Certainly, I would say that your first idea is a challenge. I would tell other students, don’t get discouraged by bumps in the road. You just have to get past those. For example, when we were pitching our concept, like anyone else, we got a lot of no’s. We were approaching bigger companies that maybe weren’t a good fit for our product. It’s very easy to get stars in your eyes and approach the biggest companies and think you’re going to be a multi-millionaire. But you really have to look at the product line. See where the product line will fit. And find the right partner for you. It did take us 4-6 months before we found the right partner. Stephen: Any advice for inventors who are just starting out? Dr. Cetta: Don’t give up. It’s completely normal to face rejection. It does get frustrating, but don’t take that personally. If you believe in your product, just keep getting it out there. Sure, you can take that to an extreme. If you’ve been pitching for multiple years, maybe it’s time to jump ship. But there will just be some road blocks that you’re going to have to get past. Check out my full interview with Dr. Cetta on my YouTube channel inventRightTV. We take a closer look at his dental innovation and discuss the benefits of working with a partner.

PART THREE Getting in the Game

5. ROTECTING YOUR IDEAS start this chapter off by sharing what I hear from inventors every L et’s day. Every. Single. Day. Is a company is going to steal my idea? Do I need a patent? Do I need a trademark or copyright? I get these questions from inventors constantly! In most cases, I don’t think inventors should be nearly as worried as they are. A positive social media presence for companies is incredibly important in our current business climate, so it makes little sense for them to risk their reputations by stealing ideas. Can you imagine reading reviews or articles about a company stealing ideas and how quickly that would spread throughout the internet? Personally, I’ve heard of very few situations where a company has actually stolen an idea that was submitted to them. Has it happened? Yes? Does it happen often? No, emphatically no. There’s another reason why it’s unlikely that a company will steal your idea. As I have previously stated, most companies have embraced open innovation. They want, actually they need, our ideas. If a company were to steal someone’s idea, the inventing community would quickly dry-up in terms of product submissions — and ultimately that would render a company less competitive. “50%-60% of our portfolio started as an idea from the outside.” — Brian Chapman, President and Head of Global Design and Development at Hasbro, the world’s largest toy company by revenue.

“35%-40% of our items are coming from inventors.” — Corey Talbot, VP Marketing and Product Development at Hyde Tools, which sells more than 1,200 products. My takeaway after interviewing all of the folks that I talked with to research this book, as well as my experience over the years, is this: Intellectual property is a tough subject and a hard topic to lay out in black and white terms. Most companies nowadays acknowledge that it is pretty difficult to protect anything. Some of the bigger companies that are market leaders may use patents or other intellectual property tools to stop a major retailer from carrying a copycat item. The really, really, really big companies may use litigation to protect their products – after all they can afford to! These cases are few and far between. Ideas that potentially have a long lifespan and cost a considerable amount of money to produce are likely to require patents. Not just one patent, patents. There are certain industries that are the most likely to employ this strategy, and they include medical devices, packaging innovations, automotive changes, aerospace, and other highly engineeringoriented industries like energy and computer hardware. It is a cost benefit analysis made by the company comparing the potential life of the product versus the capital investment required to bring it to market and to protect it. Smaller and mid-size companies, particularly in consumer-oriented categories, have a different perspective. Their strategy is to keep innovating to stay ahead of their competition. Speed to market is more important in the long run than a patent. Of course, intellectual property helps to keep some people honest. The broadscale policy I can recommend is that you protect your idea with what is necessary for your industry and what is necessary to get a licensing deal. And I am here to tell you that today, it’s usually not a patent. There are other tools that are more affordable. Keep reading! “I don’t mind if it’s patented or not, because we have the opportunity to get products to market fast.” — Luke Berry, Head of Innovation at Halfords Group, a UK and Ireland-based automotive retailer with 450 outlets and 350 repair centers.

“Patents are nice but not essential.” — Nick Mowbray, Co-CEO Zuru Toys, one of the fastest growing toy companies in the world. Bunch O Balloons, one of their hits, sells about 30 million units a year. “(Intellectual property) doesn’t matter to us.” — Sam Hurt, Cofounder SUCK UK (Novelty gifts) “It’s not super important. It’s nice to have. If someone gives us a product and already has a patent on it, it’s nice to have that. In most cases that can command a slightly higher royalty rate. But it’s not, you know, totally necessary. If we have a product that we feel we can manufacture and be first to market, we will move forward and work on a royalty agreement even in the absence of a patent.” — Jonathan Zelinger, President of Ethical Products, a familyowned pet company for 65 years. “We will work on an item whether it has a patent or not. And if we decide to go forward, we will help the inventor get a patent in the U.S. and China because that benefits both of us.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. “Patents are important, and they’re not. It’s a long, complicated question. They are important for some people; for me, they’re not. I’m happy to look at all inventions, whether they’re patented or not.” — Elias Amash, President of GRIP (Grand Rapids Innovative Products). GRIP carries a product line of more than 1,500 specialty hand tools, sporting goods, household items, automotive, air tools, wood working, and general merchandise. “Patents are massively important.” — Barron McKillip, Research Scientist at Multi- Color Corp and Former VP of R&D at CCL Label, two of the largest packaging firms in the world. It is important to realize that companies are in fact sometimes already working on a product that is similar to an idea that has been submitted. This

often leads to confusion for both sides. Often, inventors are too quick to assume that their idea has been intentionally ripped off. So what protection is really necessary before you submit a product? It all depends on your product and who you’re asking. If you watch Shark Tank , you’re going to hear that you need to protect your idea with a patent. This is not true for many products. If you ask friends and family about your new invention, they’re probably going to say you need a patent as well. Everyone has heard of patents and has a general notion that a patent allows you to “own” your idea. No. Your friends and family clearly have your best interest in mind but they have little real-life experience in protecting inventions and bringing them to market. Many patent attorneys will also tell you it’s an absolute must to have a patent or some type of ownership of your intellectual property to get a licensing deal. Again, this is not true in most situations. Remember: A patent attorney has a unique set of skills which exist to help you get a patent, but not necessarily to help you get a licensing deal. Getting a patent is NOT the same as getting a licensing deal! Far from it. Patent attorneys are not businessmen! Don’t take business advice from a patent attorney.

Now don’t get me wrong. Patent attorneys are very valuable and necessary. I’ve worked with the same patent attorney for more than 25 years. I know when to ask for his advice and when not to as well. On the topic of protection, my business partner Andrew Krauss adds, “An incredible form of protection is licensing your product to a company that is first-to-market, so other knockoffs are “me-too products” and your licensee is the company (along with you) making the most money. When you license your idea to a big company, you are that big company! When you try to sell a product yourself, you can get crushed very quickly. It can be as if you never even existed, let alone were first to market. So, no — it’s not all about patents. Success is more about distribution and being first-tomarket fast and in a big way.” I couldn’t agree more.

Patents: Why they might not be needed for your idea I see a licensing deal signed each and every week and most of the time there’s no intellectual property issued. Patent attorneys hate hearing this because it’s bad for business. 97% of patents never recoup the cost required to file and obtain them. I’m not surprised, as there are more products on the market than ever and the lifespan of most products is very short. If a product is only going to sell for 2-4 years, it doesn’t justify the time and cost of getting a patent! There’s also the problem of online copycats. Even if you can afford the countless hours and massive financial resources to fight infringers, you might not even be able to defend your intellectual property in federal court because of new patent laws. You may end up dealing with the Patent Trial and Appeal Board (PTAB). And if you end up in PTAB it’s going to cost you hundreds of thousands of dollars to defend your patents. Your odds of success aren’t that great either. Most patents get overturned in PTAB – which means the inventor loses everything. Even if we had stronger patent rights for inventors, it would still be very difficult to fight an opponent that is better equipped financially. The reality is that completely protecting an innovation will require much more than just a patent. It will require a significant amount of time and money. It’s not about who’s in the right or wrong. Anything can be argued in court. Companies can make slight changes or variations to your idea. They can reverse- engineer your product to find information that will make it hard for you to argue that the idea is yours in federal court. Patents are just words. And those words can be interpreted differently by patent examiners, judges, and a jury. I learned this firsthand in 2003 when I fought the toy company Lego in federal court. After three years the case came down to an argument over two words. The process of protecting your intellectual property has always been a very expensive and timeconsuming problem. I’ll mention Apple again. Apple is one of the largest companies in the world and they can’t protect their innovations with an army of attorneys and tens of thousands of patents, let alone billions of dollars. If they can’t do it, how can we? “If you’re successful, 99% of the time you will be copied. You are a victim of your own success. But you don’t make money by suing people, you make money by selling products. I have personally spent about $1 million suing people, but more than the money is the stress.” — Jonah White, inventor of the smash novelty gift “Billy Bob” fake teeth, 22 million sold.

Here’s the good news – everything that I just shared with you doesn’t matter in terms of your ability to license your product!

Companies have realized that chasing infringers and spending lots of money to defend ideas in court is a losing tactic. Because of the short lifespan of products today, it just doesn’t make sense. The best approach is to sell and not worry about protection. “Sell first and sell fast!” — Michael Weinstein, President of Digital at Bluewater Media and former Chief Marketing Officer for Allstar Innovations As I discussed earlier, companies need ideas from us to stay competitive. They are trying to get good ideas to market, not steal them or wage protracted legal battles over ownership, so you shouldn’t spend more resources on protecting your ideas than necessary. Don’t think that filing a patent for your invention is always a necessary step to getting to a licensing deal. Before the Lego case, I used to think that I “owned” an idea if I was granted a patent for it. However, I learned that in reality ownership is often determined by successfully defending your ideas in court. And that takes time and money. Lots of time and money. Instead of thinking about patenting an idea so that you “own” it, I suggest you consider establishing what I call perceived ownership . Let me explain what I mean by that phrase. Perhaps I’m a bit jaded from my experience in federal court, but I believe you don’t truly “own” anything. When I first came to this opinion I was so upset and disappointed – it really shook my world view. I was one of many who believed that if I had a patent, that meant I “owned” something. Well, I had six patents and I still had to go to federal court to defend my ownership. The judge in the case issued a ruling on two words just a few days before the case was to go to court. After that ruling my adversary Lego and I agreed to settle the case. What if the judge’s ruling had been different? Would I have had to go to court? Would I have lost? I had spent literally hundreds of thousands of dollars obtaining those patents – and their future came down to one person’s interpretation of two words?

What I realized is this: Patents are a collection of words and drawings. Words and drawings can be argued about… and the side with the more skillful attorneys and deeper pockets is the most likely to win the argument. That’s the way the patent and legal system works. So, back to perceived ownership . What I learned over time is that many industries don’t require patents because of the speed at which they move. But they DO want to have some confidence that the product idea you submit to them is original and that it is yours and not someone else’s. Creating documents, having phone conversations, and keeping a paper trail that establishes you as the inventor is what I call perceived ownership. Companies do not want to get a letter in the mail after they introduce a product suggesting that they stole it. Some companies may want the option to file a patent down the road, but they do not need to have a patent today to review the product and move forward. The very best way to create perceived ownership is to write and file a well-written provisional patent application – which I will discuss in just a moment. There are other ways too. And if you ever have to defend your ownership of an idea, it’s perceived ownership that matters, not any single patent. A patent might be a tool in your overall strategy, but it is not the only way to create perceived ownership. What is really important is that you utilize the correct business strategy to create that perceived ownership. There are many tools and strategies outside of patents that will help with this. How to create perceived ownership First, find inventor-friendly companies. Look for companies with a proven track record of licensing ideas from independent developers. Working with inventor-friendly companies is the best protection you can have because they value you and your product ideas. Make sure the company’s submission requirements are fair. You will find many companies that claim they’re open to product submissions but have submission agreements that are unreasonable. Run from these companies! As a rule of thumb, steer away from companies that don’t have an invention submission process in place. Working with companies that don’t have experience with outside inventors typically takes far more time and effort than working with companies that consistently license ideas.

Make sure your idea is new. Do a thorough search online. Know your point of difference. To me this is probably one of the most important things you can do. Too many potential licensees have told me that a simple Google search often shows that a submitted idea is not new or original. Don’t waste their time or yours. “Do something that stands out. Do something that others aren’t - so when you send your marketing material to a company, it’s going to get their attention.” — Scott Baumann, Professional inventor and CEO of Procreate Brands, LLC., which has more than 40 worldwide licensed products in its portfolio. inventRight student. Do a prior art search and make sure you know your point of difference versus any issued patents. I highly recommend you learn to do this yourself. There are classes online that will teach you how. It’s impossible to find everything, but learn as much as you can and have fun. You could hire a firm that specializes in prior art searches but ultimately, learning to do this yourself is an invaluable skill. When a potential licensee asks you about patents or products that are already on the market, you want to have an answer. You can turn these questions into selling points if know your point of difference very well. File a well-written provisional patent application (PPA) . I think a well-written PPA is one of the best tools that inventors have to protect their ideas. A PPA is a fast and affordable way to protect your idea while you refine it, test the market, figure out manufacturing, and generate interest from potential licensees. You can file a PPA without an attorney or the formal documentation that a non-provisional patent application requires. For 12 months, a PPA will give you the same legal protection you would get under a regular patent application. It allows you to include the “patent pending” notice on documents, your sell sheet, and prototypes you present to potential manufactures, vendors, and customers. Also, a PPA will give you or your licensee the option to file a non-provisional patent application. In many situations, you can eventually negotiate for your licensee to pay for the filing of a non-provisional patent application. Most individual inventors will be able to file a PPA as a “micro-entity” which will reduce the filing fee to $70. This makes a PPA a very affordable option!

I wrote extensively about how to write provisional patent applications in my last book, Sell Your Ideas With or Without a Patent . inventRight also offers for sale a software program called SmartIP. Designed by IPWatchdog.com founder, law professor and patent attorney, Gene Quinn, SmartIP makes writing a strong provisional patent application a very streamlined process. Do not share your ideas on social media. Tha t means Facebook, Twitter, LinkedIn, and Instagram. Keep them to yourself! In some countries, showing your product idea in public is considered “public disclosure” and you can potentially lose any intellectual property rights if you have not previously filed for them. Use non-disclosure agreements as a way to set a professional tone. Don’t ask a company to sign an NDA at the very beginning. Show them the benefits of your product first. If they seem interested in your idea and want more information, then sign their NDA but make sure you read it very carefully. If a company’s NDA doesn’t seem balanced, have an attorney make changes. NDAs can also be used if you have trade secrets. If you do, I highly recommend working with a patent or licensing attorney to draft a strong NDA. There are many types of NDAs. I do not recommend piecing together your own from the internet. Also, you can use an NDA that has work-forhire language when working with a vendor or anyone else that you’re consulting. That way there’s no co-ownership. Also, if working with any Chinese manufacturer, make sure you have them sign an NNN (nondisclosure, non-use, non-circumvention). File a trademark if it’s appropriate. There are many examples of shameless counterfeiters online, especially on Amazon. These scams are often word for word replicas of your product name, features, and benefits. Trademarks can be an easy tool to prove rightful ownership to a retailer. File a copyright. The y’re another affordable tool to deter online thieves. Copyrights will protect your photographs and images. File a design patent. Design patents are issued “for a reproducible change in the decorative appearance, configuration, ornamental design, or shape of a utilitarian item.” They are different from utility patents, which is

what most patents applications are for. Just like trademarks and copyrights, design patents are relatively easy and affordable to obtain. Trademarks, copyrights, and design patents take a minimum of 10 months to obtain, versus 2-4 years for a non-provisional patent. For more information, please consult my last book, Sell Your Ideas With or Without a Patent. Be wary of crowdfunding. Crowdfunding is a catalog for copycats, especially for thieves abroad. You’ve seen the countless fakes on Amazon. I think the dangers of crowdfunding outweigh the benefits if you’re trying to license an idea. DRTV companies frequently run a test of a product before making a final commitment to an inventor and that sometimes creates problems. Don’t get seduced by TV. Sure, shows like Shark Tank are fun and the exposure can be fantastic. But I’ve heard too many stories about product ideas that were copied after appearing on TV. I’ve also heard stories of contestants who have found themselves accused of stealing ideas. TV is more about advertising than licensing ideas. I recommend you focus your energy elsewhere. Attend trade shows. Trade shows can be incredibly valuable for product developers. They’re a great way to familiarize yourself with other products in your industry. I do not recommend purchasing a booth to display a prototype of your invention, which is an opportunity some trade shows offer inventors. Instead, you should walk the show to introduce yourself to potential licensees and get a better sense of the market, including where it’s headed. There’s an entire strategy behind using trade shows to license your product ideas — which professional inventors Sara Farber and Amanda Hutton touch on in their interviews — and which I’ve written about extensively online. “If you’re looking to sell a lot of products to a lot of companies, attending a trade show is a good opportunity to see everyone and meet everyone.” — Ben Dermer, SVP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America. “No, I wouldn’t recommend just sitting at a booth with all your ideas. There probably are people who would intentionally rip stuff off, but there are also people who wouldn't intentionally rip stuff off, but you don't

know where you see something sometimes. It gets into your head and it gets into the ether and then you might come up with something similar and you don’t even know that you got it from seeing this other item.” — Sara Farber, Professional toy and game inventor and Cofounder of Galactic Sneeze, which has both ventured and licensed games, including three to Kikkerland Design in the fall of 2019. “Absolutely we’ve seen examples where inventors have presented prototypes to people at shows and then magically seen the same item, called something else, make its way to the market 6 months later. So, yes there is risk. If you don’t have a patent and you’re not ready for the market, I would very much agree the item should be shown privately.” — Michael Weinstein, President of Digital at Bluewater Media, formerly Chief Marketing Officer at Allstar Innovations “(Attending trade shows) is very important. You can talk to the experts there pitching items, see product demonstrations, and see what else is already out there and where the holes are. So that’s very, very important.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. Get to know retail buyers. Start making contacts with all the retailers so they know that you’re an inventor producing original works. I’ll explain in the next chapter how creating good relationships with retail buyers can be extremely helpful, especially if you find that your idea has been copied.

Always do a thorough background check. Whoever you’re working with, make sure to look at their profile on LinkedIn. Understanding someone’s area of expertise will help you negotiate with them. Avoid anyone or any company that promises to do all the work for you. It doesn’t work that way. Creating licensing agreements takes legitimate work, time, and knowledge. If something sounds too good to be true, it usually is. Always create a paper trail. After every conversation, summarize the important points of the conversation and highlight the next steps. Also, this is a great way to keep your project moving forward. Create strong marketing material. Creating strong marketing material and highlighting the benefit of your product idea builds your perceived ownership of an idea. I’ll discuss this topic in detail in the next chapter.

Tell your story on social media only after you’ve licensed your product idea to a company. I cannot stress this enough! Not only can you tell a newsworthy story about your product, you can create authenticity by making that story personal! Be genuine and transparent and you’ll build an audience and an army. “If I had licensed a really good idea I would want to tell as many people as possible as soon as possible. You want your name associated with it. You want as many people as possible to know it’s your idea before another company comes along and does it.” — Sam Hurt, Cofounder SUCK UK (Novelty gifts) These strategies have little to do with protection and entirely to do with perceived ownership. It’s not just about patents anymore. If you have a truly original idea, this is newsworthy in itself! You must create a narrative to support your idea. Take these steps and you’ll be in a great position to defend your ownership of an idea if it ever becomes an issue. But first, you have to get your product to market. Let’s discuss the tools you’ll need to effectively sell your idea. One last thought: For inventions that are very complex and require significant capital to implement, you’re going to need a different strategy. You may need a team, significant funding, and a wall of intellectual property along with trademarks, copyrights, NDAs, etc. These types of inventions are usually in the medical, packaging, auto, or software industries. Big ideas typically justify more robust intellectual property protections and you may need to file a non-provisional patent application, perhaps more than one. You’ll have to work with a patent attorney and may have to defend your patent(s) in court. Part Four of my last book, Sell Your Ideas With or Without a Patent takes a deep dive in to the lengthy and complex process of obtaining a patent.

Protecting Your Ideas Inventor: Roxana Product licensed: Sophisti-Clean Water Bottle Wash & Dry Set I’ve seen many inventors run into their product idea out in the world after they have submitted it to a company and wonder if it’s been stolen. I’ve experienced this firsthand when I saw my own product in a television ad. Ultimately, I don’t think you should automatically fear the worst. In general, I think it’s a wise approach to give companies the benefit of the doubt and ask questions. That’s the advice I gave Roxana and here’s what she learned from the experience: Roxana: I had an idea. I got my sell sheet and PPA ready and submitted to a company. Then I went to a trade show and saw that the company had a part of my idea in one of their designs. I wasn’t sure if they stole my idea or didn’t. I was numb at that moment. I didn’t know what to do. (I advised Roxana to craft a very nice email explaining her experience. The company did get back to her and revealed that their idea came first, and that they had even patented it. That’s not the reply she wanted to hear. She felt a little doubtful at first, but….) Roxana: I decided to do a patent search, and sure enough, it was there. And it had been filed before I ever submitted my product to the company! It felt good to see it. It feels nice to know that they’re an upstanding company and were kind enough to share information. Stephen: The fact is, companies take a risk when working with inventors. I think it hurts the relationship between independent product developers and open innovation companies when inventors quickly assume the worst – that their idea has been stolen. The reality is that the good companies are going to play fair because they need us. Inventors should respect that to help keep their doors open to outside developers. Watch my full interview with Roxana on inventRightTV.

6. WHAT YOU NEED TO LAND A LICENSING DEAL a licensing deal is not that difficult. Many people make it out to L anding be an impossible task. But I’m here to tell you that I see it done each and every week. Let’s look at the big picture. Companies know that in order to stay competitive they need to innovate. So, you must come up with a product idea that your potential licensees’ customers need and want. The idea should solve a problem they have or perhaps entertain in a new and clever way. It’s as simple as that. There’s always a risk when launching new products. What if it doesn’t sell? What if the company ends up with unsold inventory? What if another company comes out with a similar product? Your job is to show your potential licensee a new product idea while taking away as much risk as possible. Make it extremely easy for them to pull the trigger on your project. That’s why you have to reach out to inventor-friendly companies and provide them with ideas that are a good fit for their existing business model. Here are the tools you’ll need to land licensing deal: 1. The right attitude Without the right attitude, you won’t get far. Your goal is to be an asset to companies that are looking for great ideas. You want to make them want to work with you. Remember, you set the tone. At the very beginning, tell them you’re excited about working with them. At this stage, the goal is to convince them

that you’re a team player (and not just convince them, but actually be one!). Ultimately, you want to establish a relationship in which they trust you because you know their business and you are going to be an asset not a liability. Once you have a good relationship with a company, you’re going to submit ideas. Even when those idea submissions aren’t quite what they are looking for, since you’ve invested in them, they will invest in you by giving you feedback about your ideas, or maybe even a specific target to hit for your next submission. Having the right attitude is key to building this relationship. Always be knowledgeable – make sure you’ve done your homework so you can field any question. Be reasonable. I’m willing to bet that you’re fired up about your idea. It’s yours, you created it! But don’t let your passions get the best of you. Be willing to listen and negotiate. Look at things from your potential licensee’s perspective. They might manage over a 1,000 SKUs (Stock Keeping Units); don’t act like your idea should be the center of their universe. Have a positive attitude and you won’t be seen as a “high maintenance” inventor. “I think it’s important to mention that while inventors expect companies to be respectful to them, we expect inventors to be respectful to us.” — Olyvia Pronin, Marketing Director at Wham- O-Toys, which has created and marketed many of most popular toys of the last 70 years. 2. A list of inventor-friendly companies that are looking for ideas I am always being asked for this. Sure, it’s a good place to start. As I previously discussed, not all companies have the same attitude towards independent product developers and you absolutely should identify the right companies to submit your ideas to. But know that a list of companies alone will not get you a licensing agreement. It’s not about access, it’s about doing it correctly. Knowing that a company is friendly to outside inventors doesn’t save you from the work of thoughtfully developing your idea and navigating the tricky waters of pitching it to a company. You should understand that a list will never be perfect or complete because invention submission polices can change. Companies will go out of business and new ones will take their

place. That’s why you can’t just rely on a simple list or database of companies. Instead of relying on other people’s lists you need to make your own. And you do that by being confident in your ability to assess a company’s attitude towards outside inventors. We already discussed this at length in Chapter Four. Another way to do this is to look at store shelves where your product could be sold. Reach out to companies in the same aisle. Don’t see these other brands as your competition, they’re your potential licensees! Also, make sure you always do a background check on whoever you’re working with, even if you found them through a list of presumably good contacts. See if there are any complaints or lawsuits on the internet; it could save you a lot of time. 3. A prototype (whether or when?) I absolutely love building prototypes. Who doesn’t want to see their idea come to life? But creating a prototype for all your ideas is not practical. It would be a losing game by the numbers. You want to pitch as many good product ideas as possible. Spending time and money on a prototype for every idea is not efficient in terms of time or money! So, you shouldn’t be asking if you need a prototype for every idea, you should be asking, “When do I need a prototype?” Let’s take a step back. I recommend selling the benefit first, not the product. Most companies would like to see a proof-of-concept after they’re interested in your product idea. So, try to gauge the interest before going to the trouble of building a prototype. If you cannot sell the benefit first, there’s no reason to build a prototype. “What we prefer to receive, and I only speak for us, is a simple drawing, because the way we work is that we often deconstruct and put it back together with our own take on it.” — Sam Hurt, Cofounder SUCK UK (Novelty gifts) “A video is great. At a very basic level we need a drawing. It doesn't have to be a very fancy drawing. It could be a sketch. We don't need blueprints or CAD drawings at the early stage. A lot of inventors now are providing us with homemade videos showing their product in action with a pet, which is very helpful as well. The more an inventor can do to

convey the attributes of the product to us in a minimal amount of time, the better.” — Jonathan Zelinger, President of Ethical Products, a familyowned pet company for 65 years. You can show your product idea with a sketch or even better, a 3-D computer generated sample. These models can look so real that people will want to purchase it. 3-D models used to be extremely expensive, but they’ve become quite affordable. A good computer-generated image can also be utilized in the marketing material you use to pitch your idea. “In many cases just rendering a product – a drawing of a product – is sufficient to at least get early interest.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. But I want to tell you that the industry is evolving. A sketch will work for a product that is a simple idea, a clever improvement on an existing product, or something simple with no moving parts. If it’s something more than that then just a sketch will put you in the amateur camp quickly. Once again though, it’s all about timing. So, you don’t necessarily need a protype to pitch an idea, but sometimes there are important reasons to build one eventually. For one, a prototype can show proof-of-concept (meaning your product can do what you say it can do). It can show that your product idea actually works. Another reason to build a prototype is to gain a functional understanding of how your product works. You often have to tinker to know what works and doesn’t. This information has huge value when writing a provisional patent application. “We want to see a prototype to see if the inventor can show us proofof-concept.” — Nick Mowbray, Co-CEO Zuru Toys, one of the fastest growing toy companies in the world. Bunch O Balloons, one of their hits, sells about 30 million units a year. Back in the day I used to take existing products and cannibalize them to build my prototypes. I would make Frankenstein/Mr. Potato Head

prototypes. Today, you have the wonderful option of 3-D printing. Know that the cost can be affordable for small objects and quite significant for larger more complex projects. You can always hire a professional prototyper, but expect to spend anywhere from $500 to $20,000 depending on the complexity of your idea. And don’t forget that prototypes break, so you might need more than one. Just because a company asks for a prototype doesn’t mean you should automatically send them one. You always have to gauge their interest. There’s no way to know for sure that their interest is legitimate, but you can learn more by starting a conversation. If they claim to be interested and ask if you can provide a prototype, you might respond that you can indeed provide a prototype, but ask some questions first: What was it about my product submission that you think your customers will like? How do you see my idea fitting in to your product line? What is your review process once I send a prototype? Most of the time I don’t recommend sending a prototype because you can’t control how someone will demo it. Things often go wrong and a prototype that isn’t used correctly can bury your chances of licensing an idea, even if it’s a great one. If you do send a prototype, make sure you send the appropriate information about how to use it correctly and don’t expect to get it back. If you can get to a potential licensee in person, I highly recommend doing the demonstration yourself. Another idea is to propose meeting at a trade show where you can show and demonstrate your own prototype. There are many types of prototypes. Some are working models designed to show the function of a product, and others may be representational and not functioning. A prototype can be full scale or miniature and can be made from different materials, not necessarily the same ones you want for your finished product. The important takeaway is that your prototype should be developed based on its intended purpose. Now, I must add here – there is one industry that absolutely requires a prototype at some point, and that is DRTV. You can use a sell sheet and a video initially, but at some point, you will have to submit a prototype, there’s no way around it. The companies in this industry do not develop their own prototypes, so you are going to have to provide one. They will use your prototype for digital testing so it will need to be both a looks-like

and a works-like. If you have strong interest from a DRTV company, I think you are going to have to invest in a good prototype! “We must see what the product is and how it functions.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. 4. Your value proposition: A one-line benefit statement What’s so great about your product? You need a clear value proposition. I call it the one-line benefit statement. You want to limit your statement to one line, so think big picture. You want to very quickly explain the value that your product brings – what the product will do for the user. Reduce the benefits of your product to one concise sentence. The iPod had a perfect one-line benefit statement. “A thousand songs in your pocket.” It was so powerful, we all wanted one. Please note that a benefit is different than a feature! The iPod didn’t tell you what it was made out of, how long the battery lasted, its relatively small size – or a myriad of other details that were factually accurate. It shared with you the benefit to you – why you would want to buy one. The easiest way to come up with your one-line benefit statement is to consider all the features of your product. What do those features add up to? Take Bunch O Balloons, one of best-selling toys in the world for multiple years. What does this product do for you? Their one-line is, “Fill and Tie 100 water balloons in 60 seconds!” Speed! That’s the clear benefit. Here are some examples of great one-line benefit statements: Chop Magic: The fast & easy way to slice & dice. Pocket Hose: The hose that grows to 50 feet! And it’s not just products that have one-line benefit statements, they’re everywhere! Look for benefit statements about the products, services, and brands you use every day: Apple MacBook: Light. Years ahead. Evernote: Remember everything. If you can, make your one-line benefit statement emotional! A value proposition that appeals to people’s emotions will get more attention than one that feels cold or disconnected. Look online for examples of great benefit statements. They’re everywhere – on websites, on packaging, in newspaper headlines. Clickbait is usually just a clear benefit statement that

lures you in. Your one-line benefit statement can be used on all your marketing materials, subject lines for emails, and even when you’re pitching your idea in person. “If you cannot grab someone’s attention in a minute or a minute and a half you will probably lose that sale.” — John Cremeans, Pioneer in the home shopping industry who has pitched over 100,000 products with $2 billion in sales and 35,000 live television hours. “Pitching is actually an art. When presenting one-on-one to a customer, watch their eyes and watch their facial expression. I remember those. I refine my pitch every single time, and the pitch starts to get better and better. You should 100% believe in your product, and that should come across every time you make a pitch — whether it’s to a camera, a one-on-one presentation to an investor, or a presentation to someone you’re trying to sell.” — Aaron Krause, Inventor of Scrub Daddy. Since 2012, he has sold more than 25 million Scrub Daddies and his company is worth upwards of 170 million. 5. Marketing material You have a great idea. You clearly understand the benefits of your product, you created it. The question is, how are you going to pitch this great idea to a potential licensee? I want you to know, that after interviewing many, many companies about the submission process, your marketing material is the number one thing that will guide a decision about whether the company wants to work with you or not. Even if your product is not great and your one-line benefit statement is lousy, professional-looking marketing material will get you in the door. If your marketing material is amateurish or sloppy, your idea will get put in a pile of items that don’t get looked at! There are two items that are invaluable for marketing your ideas. a. Sell sheets

First, you absolutely need a one-page advertisement of the benefits of your product. I call it a sell sheet. After interviewing hundreds of companies, I can tell you that your sell sheet is the first thing they look at. If your sell sheet does not convey your product’s benefit immediately or if it looks like you did it yourself, they will put your product in the “amateur” pile. Most companies do not have time to review products that they have to “work” to understand. A professional sell sheet is your first step to becoming a professional inventor. It makes an excellent first impression and they will spend a few more minutes reviewing your product submission. The format of an effective sell sheet is very simple. Keep it to one page. Your benefit statement should be at the top of the page. Next, make sure you include a large visual of your product. You can take a photo of your prototype. You may even use a 3-D computer generated model. Using bullet points, write three to four features of your product. These features should all contribute to the main benefit statement that’s at the top of the page. Add your contact information at the bottom of the page. Email, mailing address, and telephone number are all you need. If you have a product logo, it will give a great finishing touch to your sell sheet. It doesn’t have to be large and overbearing. Add it to the bottom. Likewise, if you own a company and have a logo for it, you can add it to the bottom but again, keep it small. You can also add “patent pending” if you have filed intellectual property such as a PPA or non-provisional patent application. You can keep this detail small as well. A well-designed sell sheet should be pleasing to the eye. It should use fonts and colors that are typically used for products in that category. Make sure you study the company's website to create a sell sheet that’s consistent with their product line! Look at their branding very carefully. You should test your sell sheet on friends and family to see if they get it. If they don’t get it quickly, you must re-design your sell sheet. A sell sheet should be like a billboard advertisement. You should be able to pass it at 60 miles per hour and get it instantly. Another good comparison would be a one-page magazine ad. You should get what they’re selling at first glance. Don’t be tempted to be wordy and detailed. The goal is to keep things short and sweet. You won’t have room to provide every detail and that’s perfectly fine. Remember, you’re selling the benefits of your idea, not

the intellectual property or the potential for profit. Sell the benefits and give enough information so they ask questions and engage with you. “It’s not about how fancy your sell sheet looks – does it convey the idea? That’s the biggest thing.” — Atul H. Patel, former product manager with 15 years of experience at Bosch, GM, and Daimler, some of the largest automotive companies in the world. One of the biggest mistakes that I see is that inventors are making sell sheets themselves. Sure, if you’re a graphic designer, have at it. But if you don’t have graphic design skills, I highly recommend that you outsource this task. There are multiple ways to make this happen. If you’re on a budget, look for a graphic designer at your local college. Also, you can look for a freelancer online on sites like Upwork and Fiverr. If you’re worried about confidentiality, have them sign an NDA with work-for-hire language. The potential downside to connecting with a freelancer online is that the process may take a while. There’s a good chance that you’ll be working with someone overseas whose first language isn’t English. You’ll have to explain the idea of a sell sheet. You’re also going to have to play art director. You’ll have to put in some work to get great results. Because the sell sheet is such an critical tool that inventors are so often getting wrong, at inventRight, we created a service called Design Studio that provides you with a convenient online portal to get all of your marketing materials in one place without having to worry about third party services, communication issues, or other common problems that can slow you down. Want to see more examples of sell sheets? Visit my YouTube channel inventRightTV and search “sell sheets.” I have recorded many videos reviewing real sell sheets. There are also four sell sheets in the back of this book for you to check out. b. A one-minute video Who doesn’t love a video? A one-minute video that shows a problem followed by your product as the solution to that problem can work as a very effective marketing tool. A sell sheet is a must, but a good video is arguably the most powerful marketing tool you can have today. This type of format

is extremely popular in the DRTV space. Look them up, almost every DRTV product will have one. You don’t have to spend thousands of dollars to produce a one-minute video. Most of my students create their videos with a smartphone, storyboard, and a good script. I highly recommend that you embed your one-minute video in any digital copy of your sell sheet. When you combine your sell sheet with an embedded video, that’s all you need to market your product. You don’t need to be a salesperson. You don’t need to dance on table tops. Your marketing materials should sell for you. When you provide your potential licensee with marketing material that they can share with others, you’re making it extremely easy for them to gather enough information to determine whether your idea is the right fit for them. They’re able to share this information with their manufacturers, buyers, and even supply chain. Once you share your video with a potential licensee, make sure they can watch the video! A broken link will not make a good impression. Also, knowing if or how many times a potential licensee has watched your video will help you determine if there’s interest in your idea. There are many ways to do this. Most inventors use YouTube to host their videos. That video should be private on YouTube. We mentioned in the last chapter why this is an important strategy—you want to protect your idea. Don’t share your idea on social media too early! If your video is private, and you’ve shared it just once, or with a select number of potential licensees, you can use YouTube’s built in analytics feature called Watch time report to learn about who’s watching, how many times they’ve watched, and even how much time they’re spending watching your video. Of course, if you’re hosting your own video, you can use whatever software you prefer to gather data about your one-minute video. Also, a reliable low-tech option would be to send a follow up email with a link to your video to try to make sure your potential licensee is watching it. If you are submitting ideas in the DRTV industry – you probably want to take your one-minute video “one step further” to make sure that it looks like a professional advertisement. That doesn’t necessarily mean that you can’t make it yourself, but it does mean that you will really want to take lighting, voice-over, script – all the details – and make sure that they are

really well done. Past inventRight student Scott Baumann has elevated the one-minute video to an art. “Scott did a great job. Usually we give our assets to a producer and then we do the test, which takes longer. Whereas with what Scott brought in, we were able to test immediately because he had done all the work.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. “You, as the inventor of your own product, knows that product better than anyone else in the world. You came up with that idea based on your own experiences and your own vision of the world. No one is going to be able to relay the attributes of that product better than yourself. Do not ever leave it up to chance!” — Scott Baumann, Professional inventor and CEO of Procreate Brands, LLC., which has more than 40 worldwide licensed products in its portfolio. inventRight student. 5. Knowledge of manufacturing costs Understanding manufacturing costs can be a big plus when trying to license your idea – you can really move the project along much faster. “Inventors should also pay attention to costs. There are hidden costs of doing business at large companies, which is one reason why they can be risk-averse. Learn more about their cost structure and cost structures in the industry at large. It could be the best product in the world but it will be cancelled if everyone involved cannot make enough money.” — Atul H. Patel, former product manager with 15 years of experience at Bosch, GM, and Daimler, some of the largest automotive companies in the world. Now I know that you are thinking: “How would I know anything about manufacturing costs? I’m just a regular individual with a great product idea.” I completely understand that reaction – I was in your shoes once, but with some patience and homework you can develop an understanding of this important detail that will assist you with your potential licensee. If a company is interested in your idea, one of the first questions you’ll be asked is, “How much is it going to cost to make?” It doesn’t matter if your idea is great. If it can’t be produced at a reasonable cost, no one will be interested. A related question is, “How can we make it?” Again, they’re

wondering, “Can we use existing production lines and equipment to produce this new product?” If your idea is simple, you can learn about how it can be manufactured by studying other similar products on the marketplace. If your idea is more complicated and you have a working prototype or CAD drawing, a very smart move would be to reach out to a contract manufacturer. I generally recommend choosing a contract manufacturer here in the United States as opposed to one overseas. Yes, the price per unit will be higher but there will be far less concern about having your idea stolen. You can also get an estimate from the engineering firm if you hired one to do your technical drawings. You shouldn’t be too concerned about your idea being stolen from an engineering firm or contract manufacturer. You can have them sign an NDA with work-for-hire language to cover the bases. Some companies won’t need a manufacturing quote from you because they’re very good at manufacturing themselves. They can easily look at your product idea and estimate a manufacturing cost inhouse. That’s somewhat unusual but it does happen. But some companies are so busy that they will rely on the inventor to help obtain an initial price quote for the product. If you don’t know the right components, materials, or mechanical parts, you could be at a big disadvantage. You might send your drawings or prototype to the company’s supplier in China only to have it deemed too expensive to manufacture because you left the materials up to the supplier’s decision. No matter what, if your product is going to get to the market it is going to get manufactured. It comes down to timing but someone, somewhere is going to have to do an evaluation of the cost to product because ultimately, the retail price point and profit margin (and your royalty) depends on that cost. Know that different ideas will require different approaches, but make sure to always consider manufacturing. Adopt a detective’s mindset and try to gain as much information as possible about your potential product. Also, don’t forget that the information that’s initially gathered will be not be final. Costs will always vary depending on scale of production. If seriously interested, your potential licensee will get their own quotes. “When submitting concepts, you really need to try to figure out what the most cost-effective way to produce the item is – if you can include that

with your submission it really helps. Most things get pushed out to the engineers to figure out and the engineers don’t really have time because they are working on projects that have already been approved and are going to market.” — Bob Ruginis, former Director Electrical Engineering, Hasbro Toys 6. Packaging concepts Who wouldn’t want to see the package with your product in it on a store shelf? For some industries, a computer-generated graphic of the package on a store shelf can be attention catching. It’s not always necessary but sometimes can make your idea stand out among the competition. It makes your idea look real. They get to visualize the end product, which can generate interest and spark conversation. If you go this route, make sure it’s done professionally. 7. Confirmation of market demand The easiest way to obtain a licensing deal is to take away some amount of risk. One way is by showing market demand. You could use a crowdfunding site and show how many people want to purchase your idea. “Crowdfunding is probably the closest thing we have to real intent to purchase because the customer is literally buying something even before it is made.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. To me, crowdfunding is a lot of exposure – maybe too much. I would prefer to reach out to end-users such as buyers and see if there’s interest. With good marketing material, especially with 3-D computer generated graphics, it’s easy to get a read from buyers. 3-D computer generated models can look very realistic — realistic enough that your product looks ready for purchase. I’ve seen many buyers ask for the wholesale price after seeing a computer model of a product idea.

You’re checking in with buyers to determine if you have an idea that consumers will buy. Being able to show potential licensees that there’s demand for your product is a great tool to have. Try it out, reach out to a buyer at any major retailer through LinkedIn. Try to obtain some type of read. Start a dialogue. You’re looking for input and suggestions from the buyer. One of my students reached out to one of the buyers at Costco and asked him his opinion about his product. The Costco buyer liked it and wanted more information. Then he found a potential licensee that was currently selling at Costco. He told the potential licensee that Costco was interested in carrying his product, which definitely caught their attention. The Bottom Line, and Your Best Tool? Knowledge this book is about bringing your ideas to market by licensing them to companies, so knowledge may be the ultimate tool. You need to understand what companies are looking for. These are things you need to know: • •

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Your potential licensee’s product line and mission statement. Their price point and the materials used in their products. What your product might cost to manufacture. You could get a quote from a contract manufacturer. This is helpful to know so you can determine that the price of your product will fit in to the retail market. Your product’s point of difference compared to similar products on the market. You’ve read the reviews for similar products on Amazon. You’re able to show that there’s positive demand for a product like yours. You have done a prior art search. That your product actually works. You built a prototype that looks good and works very well. You’ve worked out all the bugs. How to put yourself in potential licensees’ shoes and understand what they need to make good decisions. Give them good marketing material that they can share with their retail buyers and suppliers. Understand royalty rates and minimum guarantees for similar products. This will make you seem very workable and reasonable.

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That you have taken away as much risk as possible for potential licensees. You should have a well-written provisional patent application. You’re not reinventing the wheel, but you made a simple improvement on an existing product.

Tools You Need Inventor Interview Inventor: Ryan Diez Product licensed: Woof Washer 360 Ryan had an idea for a simple dog washing tool as a kid and developed a rudimentary version with his dad for a school science project. In his first effort to get the Woof Washer 360 to market, Ryan took a passive approach and relied on another organization to pitch his idea for him. For years, Ryan waited but heard nothing. After joining inventRight, he was empowered with the knowledge to bring his product to market himself and successfully licensed the Woof Washer 360 to the largest DRTV company in the world. Ryan’s product has been selling in major retail stores like Petco, PetSmart, and Bed Bath & Beyond. A marketing video for the Woof Washer even went viral and has been seen over 70 million times! Ryan continues to develop product ideas and has even joined the inventRight team as a coach to give back to the inventing community. Stephen: Ryan, what makes a successful product developer? Ryan: You have to be realistic. You have to look at your product and think of it as though you’re sitting in the shoes of the person you’re pitching to. It may be a good idea in your head, but let’s be honest. Are other people going to want it? Are other people going to invest in it? Stephen: How do most inventors struggle? Ryan: Everyone comes to us and they say, “I want to make this a career. I want passive income and I want to do this full time.” In order to do that, you have to dedicate yourself to it. In theory, everything we do is very simple, but it takes an incredible amount of dedication. We all love inventing; that’s why we’re here. But where most of us struggle is the marketing. That’s where inventors everywhere need that extra guidance and push to get the product in to the hands of people that want to buy it. Stephen: What are your tips for marketing your product ideas? Ryan: Go the extra mile to create stellar marketing material. I’ve learned that a potential licensee will quickly test your idea if they’re interested. If they don’t like your marketing copy, they will use their own

marketing material to test your idea! And often, they won’t invest the time to create a great video or sell sheet. You won’t have any control over the pitch! That’s why I go the extra mile to provide a potential licensee with a great one-minute video that they can use to test my product. This will give you the best chances of success. You can watch our full interview, as well as other great content with Ryan Diez, on inventRightTV! Ryan also regularly publishes articles with helpful advice for inventors on the inventRight blog.

7. REACHING OUT TO POTENTIAL LICENSEES ago, when I started reaching out to potential licensees, I didn’t Y ears have the internet. I had to take what I call the direct approach—I just called corporate phone numbers and typically got a receptionist. They didn’t really know who to connect me to when I said I was a product developer wanting to submit ideas. So, I would just ask for someone in the marketing department. Back then that was the approach. It was rather straightforward, and people regularly picked up their phone. Things have changed a lot over the years. People are increasingly reluctant to talk on the phone and email is now the most common way to communicate. Most people want to qualify you and your interest in them before they take the time to actually speak with you. When you start to reach out to potential licensees to pitch your product ideas, you’re truly in the game. To find success, you’re going to have to learn to effectively communicate with your potential licensees. The direct approach is still necessary sometimes, but there are other approaches you should be familiar with. There are basically four ways to reach out to potential licensees today: The direct approach: Call their corporate number directly. LinkedIn: Contact someone in their sales or marketing department through LinkedIn. Online invention submission forms: Directly submit your product idea to a company online.

Trade shows: Go to a trade show and meet your potential licensees in person. In this chapter, I’ll cover each approach in great detail. But first, some general strategies for reaching out to potential licensees. General tips for reaching out You should have a list of companies in mind that could be a great fit for your idea. You’ve done enough research to know the companies that really embrace open innovation. You know their product lines very well. You’ve taken the time to create fantastic marketing material. How do you make contact? What’s the best strategy? Don’t pitch your idea on initial contact. Remember, you’re just trying to identify the right person to consider your idea. It could be a product manager at a large company or the CEO of a small company. You should have the mindset that you’re just trying to “get in,” not sell your idea the first chance you get. You don’t have to be a salesperson. You’re just trying to “drop off a package,” which is your marketing material—your sell sheet and oneminute video, to the right person. You don’t have to sell. In fact, during your first contact, you shouldn’t sell! Let your marketing materials sell for you! Look for product managers. Product managers are responsible for projects from start to finish so they’re one of the best people to talk to about your product idea. Also, they generally don’t care about where ideas come from, they just want good ones! Just remember that product managers are usually very busy. You may have to be very persistent to get through. Don’t give up too quickly. What if you can’t reach a product manager? Try someone in sales. People in sales are always on the phone reaching out to potential clients. If you approach them correctly, they’ll get back to you quickly. ftink about it, their job is to sell. If a salesperson likes your idea, there’s a decent chance they’ll help you get it to the right person. Don’t look for shortcuts. Too often, inventors mistakenly think that the best approach is to find someone who’s high up – maybe a CEO or vice- president. This is the wrong approach because they will typically hand off a good idea to a product manager. Your idea just becomes an assignment. If you reach out to a product manager and they like your idea, they will take ownership of it. Don’t be

so singularly focused on selling your idea that you bark up the wrong tree. You have to communicate like a professional product developer!

Please note, if you’re trying to get in to a very small company, the president may be the right person to reach out to. Don’t avoid the gatekeeper. The gatekeeper might be the receptionist. Make friends! Make sure to get his or her name. ftink about it, this person knows everyone. They can help you reach the right person and that’s more than half the battle. I’ve even heard a story about a receptionist who loved a new product idea so much, she shared it with her entire company. You should not see this person as an obstacle, rather someone you should befriend. In some situations, this person will not know where to send you. You can suggest someone in sales or marketing, or product development at a large company. Make sure you keep very good notes. Because you’ll reach out to many people, taking detailed notes is a very useful way to stay organized. Keep track of who you’ve talked to and when. Your goal is to cultivate relationships with the right people. Resist the urge to procrastinate. Inventors hesitate to start pitching their ideas because they fear rejection. I get it, until you start pitching, you haven’t been rejected. But don’t forget that licensing ideas is a numbers game. The aggressiveness of inventors in working to reach out to potential licensees separates those who succeed from those who fail. The Four Approaches in Detail 1. The direct approach Because of the internet, calling a potential licensee’s corporate number is not as effective a strategy as it used to be; however it is still the fastest way. Also, reaching out directly isn’t always as easy as simply submitting your idea on an online submission form. Sometimes, the right person won’t be on LinkedIn. You might have to break ground by making a cold call. Just like everyone else, I’m not wild about making cold calls. It can be very difficult to summon the energy and enthusiasm to talk to someone who you have never met in person, especially when you are asking them to do something. Over time I have developed a different point of view about this. I don’t look at the process of reaching out to potential licensees as cold calling. I’m not selling, I’m trying to find a home for my product idea.

You should start by putting together a list of 20 to 30 potential licensees. For the tenth time, make sure they’re the right ones, do your homework! I pick four or five companies I’m going to contact and that’s my goal for the day. I never start with my favorites because I know that I’ll be much better after practicing on companies that are lower on my list. I never call on Mondays or Fridays. Monday can be a busy catch up day after the weekend and people are trying to get out of the office on Fridays. I always make sure to practice my script until I really have it down. I always stand up while I make the call and am dressed appropriately. Yes, even on a phone call. It typically sounds something like this: “Hi, my name is Stephen Key. I’m a product developer and I’d like to submit a product idea to your company. Who’s the correct person or department to reach out to?” In this initial contact, I’m not trying to sell. I’m just trying to get my marketing material to the right person. If you have solid marketing material, it should do the selling. I just try to be polite and enthusiastic. Don’t forget to smile, even on a phone call. There’s a good chance you’ll have to do this quite a bit. The first call is always the hardest and you’ll eventually be surprised at how good you’ll get at this. Once you start to reach out, it gets much easier. Nine out of ten times, the person you are speaking to is very nice. Keep things fun and light hearted. You’re just trying to get your foot in the door so be polite and respectful. I always reward myself after making calls. For me, after calling companies in the morning, I work on creative projects in the afternoon. I try to separate these two jobs. I wear two different hats. Wearing the business hat, I’m calling companies. And separate from that is the creative hat – the role I’m really passionate about. Don’t mix those up. 2. LinkedIn LinkedIn can be a powerful resource when trying to connect with potential licensees. Through LinkedIn, you may be able to identify someone specific to call. And because you’re going to use LinkedIn to find the right person, make sure your LinkedIn page is your personal sell sheet. It needs to be professional and polished. From my experience, finding the right person within a company takes some time. Companies vary in size and structure. The right person won’t

always have the same title or be in the same department. It could be someone in new product development in one company and someone in charge of inventor relations in another. Reaching out to potential licensees on LinkedIn is quite simple, but it has to be done the right way. You can’t rush the process. Benjamin Harrison is an expert at using LinkedIn to get in touch with potential licensees to pitch product ideas. He was a student of mine at inventRight who was working on an extremely complex project that had the potential to be licensed by very large music companies. When he started pitching to large record labels, he wasn’t getting in. Understandable after all, the music industry has some of the toughest gatekeepers anywhere. They’re constantly getting solicited. After figuring out that he had to change his profile and pitching strategy on LinkedIn, he found success. Through the experience, he developed effective strategies to get in to any company. At inventRight, Benjamin’s course about connecting with the right people at companies using LinkedIn, which is called Smart Pitch, has helped many product developers.

LinkedIn Tips from Benjamin Harrison I don’t want to be called by people who are trying to sell me something. It’s tired, it’s worn out, it’s ineffective, and in today’s digital age it’s quickly becoming antiquated and unnecessary. Thanks to LinkedIn, product developers have another option that provides powerful strategical advantages over conventional methods of reaching out to potential licensees, but many still struggle to get responses due to a lack of understanding and execution. Most people still look at LinkedIn as a job search site. They use lifeless resumes and pictures cropped out of 10-year-old wedding photos for their profiles. They then proceed to reach out by blasting out a copy and paste “spray and pray” marketing campaign to all their connections, hoping something sticks. Their “getting in” message consists of a tower of text that is, more often than not, way longer than any sane professional will be willing to read through. It contains pictures, links, and keyword filled rants that leave people wondering what the call to action is, and more importantly - why they just wasted their time. After sending out their long-winded message with their flat profile, they blame LinkedIn for lack of success and rant about how the platform doesn’t work. Truth is, if that’s your approach, you have no one to blame but yourself. Like with all forms of communication nowadays, LinkedIn direct message (DM) boxes are packed full of spam. You can’t expect to get responses if your message and profile look like spam too. Setting yourself up for success on LinkedIn takes having a well-crafted profile, reaching out to the right connections, and sending a message that sparks engagement rather than overwhelming the recipient. Let’s take a closer look: Get your profile right Having a killer profile is critical in having success when reaching out on LinkedIn. More often than not, direct message and connection request recipients view your profile to qualify you as a professional. ftose who don’t look at your profile still see both your picture and headline when receiving a connection request or message. These brief qualifications can have long lasting results. How you present yourself either boosts the perceived value of your marketing material or it shoots it in the foot before it ever gets a chance to

sell for you. Having a polished, complete profile, with platform activity, social proof, and a narrative built in is a good place to start. It’s important that connections feel comfortable with you as a professional, especially if they are going to introduce you to coworkers and superiors. They know that their coworkers will qualify your profile as well, so they typically want to see it first. LinkedIn profile qualifications frequently happen in under 20 seconds, so you need to have a concise profile that showcases you as a professional product developer, not a mountain of information. Having a profile attached to your LinkedIn direct messages provides you with an opportunity to control what the message recipient sees when they go to qualify you, which isn’t normally the case when cold calling or emailing. Someone would hang up if you tried to explain your personal brand, work experience, and mission statement over the phone, but on LinkedIn they almost instinctively check your profile for this info after being messaged. This provides a big opportunity to set yourself apart and set the tone for your professional relationship. Find the right connections Maybe it comes from being obsessed with their own ideas, but for some reason inventors think they need to go right to the CEO or Vice President when reaching out. It’s seldom the best plan. There are some presidents and CEOs that have a hands-on approach on LinkedIn, but as a rule of thumb, they are the wrong tree to bark up. I’ll connect with anyone in a company, but I target sales, marketing, and new product development when reaching out. As a rule of thumb, Sales is the quickest to respond, Marketing is a little more helpful but not active as sales professionals, and Product Development can be hit and miss depending on the size of the company. Targeting users who are active is a smart approach. Active users tend to not only respond more often, they also typically respond faster. A user’s activity can be seen by viewing their profile. It’s a good time to consider what the activity on your profile says about you, when you’re qualifying other user’s profiles. Not every user is going to connect and not everyone will respond to messages. Some users respond quickly, some a month later, some not at all. Don’t go into this process expecting a 100% response rate, you’ll just end up disappointed. However, if you get in the practice of consistently and

properly reaching out, you can get many timely responses to your request to submit your ideas. Spark engagement by reaching out the right way Another qualification process on LinkedIn that happens even quicker than a profile qualification occurs when someone initially receives a message. I call this qualification process the “initial internal spam filter.” This filter is what allows you to quickly separate the email from the Saudi prince that just needs 3k to help free up his fortune from the important email from your mom or boss. To send messages that pass the initial internal spam filter, drumroll… don’t send a message that looks like spam! Especially from a profile that looks suspect. In order to pass this qualification, you’ll need to take a realistic look at your message and make sure it’s short and to the point, asks a pertinent question that sparks engagement, avoids spammy sounding greetings, and doesn’t include any pictures, videos, or links to your product. Sorry to break the bad news, there is no “magic bullet script” for reaching out. There is no magic string of words that’s going to work every time. I use a few different scripts when reaching out. Having a high “pitch IQ” on LinkedIn means having multiple scripts that fit varying scenarios. Scripts should be as short as possible but there are times, such as when dealing with very large companies, when it’s important to include pertinent information about the type of product you’re submitting. When reaching out to contacts on LinkedIn, the main strategy is simply to ask permission to send your hopefully killer marketing material over. Hard linear sales pitches don’t work on LinkedIn, you have to let your marketing material do the selling for you. Short and to-the-point scripts that ask a reasonable question are infinitely more likely to spark engagement and earn a response than long winded rants: “Hey Jane, is there someone at business x that takes care of open innovation submissions?” or “Hello Tom, does business y take open innovation submissions? I’d love to be able to send you guys product ideas for consideration.” It’s an important show of respect to ask if you can send your marketing material over for consideration, rather than sending it over as part of your initial message. It’s also a huge no-no to send over a message as soon as someone accepts a connection request. This is a major complaint, so fight

the urge, and wait a few days after connecting to reach out. This type of etiquette can be well received and can help lay a solid professional foundation with a connection. A more recent addition to the LinkedIn messaging repertoire that’s becoming popular is the ability to send an audio message, similar to a voicemail. While standard phone voicemails are an antiquated inconvenience, LinkedIn audio messages are more novel, so they almost demand to be played. Since very few spammers are using personalized audio messages in their strategies, you are less likely to be immediately dismissed as spam using this method. While it may seem old school to record an audio message, they can come across as personal (like a hand written note) when compared to normal LinkedIn messaging. You can use scripts similar to what you would use in a LinkedIn dm when leaving an audio message: “Hey Susan, I’m curious if business x takes open innovation submissions, and if so, who they’re sent to? I appreciate your time and hope you’re having a good day Susan”. Note: Hearing the sound of their own name makes a message feel personal. When I start the “pitching” stage of product development, I will commonly send out around 10 messages in the morning before starting my day. Depending on the day, I usually get anywhere from 2-5 responses. Don’t get me wrong, starting out, there was a long streak of 0 for 10 response days, and I occasionally still have them, but they’re rare. There are days when I’m struggling to field 7 product submissions followed by 4 connections where someone immediately asks questions about manufacturing or sales or even requests a prototype. I’ve had users respond in under 5 minutes and others respond 4 months later. I heard that an inventor in Europe got a response in under 30 seconds from a US based business. Manage your expectations by knowing that there are going to be slow days and days where you don’t have time to get back to everyone. It’s important to remember that LinkedIn is not an IP pitching platform, and of the multiple reasons that users sign up, I think it’s safe to say that none do in hopes of adding more spam to their day. People sign up on LinkedIn to work on their professional online presence, to actively pursue

networking, and occasionally to look for a job. You should try to make connections and ask relevant questions about business, not blast spam. Remember that it takes the combination of having a killer profile, reaching out to the right connections, and sending messages that spark engagement in order to have a high response rate on LinkedIn. Having the perfect script isn’t going to matter if you’re only reaching out to CEOs and your profile makes you look like a hot mess. However, once you’ve established a good balance of all three, making a cold call to reach out will become a tactic you seldom visit. I know it’s not sexy, but there’s no magic bullet when it comes to getting into companies. It takes persistence. Don’t expect red carpets and champagne every time you reach out. Through persistence and flexibility, you’ll eventually find the right connection, the right company, and the right home for your product idea.

One of my students recently reached out to me because she wasn’t getting many responses. The first thing I did was look at her LinkedIn profile. Her graphic backdrop was generic. Her description said, "Hair and makeup" for a well-known entertainment brand. Her profile picture was casual. I don’t think her hair or makeup were done for it. She changed her description to “Creative development at X / Product developer.” She updated her picture with a professional head shot. Hair and makeup were impeccable. Lastly, she changed her backdrop to a scene of one of her work events. She leveraged the brand and created a very professional LinkedIn profile. That profile was her sell sheet, and it created a powerful impression. After the changes, she submitted ideas to the same companies she had reached out to before and guess what? They started to respond.

I also asked Woof Washer 360 inventor and inventRight coach Ryan Diez to weigh in. The Woof Washer 360 was a viral hit on social media as well as an As Seen on TV sensation. Ryan was kindly willing to share some of his insights and scripts on using LinkedIn.

LinkedIn Tips from Coach Ryan Diez LinkedIn is an incredibly powerful tool that I use on a daily basis. If you want to put yourself in the absolute best position to license a product you must not only be a LinkedIn member, but also have a thorough understanding of how to manage its massive database of industry professionals. I no longer make cold calls and in fact believe that cold calls are becoming an old and tired concept. My product the Woof Washer 360, which ultimately became a major hit and was licensed to a company in the DRTV space, started with a LinkedIn message to the president of my licensee. I asked for permission to send him my sell sheet. He responded very shortly after and was receptive to my request. The rest is history as they say. Simply put, there is no easier way to identify and communicate with the decision makers who can make your product a reality! I suggest you use a combination of cold call, email, and LinkedIn. I love the three-headed approach. With that said, cold calling is nearly dead. We are in an environment where people prefer communication via text and emails and have, frankly, lost their social skills. The below scripts work for LinkedIn and email. My students are successful when they do not deviate much from these and certainly don't add much more. The reason myself and so many students find these scripts successful is because they are short and to the point. We are essentially saying, "Hey, I’ve got a great new product that will benefit your business. If you give me 2 minutes, I'd like to send it over." We are not selling and we are not wasting anyone’s time using these scripts. Subject: Greetings Mr. question re: Ergodyne Open Innovation? "Good Morning Mr. , My name is Ryan Diez. I am a product developer from Los Angeles, CA. I have developed a patented heat stress reducer which I believe would be an absolute perfect fit in the line. Obviously, your company is on the forefront of innovation in the cooling category so I was hoping

would be open to outside submissions. If so, I have a sell sheet which will quickly highlight the benefits of this product to your company. Please let me know whom I may send more information to… perhaps that person is you? Thank you for your time, Ryan Diez" Subject: Pacific World Open Innovation? “Good Afternoon Ms. , My name is Ryan Diez, I am a product developer from Los Angeles, CA. Is Pacific World on board with open innovation? I have developed an extremely unique yet simple nail care product which I believe would benefit Pacific World and fit wonderfully in your product line. Are you or someone within the company available to review my material? Hope all is well, Ryan Diez” Some additional things to consider: Subject is important. Notice my subject line is neither a sales call nor a pitch. The words “Open Innovation” are interesting, because people generally don't know that term. I believe this makes the recipient open the message. I don't ask for their process. I ask to be directed to the right person and go as far as to say, "Maybe that person is you?" It is important to say you have a professional presentation that will highlight the benefits to their company or their customers. Assuring them we have a professional presentation tells them we are not an amateur inventor with merely an "idea." Do not waste your time on someone whose profile is not active, current, or otherwise indicates they are not into connecting. (In other words, if their profile shows they have only 20 connections, don't send.) This person doesn't care about LinkedIn. If the contact allows you to send them your material, follow their lead. If they provide an email, then email it to them. If not, upload the sell sheet to the LinkedIn Message. Grab them by the horns and get that sell sheet to them while you have their interest piqued. There is no point in going around and around on messages before you send it. Should you send the same message to more than one person at the same company? Yes. We do this with the understanding that most people will

never get back to you. All you need is one person to respond with, “Sure, send me your sell sheet.” With that said, there is the possibility that John from company A responds with permission to send the sell sheet on Monday and then on Wednesday, Joe from company A also grants you permission to send him your sell sheet. So that neither party thinks you are playing one off the other, I always recommend keeping everyone in the know, such as the following. “Joe, thank you for the quick response. For full disclosure, John agreed to look at my sell sheet on Monday. Two eyes are better than one however, and I welcome your feedback too. Please see attached.” If you do not make it known that an additional party is also reviewing the sell sheet, you risk the chance of highly agitating one or both of them. this strategy is extremely beneficial, because John may hate the item, but Joe may love it. You have now effectively pitched two people at one company without causing strife! I think Ryan’s approach works for companies that do not have a dedicated person or department for receiving new product ideas. You’re just trying to find a champion or someone who will fight for you and your product idea.

3. Online invention submission forms I think there are two primary reasons why companies use invention submission forms. The first is that a company may be receiving many invention submissions and uses an online process to manage them. These companies are generally friendly to inventors. This method is becoming more and more popular among companies because it offers a built-in tracking system. The other reason that a company will use an online submission form is that they’re actually not very serious about licensing ideas. In this case, online submission forms are just a public relations mechanism more than anything else - trying to keep people happy but not seriously interested. As we mentioned in Chapter 3, some online submission forms contain ridiculous language that’s obviously unfriendly to outside inventors. And remember, if it’s not fair and balanced that’s a red flag that the company isn’t actually inventor-friendly. There are forms out there that commit inventors to giving up the rights to their ideas! Remember, some companies are just not friendly to inventors. The big takeaway here is that you must read the fine print carefully! Do your homework and know who you’re submitting to. What else can you do? Here are some strategies to make the most of online submission forms: For one, follow their instructions. Invention submission forms allow companies to screen your product submission. At this point, they do not want to establish a relationship or have any dialogue with you. This is their process and I would highly recommend following it. If you don’t hear back from a company within a month, I would try to follow up through their corporate number or someone on LinkedIn. Remember, some companies will not get back to you if they’re not interested. I always like to get some confirmation that they actually rejected my product idea, so I have a paper trail. Ask what the company’s submission procedure is. When you’re told to fill out their form online, you can ask, “Can you give me the email address of the person who receives the form?” that way you have someone’s contact information. You can also ask, “How long do you typically take to respond to product submissions?” When it comes to online submission forms, what you don’t want to do is submit your idea into a black hole. So, when you fill out the form, type out the following statement in the comments section.

“Hi, my name is _____. I’m a product developer with [name of your company]. I’m wondering if someone is actually reading these forms. If so, could you please email me to let me know? My email address is .” One of our coaches has had great success doing this. Most of the time, he says, someone does email him back to confirm that his submission was received. You now know that someone has actually received your submission and you have a contact to follow up with. If the company is receiving a lot of submissions, it’s important that you stand out. Doing this is one way of accomplishing that. Again, this also creates a paper trail, which helps protect you. You could also decide to call the company after you’ve submitted your idea online, particularly if the form you sign doesn’t ask you not to. When an employee tells you, “Oh, we only accept ideas through our website,” you can tell them that you have submitted your idea using the company’s form and quickly ask, “When can I expect a response?” Remember, you’re trying to get a dialogue going. You are trying to create a connection with a human being who can give you some feedback. It’s very helpful to know what kind of timeframe you’re working with. They could review new ideas bi-yearly! It’s totally fair of you to ask what to expect. Don’t simply submit your idea and wait for something to come of it. You need to touch base and follow up with an actual person. “Our product submissions mean everything to us and we have a very organized formulaic process. Internally we are looking at hundreds of products every week. I would say our process is what allows us to get back to people in a timely manner.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. 4. Trade shows One of the fastest ways to get a licensing deal these days is to work a trade show. “Inventors have to do their homework. And the easiest way for them to do it is by walking the trade shows to see what's out there. Not only does it help eliminate duplication, it also gives them inspiration for fresh, new ideas and to pick up on trends. So, we think it's very valuable. The professional inventors who we have worked with who have been the most

successful have been the ones who took the time and made the effort to go to shows and really get a feel for what's happening in the industry.” — Jonathan Zelinger, President of Ethical Products, one of the most highly respected larger brands in the industry. Years ago, it was hard to make appointments to get into trade booths to see the products. There was always a gatekeeper. Things have changed and you definitely should attend trade shows if you’re serious about licensing your product idea. Most of the booths don’t have walls anymore and are very open and inviting. The biggest change we see today is that companies are there not so much to take orders from buyers, but to show new products and meet inventors. I interviewed Hyde Tools and they told me that they set aside a day where they schedule appointments with inventors and take Shark Tank style pitches. One of the biggest advantages of attending a trade show is that you get to meet all of your potential licensees in one place and time. This can save you time and money. You get to see new products, feel the excitement, and meet everyone personally with no gatekeepers in the way. There will be people from marketing, sales, CEOs even. There are people at trade shows you would have a remarkably difficult time reaching otherwise! Just don’t forget to be respectful of their time. They’re there to sell, promote, and introduce new products. “For new clients, I do try to set up appointments. I try to meet with the president, CEO, or vice president of new products, but those people are very busy and they’re at the show to sell, not buy, so it’s hard to nail them down for appointments. A lot of times, they’ll just say to come by the booth.” — Amanda Hutton, Professional pet and toy inventor who has licensed more than 50 products. I attend many trade shows with my team at inventRight. It helps me and my students stay current on what’s going on. It’s like a mini reunion for all of us. Check out the Trade Show News Network (TSNN) for a complete list of trade shows for many different industries. Here are some tips for working a trade show as an inventor:

Don’t bother getting a booth. It’s not as if a buyer is going to find you out of nowhere and offer you the deal of your life. A booth won’t be cheap. When I ran a booth for my guitar pick company at NAMM, the largest musical products trade show in North America, I never walked away having spent less than $10,000. I had the smallest booth you could possibly have. The best strategy is to work the floor. If you want to rock a trade show, you must walk the room. The people walking the floor tend to be buyers. There are also R&D guys checking out their competition. It can be confusing who is buying and who is selling. But you can’t wait for them to come to you. You have to walk the floor to work the trade show. Make sure you attend the right trade show. If you’re thinking about attending a trade show, visit its website. What companies are going to be there? Are any of them potential licensees? Cross reference your list of potential licensees with the list of attendees. Register in advance if you can. Shows have different policies and pricing structures. Some shows only want qualified buyers, media representatives, or experts. Others simply require that you register online, and then you’re in. Do your homework to find out what’s required to get in. If the trade show is only open to retailers, there are still ways of getting in, because retailers tend to have extra passes. Inventors have gotten in by going to a local retailer that belongs to the trade association and asking for a pass. When it comes to these types of trade shows, it’s a better use of your time to try to get added to a retailer’s list than getting in on your own. Make a plan. The worst way to go to a trade show is unprepared. You need a goal and objectives! Before you get there, find the floorplan online and identify all the potential licensees you want to see. Map out what companies you’re going to hit and in what order. This will save you valuable time. Some trade shows are as massive as four football fields! You can’t afford to needlessly tire yourself out. I start by walking the floor as soon as possible. Once you’ve hit the companies you planned on hitting, you can wander the floor at your leisure. If you have a one-minute video, make sure it’s loaded on your phone or tablet. When I go to a show, I’m working. I go to bed early the night before and I get up early the day of the show. You are not there to party. I don’t want to waste my time. I make the most of it.

Dress the part. If the trade show is about sporting equipment and fitness, you don’t need a three-piece suit. For other industries, a sport coat is more appropriate. People will take you more seriously if you dress appropriately. Bring two pairs of shoes and wear them on alternate days. Walking the floor can be exhausting. “I always dress business casual with sneakers, which are very key for trade shows. People say, hey you’re wearing sneakers. And I always say, if someone’s looking at my feet, I’m not doing a very good job.” — Amanda Hutton, Professional pet and toy inventor who has licensed more than 50 products. Bring business cards and copies of your sell sheet and carry them both with you wherever you go. Understand that you could meet an important contact anywhere—in the lobby, in the bar, or even the elevator. You just never know. So be prepared! “I bring with me the best possible prototypes and sell sheets. I’ll try to do a little research on possible costs as well.” — Amanda Hutton, Professional pet and toy inventor who has licensed more than 50 products. Avoid approaching booths when they are packed. If you approach when it's busy, it won’t be easy to get in with the right person. For that reason, I plan on hitting most booths on the second day of the show. Just don't wait until the third day, because some companies will be gone by then.

Wait for salespeople to engage you. Approaching a booth can be intimidating, because it feels a bit like you're walking into someone else's living room. Don’t arrive when it’s very busy. Just observe what's going on around you and wait for a salesperson to come to you. They will. When someone approaches you, begin by complementing them on the company's products and ask questions like, "Can you show me how this works?" Be genuine in trying to get a dialogue going. Eventually, the salesperson will ask you what you do. Tell them you’re a product developer. Ask if they take product submissions. Your main goal is to connect to the right person who takes outside product submissions. Remember, you’re talking to a sales guy. He’s going to try to get you to the most appropriate person as quickly as he can. Make sure to get his card first though; he’ll remember you. In my experience, a representative from the company will want to see what you have right there.

That’s when you pull out your sell sheet. Make sure you get his card. Congratulations! That’s a real connection. If you work a trade show hard, you could walk away with dozens of connections. Pro tip: if you call ahead of time, you may be able to schedule an appointment with a company that’s attending a trade show. Make sure you follow up with your connections. Once you have someone’s card, you have to follow up and try to build a dialogue. I recommend waiting at least a week after the conference to do so. The best approach? Build a relationship. The most successful product developers have stayed in an industry long enough to build important relationships. They invest time in one industry, so they get to know all the players. The players get to know them. And because of that investment, these inventors have a way in. You truly become a pro when companies start to tell you what they’re looking for because they trust you. Once you have a good relationship with a company, they’ll give you a target to hit. Designing for specific companies and their needs is much easier than just coming up with ideas and trying to fit them into the marketplace. Even if an idea gets rejected, if you have the right relationship, you can submit many more. I remember one student who really struggled. I wondered if he would ever license an idea. He was extremely hard working but was jumping around among different industries. After countless rejections, he finally landed a licensing deal. I asked, “What’s different now?” He said, “I finally figured it out. I’m staying in one industry where I know everyone, and they know me. And somehow, it’s easier for me to design for them now. I know the product line and I know the industry.” By staying in one industry, he made relationships. Through those relationships, he learned what those companies were looking for. He was able to target his creativity to those companies and succeeded in licensing his first idea. His attitude completely changed. That’s when he went from amateur inventor to professional product developer. Another student of mine has licensed over 40 product ideas in two industries - the toy and DRTV industries. One night in Chicago, I was having dinner with an executive from a DRTV company the student had licensed some ideas to. I mentioned that student of mine and the executive immediately told me that they always take his call. Why? That student

really studied the DRTV industry. He knew exactly what they were looking for. I remember seeing one of his one-minute videos—it looked just like the videos they use in that industry to market products. The executive told me that he had to pause the video to show everyone at the company. They still talk about it; probably because they ended up licensing that idea and selling millions of units. this is a perfect example of an inventor who stays in an industry long enough to know it well and build relationships. He’s a pro so they take his calls. He’s treated like an asset. The executive also told me that he now regularly goes out to dinner with that student and his wife. Talk about a personal relationship. “It’s important to know that online portals are fine. But personal relationships matter the most.” — Ben Dermer, SVP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America. “It’s about the idea. But if you decide to go pro one day, it’s all about relationships.” — Scott Baumann, Professional inventor and CEO of Procreate Brands, LLC., which has more than 40 worldwide licensed products in its portfolio. inventRight student. What happens next. Why aren’t they getting back to me? What happens when you’re reaching out to potential licensees and you’re not getting any responses back? Time to give up? I don’t think so! Please remember, you have to receive a lot of no’s to find that yes. In the next chapter I will spend even more time on this but here are a few things you need to ask yourself if you’re not getting any responses: Have you reached out to everyone in your particular product category? Have you missed any retailers that are online sellers? Does your subject line convey your request? Sometimes your subject line needs to be re-written. Are you asking for too much time? Sometimes your copy can be too long. Make it short, sweet, and to the point. Remember, you’re just looking for the right person to submit your idea to. You’re not selling.

How many companies have you submitted your idea to? If you’ve submitted to 20 to 30 companies and got zero feedback, you have a problem. You need to revisit your communication strategy. It’s very important to have your marketing material look like your potential licensee. Companies spend a lot of time and money building their brand. The way their brand looks and feels is how they market to their customers. You need to clearly communicate the benefit of your product and have a point of difference, but you also need to fit in. Sometimes, you can be very thorough, do all the right things, have a great sell sheet and video, and still not get any responses. Please be flexible. Be willing to change things up if something’s not working. “We don’t do automatic responses because it’s impossible! The product has to be reviewed and sometimes we are so swamped that we might not get back to the inventor and we apologize for that.” — Olyvia Pronin, Marketing Director at Wham- O-Toys, which has created and marketed many of most popular toys of the last 70 years. One of my students had a great sell sheet and video. He was reaching out to many companies on LinkedIn but wasn’t getting the response he was looking for. I asked him to send over the subject line and verbiage he was using when reaching out to people on LinkedIn. The subject line sounded too much like spam. We changed it to be less generic and got some responses. Also, the verbiage in the request was way too long. Remember, companies are reluctant to respond to someone on LinkedIn who’s asking for too much. We shortened the request and got more responses. We even tried attaching a link for a video. He got even more responses and sure enough found a licensee. Yes, I generally recommend that you don’t include any links at this stage of reaching out, but sometimes you need to be flexible and even run a little test. For some reason, in this case, it worked. Following up Whether you pitched an idea through an online form or found a contact through other means like LinkedIn or a trade show, you cannot just submit your idea to a potential licensee and wait. You should never assume that a potential licensee has looked at your sell sheet. Don’t assume that they’re all going to get back to you. You have to take control of the process and act

as your own project manager. Remember, you are your product idea’s number one advocate! Following up is an important part of that. Most companies will need to see an idea several times before expressing interest. Unless you can submit to someone explicitly in charge of new projects, the employees you contact have other priorities. Also, it can take time to get your idea to the right person. Following up demonstrates that you are a professional. When you follow up, you send a clear message that you’re serious and committed. This attitude will set you apart from amateur inventors and people will respect your persistence. Even if you get a no, you might get some extremely helpful feedback. Also, given that open innovation is relatively new, and being the professional product developer that you are, there's a good chance you'll know more about how this works than some employees you speak to. You really can't follow up enough. If you don't follow up, all your efforts will have been for nothing. In my experience, people rarely follow up as often as they should. It makes all the difference. In order to move on, you need to know if the companies you pitched to are interested or not. I get it, no one likes being told no, but not knowing is unprofessional. You need to be able to scratch a potential licensee off your list so that you can move on. In other words, you need closure. It’s worth repeating: In order to move on, you need a “no” or a “maybe” from every company that you submitted your idea to. I’ll talk about the question of giving up on an idea in chapter 9. Here are some tips for following up: You should begin following up 7-10 days after you send your sell sheet . As I said earlier, do not send your sell sheet to an employee without getting permission from them first. When I say follow up, I mean follow up with the person who gave you permission to send your sell sheet. Use specific dates when following up. For example: “When we spoke on June 6th....” This is why it’s important to take good notes on your communication. Never send an email that asks, “Did you get my other email?” Reattach everything, every time. Don’t make an employee dig through their inbox to find a past email. Remember, your job is to make working with you easy. Also, you should never pass up an opportunity to restate your benefit statement.

Follow up with a phone call if you can. If your contact answers, tell them who you are and explain that you are calling to follow up about the sell sheet you submitted. If you get their voicemail, great! Leave a short voicemail, speak slowly, and enunciate. State your phone number at the beginning of the call as well as at the end. Explain who you are and why you’re calling. Conclude by stating that you’re going to email your sell sheet again after you get off the line. Request your contact to simply reply back, “not a right match” if your product idea isn’t a good fit. After you get off the phone, email that sell sheet immediately. Here is an example of an effective follow up email: Hello , thank you for agreeing to look at my [product name] on [date] when we spoke on the phone. I just left you a voicemail as a follow up to the email I sent you on [date you submitted your idea – the same date you first talked on the phone]. I know you are busy, so I have attached my sell sheet for [product name] to this email. There is also a link to a video of the product in the sell sheet that you may find helpful. I’m looking to license this product to your company. If you don’t think this idea is right for your product line, simply reply to this email, “Not a good fit.” If you think this idea is a good fit for your product line, please email or call me at [your telephone number]. this strategy works because you’re suggesting an easy way to respond. If your contact doesn’t feel awkward about saying no, they will be more likely to respond to you. When you make someone’s life easy, you keep the door open for a future relationship. It’s also an effective strategy because leaving a voicemail and sending an email together demonstrates that you’re persistent. Keep calling until they pick up. This strategy works well when you have a direct line. This strategy makes it very clear that you are not going to give up. Some people do not respond to their voicemails and others will eventually pick up the phone after you call them five or six times. When you do get someone on the line, ask if you can send your sell sheet again. Better yet, ask if they can look at it with you over the phone right then. If you employ this technique, don’t leave a voicemail every time. Surprise your contact with real mail. This requires some effort, but not much. To succeed with this method, you have to ensure that everything you send looks very professional—right down to how you address the front

of the envelope. Don’t use your own handwriting. Include a cover letter that has a company letterhead along with your sell sheet, which should be in full color. Use a full-sized envelope. The reason this method works is because no one gets mail anymore. A professional package can catch someone’s attention. This strategy is best used with an important potential licensee that’s a really great fit for your idea. Otherwise, don’t waste your time. Sometimes, look for a different contact. If the person you sent your sell sheet to is not responding, and you’ve been emailing and calling them every week for months, it’s time to find a different contact in the same company. Maybe the person you’ve been trying to communicate with has been fired or was promoted. It’s worth calling the operator to ask if the person is still employed by the company. It’s okay to have relationships with different employees in the same company. Try not to let following up drag on and on. The bottom line is that if you’re not getting the response you need, you must find out why. Reaching out to potential licensees seems to be a tough task for many inventors. I get it, it wasn’t easy for me until I had some practice. These days, I’m constantly being asked for access to companies. Unfortunately, you can’t shortcut your way to communicating like a professional product developer. Follow the guidelines in this chapter and don’t let the fear of rejection prevent you from taking action. In a nutshell, when reaching out, you want to be short and concise. Don’t sell. Don’t pitch. Don’t provide any links. Tell them you’re a product developer and ask about the right person to send a product submission to. You’re just looking to connect with the right person. ftink of it as building professional relationships. Be thoughtful and take your time. And I’ll say it again, manage your expectations. Most companies will want to qualify you and your product idea before there’s a phone call. You may not be actually speaking to someone for a while. If you’re really getting no responses, definitely revisit your approach. You have to be flexible. Some strategies will work better with certain industries or individuals. Also, please remember that many companies have a policy to be closed to solicitation from anyone. That’s why when you reach out to companies

on a social media platform like LinkedIn, your goal is to find out if they take outside submissions. Lastly, be prepared for when you do get that call back! When a company calls you back about your invention, negotiations have begun. Don’t get caught off-guard! We’ll talk about fielding the hard questions and successfully negotiating a licensing agreement in Chapters 10 and 11.

PART FOUR What Went Wrong

8. THE DREADED SILENCE have submitted your product idea to multiple companies and now Y ouyou’re waiting to hear back. But as my partner says, occasionally all you hear is “crickets.” This is the dreaded silence. You’re probably feeling impatient. I can relate. Once my idea is sent, I want to call them the same day to ask them what they think! But that’s not appropriate. You know that, so you wait. After about two weeks you start to think, what’s going on? The imagination starts to go wild! Did they get it? Did I give them everything they need? Did I leave anything out? Do they understand the benefit of my product idea? And eventually, you start to think, are they stealing my product idea? You need to take a deep breath. Let’s go through our checklist. You found the right potential licensee that welcomes new product ideas. You looked at their webpage, product line, and mission statement. You did your homework, so you know your idea is a very good fit for their product line. Check. You provided a professional one-page sell sheet that clearly demonstrates the benefit of your idea. It looks and feels like something straight from their company. Check. You read through their invention submission process and filled the form out correctly. Check. Maybe you even provided a great one-minute video. Check. Great! So now you need to follow up. You need to be a polite pest.

Waiting two weeks to confirm that they received your idea is appropriate. It can be frustrating when companies don’t specify how long their evaluation process takes. You’ll have to be persistent and find out. I would call the corporate number and ask for someone in their invention submission department. You might even ask for someone in their marketing department if they don’t have an invention submission department. Basically, you want to speak to someone who handles outside product submissions. One thing I’ve noticed over the years is that if a smaller company loves your idea, they will contact you fairly quickly, especially in a very competitive industry. For the larger companies it generally takes more time. “Oh, it could be minutes. Quite often it’s that quick when you see something you like. I mean, the only thing that stops us from going yes immediately is that we have to do a Google search first and see if it already exists. I probably print it off and stand up and walk around the office and go, “What do you guys think?” But otherwise, you know, we tend to have a design review meeting with new ideas every couple of weeks.” —Sam Hurt, Cofounder SUCK UK (Novelty gifts) When you’re not getting any responses or feedback after submitting product ideas, there’s a problem. Often times, you have to reevaluate your marketing material which includes your sell sheet or your sell video, and of course your subject line and any marketing copy. There’s a very good chance you might have to re-tweak, redesign or rethink your approach. I have not included quotes from industry professionals in this chapter because they’ve really already told you all these things – but I am asking you to do a bit of soul searching. ftese are a few questions you need to ask yourself: Is my product really new? If someone can do a Google search and turn up your product in a few minutes then you have not done your homework and you have just shown the company that you are an amateur. Did I go around the company’s submission process? If you sent your idea to someone other than who you were supposed to or didn’t follow the procedures outlined on their website, there’s a good chance you won’t hear anything back. And, you’ve just proven yourself to be difficult to work with.

Does my one-page sell sheet clearly communicate the benefit of my product? One way to test this is to give it to someone you don’t know and look at their reaction. Do they get it? Do they understand it? If it takes more than one minute for them to respond or “get it,” you have a problem. Remember, your one-line benefit statement should be short, concise and emotional. Why should anyone care about your product? Does my sell sheet look like the companies to which I’m submitting my product? Does it look like they could take your sell sheet and put it in their catalog? I recently spoke with one of our students who had invented a training aid for the golf industry. His training aid was an extremely fun way to learn how to swing the golf club better. He wasn’t getting any responses from any of the companies in the sporting goods industry that sell golfing aids. The websites of all the companies he was submitting his product to looked very serious. There were many golf training aids to look at and it turns out that golf is a pretty serious sport. Golfers take improving their swing pretty seriously. But his sell sheet was fun. It almost looked like it should be for the toy industry. Because his training aid had extremely bright colors, it didn’t look like a serious training aid. The layout of his sell sheet didn’t match the seriousness of the problem his product was solving. The colors and the fonts were playful. Not a great match. So, he re-designed his sell sheet to be more serious and to fit into the category of similar products and guess what? Sporting goods companies are responding now and he is in discussion with a few. What’s even better is that he submitted the playful and colorful version to some toy companies, and they like it too! Companies spend a lot of time and money building a brand. You must look like their brand. Go to your potential licensee’s website and notice the colors they use, their layout, fonts. And of course, look at their marketing copy. OXO is a great example. They use a lot of white. Their products are displayed with a white background in a very clean and modern style. Their copy is very simple and concisely highlights benefits and features. Have they watched my video? Video is now the number one tool that is being used to license product ideas. In some situations, it’s not needed, and a one-page sell sheet will suffice. But for most ideas, it’s a great way to show the features and benefits of your product. So, you absolutely have to

make sure that your potential licensees are watching your video. We highly recommend that you embed it in your sell sheet. I would always follow up with an email with a link to your video. Ask them if they’ve watched it. Just the other day one of our coaches was submitting his product idea to a DRTV company. He got a response within an hour telling him they were not interested in his product submission. Way too fast! He knew something was off. The response was too quick. He found out through YouTube Analytics that no one had watched his video. So, he reached out to someone else on LinkedIn and they loved it! The product is now being tested. Does my subject line look like spam? Quite often, you’ll be able to use your one-line benefit statement in the subject line of an email. Your subject line should be direct and informational. Don’t use words or phrases like the best, solves, free, safe, 100%, urgent, be amazed, all new, hello, open, now, great, don’t, #1, the best, huge opportunity, or $$$. Don’t use all caps or exclamation marks. Avoid spelling mistakes and don’t use a oneword subject line. These are just a few basic tips to not land in their spam folder. Also, people tend to not even open emails with this kind of language in the subject line, even on your LinkedIn. Never say you have a $1 million idea. This just shows that your expectations are too high. It’s a rookie mistake and will raise a red flag. They know you’re not going to be reasonable, so they won’t bother working with you. Is my marketing copy the appropriate length? I often see marketing copy over email or LinkedIn that is way too long. It’s not a reasonable move to ask for a lot of someone’s time if you don’t know them very well. People often connect with me and send me little novels. They’re stealing my time and I don’t even know them. It turns me off. I never engage. Make sure to keep it short. Don’t pitch or sell at the very beginning. You’re basically asking for directions to the right person to submit your product idea to. In most situations, do not provide a link to your product. Most companies have a strict policy for their employees regarding links and emails. Is the person I reached out to active on social media like LinkedIn? Please know that there are many people who are not active or check their LinkedIn page very often. A good sign that someone is not active is when they don’t even have a profile picture. If you’re not getting a response from

someone like this, find someone else at the company. Consider if the person you’re reaching out to still works at the company. People change jobs all the time. Sometimes, all you need to do is call the company’s headquarters and ask for the person. Does the potential licensee have a process for reviewing product submissions? It’s common that a company is not set up to be able to respond to your submission in a timely fashion. This actually happens quite regularly. In this situation you’re going to have to be persistent. But realize that there’s a good chance it’s going to take more time and patience on your part because of their lack of experience with licensing. You’re going to have to educate them. How’s my timing? Companies can be extremely busy, so manage your expectations. Sometimes, companies are getting ready for a trade show. They may not be responding to anyone in a timely fashion. Always look at their trade show schedule. For example, the National Hardware Show in Las Vegas is always in May, the International Home + Housewares Show is always in Chicago in March. Sometimes, a company is going through changes. Sometimes, companies are merging, and everything is put on hold. Also consider changes in management. Companies can shift in completely new directions. Once again, everything is put on hold. Sometimes it just takes a company a little bit of time to respond. That’s why you need to be patient. When possible, ask a potential licensee about their timing and invention review process upfront. Remember, if a company loves your pitch, you’ll generally get a response fairly quickly. Especially from small companies. If they don’t get back to you, they just might not be interested. Not every company is going to give you feedback. Many companies won’t even respond. What if they do respond and reject your idea? In the next chapter, I’ll talk about the possible reasons for rejection.

9. REASONS WHY YOUR PRODUCT IDEA WAS REJECTED came up with a great idea, put together a wonderful sell sheet, filed a Y ouprovisional patent application, and now you’re reaching out to companies to see if you can license it. Wonderful news, you’re getting in, but something’s not quite right. You’re getting rejected by everyone. “With professional inventors, though, they'll usually come in and show us 20, 30 items in a clip. We'll probably dedicate at least a half a day to review all of their products. We'll tell them pretty much at the get go what we like and what we don't like. One thing we tell inventors is if you're going to be in this business, you have to have a thick skin and you're going to get some rejection; don't take it personally. There could be a multitude of reasons why we're rejecting it. It could be that the price point won't work for us, it could be that it’s too difficult to manufacture. It could be that it's a duplicate of something else that's out there.” — Jonathan Zelinger, President of Ethical Products, a familyowned pet company for 65 years. When you’re an inventor who’s licensing ideas, you’re basically in the rejection game. It’s not easy, but you have to learn why your product ideas are getting rejected. You have to step back and see if you’ve done everything correctly.

Here are some of the most common reasons why your product idea could have been rejected: Your idea was submitted to the wrong company. In my opinion, this is the most common mistake people make. Inventors come up with great ideas and pitch them to companies that don’t sell similar products. They might be good inventions, but they’re not right for the companies they’re pitched to. Pro tip: Study the product lines of your potential licensees carefully. Look at the type of products they’re currently selling. Look at the price point and the materials that they’re using. Make sure your product could fit in to their existing product line. Don’t show a potential licensee something that’s too far off from what they’re currently selling. Smaller companies will look at a broader range of products submissions. They’re willing to take a little more risk to find that next big hit. Larger companies stay in a certain lane. They’re more risk-adverse. Also, some industries are not inventor-friendly. Some companies are just too large, and they don’t know what has been developed within their own company. So, there’s too much risk working with outside product developers. Trust me, I’ve experienced this first-hand. If a company requires an issued patent before looking at an idea – basically, they’re telling you they’re not interested. Your sell sheet is not selling for you. It doesn’t clearly communicate the benefit of your product. It may be too long. Maybe it doesn’t look anything like the company you’re submitting to. This is common. Many inventors without graphic design skills try to create their own sell sheets. I think this is a bad idea. Your sell sheet is one of the most important tools you have to market your idea. Make sure it’s polished! Getting some professional help with graphic design shouldn’t break the bank. Pro tip: Test your sell sheet by showing it to a friend. If they don’t understand your product within a few moments, you need to get back to the drawing board. Some industries are not friendly to inventors. Not every company has embraced open innovation. They don’t all work with independent product developers or take idea submissions. Some large companies require patents before looking at ideas. And some industries only have 2 to 3 very large

players—think of Coleman and Igloo, they dominated the cooler industry for years. Pro tip: Reach out to companies that have licensed ideas from independent inventors. Go after midsize companies that need new ideas. Focus on competitive industries with many players; companies will be actively looking for great ideas to best their rivals. The industry is crowded with too many similar products. In other words, there’s too much competition. Pro tip: Plenty of competition does not mean you can’t be successful, but your product is going to have to have a big point of difference. You’ll need that much more of a wow factor to stand out. Bad timing. Most industries have a selling cycle. Generally, they start to develop new products for the following year. If you miss a cycle, you might have to wait a year before your product is looked at. Pro tip: Look at trade show dates and work backwards nine months. If they like your idea, they’ll have enough time to get it ready for the trade show. Ask potential licensees about the best time of year to submit product ideas. Sometimes, a company has just launched a similar product and that really is just bad timing. Pro tip: Try to make improvements to that product. When products do well, there will usually be subsequent versions with improvements. Design the next improvement to that product. Your product idea is overdesigned. Often, overdesigned products have too many bells and whistles and are too expensive. An overdesigned product might not fit into the price category of similar products at retail. Pro tip: Tweak your design and make it a little simpler. Have a U.S. based contract manufacturer give you a quote after signing an NDA. Being able to discuss a real manufacturing quote can be helpful when discussing your idea with a potential licensee. Your idea is not original. Yes, a few companies require you to have a patent filed before looking at your product idea, but there shouldn’t be much reason for them to suspect that your idea is not original. If a search for similar prior art (patents) brings up too many results, you probably don’t have a point of difference and your idea will likely get rejected. Please

make sure to do a Google image search. Make sure your idea has a point of difference and is new. I’ve been told many times from companies that they can find ideas that have been submitted to them within minutes on Google. Don’t let that happen to you. If your idea is too similar to one of their products or another product on the market, they will walk away. Pro tip: Make sure you do your own prior art search; you can learn how to do this at USPTO.gov. Make sure your product idea has a clear point of difference from other similar products. And make sure you file a well-written provisional patent application that gives you perceived ownership of the idea. Your product has a bad sales record. Sometimes, selling your product online before submitting it to a company to license can hurt your chances of getting a licensing deal. Especially if the sales were poor. Pro tip: If you’re going to sell your own product, make sure you keep a record of your sales data and customer testimonials for your product. A positive sales record and good reviews of your product could be helpful to land a licensing deal. Showing that there’s already demand and positive feedback for your product can function to take away some risk for a company to license that idea and bring it to market. Your product requires new manufacturing equipment. Your idea is so new that a licensee is going to have to invest money in new manufacturing equipment to produce it. Again, an idea that requires significant financial investment poses significant risk and is unlikely to get licensed. Pro tip: Start with simple ideas that make small variations and improvements on products that are already being manufactured. Don’t propose product ideas that pose too much risk for companies. Try to take the risk away! You’re being unreasonable. Companies want to work with people who are helpful, courteous, and professional. If you’re sending potential licensees too many emails with too many questions, you’re being a highmaintenanceinventor. If you tell them at the very beginning that you have a “million-dollar idea,” they will avoid you at all costs. Pro tip: Be patient, be helpful, and don’t argue. It’s okay to state your opinion but please realize that you want to make their job a little easier. Ask

for feedback and be a team player. If you leave a bad taste in their mouth, they’ll put you on the amateur inventor list. Your potential licensee doesn’t have the resources. You reached out to a company that’s a startup or just too small. They may not have the resources to review product idea submissions from the outside. Pro tip: Find established companies that are midsize. Generally, they have resources and are looking for ideas to get ahead. You reached out to market leaders. Yes, every inventor wants to license to the major players. In most cases, these companies are not that innovative. They can afford to buy ideas after smaller companies test them in the market. They already have their products on shelves and aren’t compelled to take much risk. Pro tip: It’s ok to reach out to the big boys, your favorite companies, but realize that midsize companies will typically be more helpful. Your idea hasn’t reached the right person. People change jobs, they get promoted, their roles change. This happens quite regularly, and no one is going to tell you. Your idea could be rejected because the person reviewing it does not want to take on new projects. You may have to start again with somebody else. Pro tip: Try to get to know the project manager who's handling your product submission. Ask them if they need any help. Be an asset. Your product was sent out for a price quote and it came back too high. Actually, this happens quite regularly. I’ve been told more than one occasion that engineers don’t have the time to re-design for manufacturing. They send out for a quote exactly what you sent to them. So, of course, if this is not your specialty you might get bad news. Pro tip: When things start to get serious and you know they’re looking for a price quote I would try to find either a mechanical or electrical engineer and spend some time with them so they can put together a “spec” - a list of potential components that can be used in manufacturing. This type of knowledge is priceless. You might even have a contract manufacturer quote it for you. That way you have some type of control and knowledge of what’s been quoted. Getting rejected is just part of the business. Don’t be discouraged! Remember, pitching ideas is a numbers game. Even if you get rejected, conduct yourself professionally so you build a relationship

for future efforts. As a product developer, you have to be persistent and willing to make improvements. It’s crucial to find out why your idea was rejected so you can make effective changes.

I have seen many ideas that are first rejected, then accepted after the inventor resubmits the same idea in 6 months. Why? It could be timing. Your idea was submitted to a company at the wrong time. Perhaps they had a trade show coming up, maybe personnel changes, or a bad sales quarter, it could be anything. A no just means no now, not necessarily later. People ask me all the time about when you should give up on an idea. It’s a great question. Obviously, there’s no black and white answer to that question. Here are some important things to consider. Have you completely exhausted all the possibilities? Have you made a list of at least 30 companies and reached out to every one? Have you received any feedback? And have you considered the feedback and tweaked your design, your marketing materials or your pitch? Learn from inventRight student Michelle Morrison. When she submitted her idea to many companies, she received rejections from all but one. That one company suggested that she make a change. So, she redesigned her sell sheet and video to be more versatile and resubmitted to three companies. All three companies got back to her saying they were interested. Getting feedback is incredibly important. More often than not, additional creativity comes after you get some specific feedback on your product idea. Companies are industry experts. Take their comments very seriously. Don’t be too stubborn to make a change. Sometimes, you keep pushing and there comes a point where you want to move on. Listen to your instincts. At that point, just put the project down and move on to another one. You don’t need to completely give up, but sometimes you need to move on for your sanity! You can always come back to an idea later with a fresh perspective. Many students take this approach and eventually get a licensing deal. In summary, there are many reasons why your product idea could have been rejected. Sometimes you just need to put it down when you’re emotionally beat up. Bring it back out when you’re ready. Having a fresh pair of eyes to look at it can actually be a great opportunity. Try to get feedback to see if you need to make some adjustments.

Whenever you do get rejected, have a positive attitude. They will remember that and want to work with you again. Don’t forget that you’re in the rejection game. You’re a “no” collector. Don’t take it personally when you get rejected. Keep submitting and work to build relationships. “Don’t get discouraged. Try not to be discouraged. Your product might not be right for direct-response, but you may have a great item. So, just study the market - know what is out there and how your item compares to it.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie. Being a professional product developer means that you’ll keep coming back with new ideas after you’ve been rejected. That’s when you’re truly in the game. That’s when you start to build relationships with those companies. The most successful inventors I know get many rejections. They’re successful, not because they don’t get rejections, but because they do! They have built relationships with companies in specific industries. Even when they get rejections, they often get helpful feedback, and the door to submitting more ideas in the future isn’t closed because they’ve conducted themselves like professionals. Remember, “no” just means “not now.” “A professional inventor has objectivity. What a professional inventor is able to do is look at this as a business. The more you do it, the more of a process it becomes. You have to look at the numbers and if they don’t add up, move on.” — Louis Foreman, Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest.

Reasons Why Your Idea Was Rejected Interview Inventor: Courtney Products licensed: Keyboard Desk, Wombat Joey Chair Pouch, Trunk Pocket, Yak About It Entry Organizer At the young age of 22, Courtney has successfully licensed four different product ideas to DormCo! Courtney’s first idea was rejected many times but that didn’t discourage her. After submitting her product idea to 80 different companies without success, she moved on for a while. Five months later, Courtney had a gut feeling that she should contact one of the companies again. She reached out politely and reminded them that her product was still available. And they took it! They said it was the perfect time. They even asked her if she had more ideas! Here are some insights from Courtney’s experience: Stephen: 80 rejections – that’s a lot! Why not just walk away? Courtney: I believe that you miss 100% of the shots that you don't take. I think it’s really important to have persistence and to keep going. I felt like this product just had to be out there. I knew there was a home for it. I didn’t want to give up because I had enough passion to bring this product to market. If you have a feeling that your product is big, and it’s going to be good, there is a home for it. You're going to find it if you have persistence. Do not give up. Stephen: It took Courtney a lot of time and energy to reach out to those 80 companies. But she gained confidence throughout the process as she worked on her approach. She made many improvements to her sell sheet. She got better at reaching out with practice. Eventually, she listened to her gut, reached out again, and found success. Timing can be everything. Don’t forget, you won’t be around at the right time if you don’t play the long game. Watch my full interviews with Courtney on inventRightTV.

PART FIVE You’re In! They’re Interested.

10. PREPARING TO ANSWER THE HARD QUESTIONS You’re getting responses from potential licensees. Now C ongratulations! for the tricky part. They are going to ask you many questions. And some of these questions have to do with evaluating you – meaning they are trying to assess if you are going to be reasonable and rational during the process. I have seen deals die because inventors did not handle themselves professionally after interest was expressed! So right from the start, let’s talk about a few things you simply must do: 1) be on time for phone calls or meetings, 2) know their product line and their business well enough to make conversation, 3) end every discussion with a list of agreed-upon next steps and know who is responsible for each, 4) spell check any email or document you send, 5) if on a Skype call – dress professionally, and finally 6) if you get asked a question and don’t know the answer – say so and let them know you’ll get back to them. I also make it a point, if possible, to find out who I am going to be meeting with or working with. I ask for names and titles. Use LinkedIn to research the responsibilities and backgrounds of the people with whom you will be interacting. Just as you researched the company, so should you research the people. As you get to know your contact, it’s perfectly fine to make some small talk about sports, weather, or current news (stay away from politics!). You are not going to become best friends with this person but having a personal relationship is a good idea. Also, when you are on a phone call or in a

meeting, make sure that someone introduces everyone at the start of the call. Make sure you write down names and titles – it’s important to know the players involved. If need be, ask your contact to send over a list of the people with the correct spelling of their name and title, and possibly their email address as well. It’s likely that you will have further interaction with these people so making sure you get it right is important. Sometimes you’ll have to explain to them that you’re looking to license your product idea – that you’re not a manufacturer. Sometimes they will quickly ask to see a prototype and any intellectual property you have. That’s pretty standard. Understand that just because they ask for something does not mean you should give it to them, yet. Realize that your first conversation with a potential licensee is really an interview. You’re interviewing them, and they’re interviewing you. Sometimes, you should slow it down and ask a few questions yourself. You cannot speed this process up. At first, they will ask questions to evaluate your product submission. Do not jump ahead and start to negotiate. The re’s a sequence of events that happens! • You created a marketable product idea. • You identified a company that is selling similar products. • •

You created strong marketing material. You created perceived ownership with intellectual property (usually a PPA). • You submitted your product idea to this potential licensee. •

Th ey evaluated your product submission.

•

Th ey determined they’re interested. That’s where you are - now, what’s next? • You start with a basic term sheet. •

After terms are agreed upon, you proceed to a licensing agreement. I try to avoid some of the more difficult questions at the very beginning.

I prefer to negotiate the contentious issues later in the licensing agreement. It’s a little bit like dating – you don’t really want to talk about tough issues on the first date, do you? Get to know one another first and establish some common interests and goals. Then, later, if things continue to go well, you can tackle the tougher issues. The beginning of the dialogue is a great time for you to ask them some questions. The conversation will help them determine that they’re really interested. At the very beginning, they are trying to sell you too. Ask them what’s important to them. What do they need to be successful? Ask about their process. It’s also the perfect time to ask questions about their distribution. Ask them how large their distribution is (meaning how many stores they are in and what countries/territories). At this point, it’s likely that they will volunteer this information. They are less likely to answer these questions later during the negotiating process, especially questions about distribution. Asking these types of questions early will help you later. At first, your goal is to give them enough information for them to want to license your product idea from you. You’re not trying to negotiate any of the licensing terms at this point. That should come much later. When you start to answer the initial questions, just try to be as helpful as possible. You’re trying to move the project forward to a point where it’s clear that they’re interested in working with you. That’s when you can ask for a licensing agreement. Once you start a dialogue with a potential licensee, it can take many twists and turns. You don’t want to lose interest from a potential licensee by asking the wrong questions or acting like an amateur inventor. You cannot rush this. Sometimes the hard questions can be asked through email. But sometimes you’ll have to have a conference call. When I do, I always provide a conference line or set up a Skype call. Realize that many companies see product ideas every day. They’re only going to work with product developers who make it easy for them to do their job. So, always take the time to read each request carefully. You want to be timely, but don’t rush yourself. Have fun and be reasonable. Your attitude must always be positive. Be an asset to them.

Examples of common questions and how to respond Can you send us a working prototype? this is one of the first things they are going to want to see after viewing your sell sheet. Everyone wants to see a prototype, of course! But if you were to build a prototype for every idea you had, you’re never going to win the numbers game. My philosophy has always been to spend very little money on each of my product ideas. Filing a provisional patent application and using some smart marketing material such as a sell sheet and video is all you need at the very beginning. Remember, don’t make the mistake of thinking it’s all about patents or prototypes. Prototypes can be costly for some projects. You want to confirm that there’s genuine interest in your idea before you spend the effort to build a prototype. You want to test your ideas and spend as little money and time as possible. This approach will increase your chances of success. So, how do you gauge whether there’s genuine interest? Engage with them and ask them about their interest level. Ask them about how they see this idea fitting in their product line. What is it about the product that appeals to them or their customers? Just because a company asks to see a prototype doesn’t mean I would send one right away. I always qualify their interest level first. This will save you resources in the long run. So, the question is not whether to build a prototype, but when? If you determine that they really are interested in your product idea, it’s time to spend a little money and build them a prototype. You need to reach out to someone who can help you. Be very careful about who you hire for help. By that I mean, make sure they have experience or are knowledgeable about manufacturing processes. Many inventors pay for an expensive prototype only to find out later that the way the product has been built is not manufacturable. This means you will have to head back to the drawing board. And if you base your patent application on a prototype that is not manufacturable, you may need to file for another patent later on. 3-D printing has made building small prototypes fairly easy and affordable. You could find someone locally to provide the right programming and print out your prototype. Today there are Maker spaces in most cities that will allow you to find someone local to help you. In some situations, it’s going to be more complicated than that. You might need a company that specializes in prototypes to help. Of course, this

can get expensive. That’s why it’s important to gauge the interest of your potential licensee before spending a lot of money on a complex prototype. A working prototype that looks exactly like the finished product might require hundreds of hours of engineering. This kind of prototype can run anywhere between $1,000 - $20,000! Don’t spend this type of money unless you know that there’s serious interest! There are also multiple types of prototypes. You should clarify which one they are asking for. A “works-like” prototype may not look like a finished product, but will prove your product concept. A “looks-like” prototype might be used for a photo shoot or advertisement to buyers but isn’t actually functioning. Sometimes you can get by with a computergenerated drawing of your product that looks like a finished product along with a rough “works-like” prototype that proves your idea actually works. A “works-like” prototype can be pretty rough and made with cannibalized parts from other products. Remember, you are just trying to show that your concept is functional. It’s important to remember that prototypes break very easily. I’ve seen this play out many times. You send a prototype to a company and they’re not quite sure how to use it. They end up breaking it or determining that the product is not right for them because they don’t know how to use it correctly. I highly recommend that you provide written instructions or even a video for using your prototype. Better yet, if they are close by, deliver it yourself and do the demo. This way you control the pitch. If they have any questions, doubts, or objections during your demonstration, you can address them accordingly. Some industries, such as the DRTV industry, require prototypes. I would still send a sell sheet and video first to gauge interest. Even knowing that they’re going to ask for a prototype if they like the idea, it still doesn’t make sense to build a prototype in the beginning. It’s worth repeating: The first thing you should do is sell the benefits of your idea. Overall, having a working prototype at the right time may be very beneficial, especially to speed up the manufacturing process. But again, I think it’s all about timing and assessing the return on any money and time spent. Do you have any rights to your intellectual property?

Basically, they’re asking, why should we pay you? Do not be afraid of this question. In fact, I love this question. It allows you to sell your point of difference. And the most often asked question is, “Do you have a patent?” If a potential licensee demands a patent, they are a dinosaur but some still do. The smart ones don’t wait for a patent because they don’t want to miss a window of opportunity. Because products have short lifespans these days, patents are not that important for most product ideas. I actually hear quite often from inventors that they just want to sell their patent to a company. I get it, it sounds easy. But companies will not ask to buy your patent. Buyouts are extremely rare. Companies like the concept of “pay as you go,” because there’s no risk. Know that there’s some prior art on just about every invention. When companies question my ownership of my idea because there’s prior art that’s similar (meaning prior patents), I always tell them: “Yes of course there’s prior art. The important point is that my invention is not on the market. And because of my strong point of difference, I’m very confident I will be granted intellectual property rights on my invention.” Your point of difference could be the design, the manufacturing process, or even a new material. The point you’re making is that your product solves a problem in a specific way that is not yet on the market. You must state this with confidence. This puts the ball in their court. Your idea is unique, they haven’t found it on the market, and they’re interested! You could line up 10 patent attorneys and show them your invention and your well-written provisional patent application and you’ll get 10 different opinions as to whether your idea can be patented. No one, and I mean no one, can tell you with 100% certainty that you’re going to get a patent – and that’s very useful, because it creates a gray area. Truth be told, it’s not about patents anymore, it’s about selling first and great customer service. I love this gray area. It leaves room for independent product developers to succeed. Smart companies come to the conclusion that it’s not about ownership, but it’s about selling. They know as well as we do that most products have a short lifespan - I’ve heard as short as 18 months. Most likely a product will sell for three to four years. In three years, there’s a very good chance a patent wouldn’t even be issued. Given there’s many workarounds and variations for any product, it’s truly hard to protect anything, even with multiple patents. That said, some products last

as long as 10 years in industries like tools. That’s why companies in those industries like patents. Basically, the new patent laws have made it extremely difficult to litigate. For these reasons, licensees don’t particularly care about patents these days. It’s not about protection, it’s about selling, great customer service, and being first! If you get asked about your intellectual property and want to provide confidential information such as a provisional patent application or trade secrets as discussed in Chapter 5, you could ask them for a mutual NDA. Make sure to read about those later in this chapter. Do you have any market data about your product idea? I always smile when I hear this. They’re the experts in a particular category so why are they asking you? If you can create or show some type of market demand, it definitely takes away some risk for your potential licensee. Sometimes you can show market demand by showing your idea to a buyer and getting good feedback. Reference Chapter 6 for more information about creating market demand for your product idea. What do you estimate manufacturing costs will be for this product? Ultimately, they’re going to have to investigate this themselves. They may ask you just to test the waters quickly. If you reach out to a U.S. contract manufacturer for a quote, this can make the process go a little faster. In most situations your product will be manufactured overseas, so the company knows that the real cost at full production scale will be lower than your quote. Another possible response to this question is to tell your potential licensee that you do have a few contract manufacturers that would love to meet to discuss how this product could be produced and what it would cost. Having a contract manufacture in a meeting with a potential licensee can be very powerful. It can give confidence that your product can be produced at a price that works for them. If they love your idea, the question of licensing just comes down to cost. If your idea is similar to another idea, you could do a guesstimate. If you have the retail price of a similar idea, you could tell them that your product is similar to an existing idea that’s currently on the market. That

would give them the retail price point and they would be able to estimate wholesale price and manufacturing cost. In most situations, it won’t really be on you to provide an accurate manufacturing cost. How much do you anticipate the retail price will be? ftey’re looking for an acceptable profit margin, not an exuberant retail price. Sometimes they ask this question to see how flexible you can be with features like size and materials. You might get this question from someone in marketing since your sell sheet and video didn’t mention the retail price. You can offer a number based on a manufacturing quote but be sure to explain that it could change based on certain criteria such as the final size or materials used in the product. What royalty do you want? this is very hard to answer at the very beginning. In fact, don’t rush to answer this question. It’s way too early to start negotiating the royalty because there are many issues that will impact what that royalty rate will be. I always let them know that I can get back to them with a reasonable royalty rate once I get some additional information. First, ask them about their company. Try to figure out how many stores in which they currently sell products. The point is, you shouldn’t try to answer this question without having enough information. Yes, you want to get a high royalty rate. But it really comes down to how many units they’re going to sell. In some situations, 5% is a very fair royalty rate. But if they’re going to sell a huge volume, a lower royalty rate might be just fine. There are many other topics to discuss, such as exclusivity, territory, and improvement clauses. I will discuss further in the next chapter so you can appropriately answer these questions and keep the momentum going. Here’s an example of a dialogue between an inventRight student and potential licensee: Jon, Do you have a patent on this idea or is there an application on file with the USPTO? Also, have you ever built a proof-of-concept model and is there any user test data with the model?

Do you have a manufacturer lined up to produce your product? Thanks Ray Ray, I have filed a provisional patent application at the USPTO and am confident that I will receive a patent on this invention. I do have a working prototype. Concerning your question about user testing: I am currently a wrestling coach at the local high school, and I’ve been involved in fitness my whole career. I have tested this product personally. The results have been fantastic. I am looking to license this product. I am not a manufacturer. I can reach out to a contract manufacturer for quotes if this would be helpful. Is there anything else you need? Thank you very much for your interest. Jon Notice that at the very beginning the conversation’s pretty basic. They want to know if your product works. They want to know if there’s any intellectual property. They also want to know if you’re a reasonable person they could work with. What if you don’t have the answer? If you get a question you don’t have the answer to, tell them you’ll get back to them. Don’t ever fake it. Don’t ever feel forced to answer a question too quickly. Always give yourself some time to think about how to answer it correctly. If you’re having a conversation over the phone or through Skype, don’t agree to anything on the spot. You can always tell them that you have to consult with your team. You should have the tone that you’re excited to be working with them. Make it clear that you’re willing to work together to come up with solutions to any problems they have. And once again, always create a paper trail. After each call, always follow up with next steps. NDAs They’re really interested, what’s next? When a company asks you for confidential information such as intellectual property or trade secrets, it might be a good time to ask them to sign an NDA. Know that they will not sign your NDA. In most situations, you will have to sign theirs. It’s

important that you understand it very well. Consult legal help if you don’t. Many inventors fail at this. Once you get to NDAs, it’s important to have the help of someone experienced in the matter. You should not ask a potential licensee to sign an NDA before you show them your marketing material. As I stated earlier, most of the companies you pitch to are not going to keep your product submission confidential. It states this very clearly on most invention submission forms. They may want to share it with suppliers, buyers, or manufacturers. That’s why you start with your marketing material. Marketing material sells the benefit of your product but should not disclose any intellectual property. Once a potential licensee sees your sell sheet or video, they’re going to want to know more information. And that’s the perfect time to ask for an NDA. In my opinion — and please note that I’m not an attorney and I’m not giving legal advice — if you have filed a well-written provisional patent application, I'm not sure an NDA is even needed. NDAs are not federal, meaning they’re different from state to state. Also, if you publicly disclose your invention prior to securing patent pending status (meaning filed at least a provisional patent application) you run the risk of having to prove your ownership in court. NDAs can slow down the overall process. But you need to know that every company and every industry is different. “We usually don’t sign non-disclosure agreements and will direct an inventor to do a patent search, file a non-provisional patent application, and then resubmit.” — Corey Talbot, VP Marketing and Product Development at Hyde Tools, which sells more than 1,200 products. “NDAs gladly signed and enforced.” — Hog Wild Toys website “We don't sign NDAs, as a policy. I encourage inventors to protect themselves to an extent they feel comfortable with, so they can actually share the idea. NDAs don’t work the way most people think they do.” — Lawrence Cruz, Chief Patent Counsel at Conair, the $2 billiondollar maker of small appliances, personal care products, and travel accessories.

Final Thoughts I recently spoke with an inventRight student who was about to have a call with a very large manufacturer. I asked him who was going to be on the call and he said the product manager, which makes perfect sense. But also, he expected a technical person to join the conversation. This individual did his homework on who he was speaking with which I think is a very smart idea. I wasn’t so worried about the product manager because their job is to evaluate the marketability of the idea. They don’t care where great ideas come from. What did concern me was the technical person. Engineers cannot stop reverse engineering. They’re always looking for ways around intellectual property. It’s in their nature. So, be prepared for this. If you anticipate that they will ask for confidential technical information, you must have an NDA in place prior to the meeting. And don’t forget to file a wellwritten provisional patent application before you sign an NDA! Also, if you’re considering filing for a patent internationally at some point, you’re going to have to have your potential partners sign NDAs so there’s no disclosure issues. Public disclosure issues can be extremely tricky. I would highly recommend speaking with a patent attorney on the strategy to prevent any public disclosures, so you don’t lose any rights. I have provided four examples of non-disclosure agreements in the appendix of this book, including two supplied by patent attorneys Richard Bennett Salles of Foundation Patents and Damon Kali of Kali Law Group.

11. FROM INITIAL INTEREST TO A DEAL: NEGOTIATING LICENSING AGREEMENTS most inventors, negotiating a licensing agreement is incredibly F orexciting, but also very stressful. By the time you arrive at the negotiating stage, you’ve worked extremely hard to come up with a great idea, reach out to potential licensees, work through prototypes, and file intellectual property. You have a potential licensee that’s interested, but ultimately your success will be defined by the details of your licensing agreement and what happens in the market. I’m here to tell you, you can do this, but you’re going to need some help. And by help, I don’t mean an attorney. Don’t get me wrong, you will need a licensing attorney to review the contract towards the end of the negotiating process. Attorneys can provide a very valuable service, but you must bring them in at the right time. Something very important I’ve learned over the years is that you must negotiate the business terms yourself. You and only you. Please understand, there is a difference between the business terms of a licensing agreements and the legal terms.

Having a licensing or patent attorney negotiating on your behalf is not a good idea. Their involvement can kill a deal. Attorneys get paid for their time, not the outcome at the end. They will argue over details that don’t make a difference. They will argue to protect you - so much protection that you will find yourself without a deal. They can literally protect you and your idea to death. And if you take a combative approach by having an attorney with you at the negotiating table, your potential licensee will bring in their own legal counsel. They’ll have no choice. And in this case, time is money. That’s why you must negotiate the business terms yourself. As I talked about before, the best approach is relationship building. You’re trying to be reasonable and work with your potential licensee. You shouldn’t set yourself up to go to war. Negotiating is a complex process. You’re going to want to get through it as fast as you can, but it often ends up taking longer than you might expect. Good licensing agreements generally take time. Bad ones get done quickly. Trust me, not only have I negotiated my own licensing deals - I’ve been helping other inventors negotiate their contracts for decades. Every now and then, we even get inventors who sign up for inventRight after they sign a licensing agreement. Why? Because they left money on the table. Negotiating is definitely one of the most complicated parts of the process. So, if you’re new to this, you do need help. You need a mentor. You need someone who’s been in your shoes and has experience negotiating licensing agreements - attorneys don’t necessarily fit the bill. This chapter is no substitution for expert advice from someone who has done this before. The negotiating process will take many twists and turns and could be quite different depending on your product and what industry or company you’re licensing to. The main takeaway from this chapter is that you need to be in control of the process. Here are some general guidelines and strategies to get you started on the right foot. First, let’s recap. How to set yourself up for success Negotiations start earlier than you might think. They actually start the minute you come up with an idea. How? Who you work with, and how you work with them, will set the stage for negotiations. You want to play your cards right from the start if you want to get the best deal possible. Let’s

review the steps you should take to optimize your chances of getting a great licensing agreement and if this sounds a bit repetitive, well it is. There are certain things that you need to do from the very beginning to create conditions for success. Carefully study the marketplace. Companies will have different attitudes and expectations when working with inventors. Some industries and even individual product categories will have different processes and requirements for licensing. Doing a little homework on the company you’re going to be submitting your ideas to will give you some advance notice about their attitude towards negotiating with an independent product developer. Starting with the right companies is an easy way to set yourself up for success. I’m here to tell you that working with a company that has already licensed ideas is going to be 10 times easier than trying to educate a company new to this business. Companies already licensing ideas understand that an agreement needs to be fair and balanced. They’re familiar with licensing agreements and they value independent inventors. The ideal company is one that has an entrepreneurial spirit. They welcome open innovation and regard creativity as a high priority to be competitive. Usually, you see this kind of attitude in midsize companies. A midsize company can still be a $100 million company with great distribution. It just depends on the industry. Also, companies that have licensed product ideas from outside their walls are just easier to work with. On the flipside, working with a company that has not licensed anything will require your patience. You’ll have to educate them along the way. I have found that negotiating with market leaders and very large companies is more time-consuming and difficult than dealing with smaller players. Market leaders are extremely risk-averse. Because market leaders operate at the biggest scales, your idea will require more capital investment, which means more risk. Study your potential licensees. Check their past. Have they licensed ideas? Are they inventor-friendly? How many lawsuits have they been in with product developers? This type of information will help you prepare an appropriate strategy for your intellectual property. Most of this information can be found by searching online. Just search a potential licensees name, followed by “lawsuit or complaint.” Also, look to see if they have prior

patents. Look them up with the USPTO or just search online. You’ll be able to tell how important intellectual property is to them. For example, if you have an invention that you want to license in the packaging industry, you will need intellectual property filed such as a provisional patent application that has manufacturing “know how.” In the packaging industry, without this type knowledge, the chance of negotiating and getting a licensing agreement is very low. If you don’t have this knowledge, you should find an engineer that can help you understand your potential licensee’s manufacturing process to help you understand how they can implement your invention in their production line. Make sure your consultant/engineer signs an NDA with work-for-hire language. This will help you maintain ownership over any developments in your intellectual property. For most consumer product ideas, having firsthand knowledge in the manufacturing process is probably not that important. In 99% of the licensing agreements we help negotiate behind the scenes at inventRight, this isn’t required. Create effective marketing materials. Strong marketing material can be a great benefit in future negotiations. Remember to design your marketing sell sheet with the customer in mind. Present your idea in a way that allows your potential licensee to quickly understand the benefits to their customers. Highlighting the big benefit—the one-line benefit statement, as well as the various features of your product, is extremely important. For your marketing material to be effective, you have to understand your potential licensee’s product line and mission statement. You want your product submission to easily fit in with their current product line. Create market demand early. Over the years, I have learned that creating market demand can be a powerful strategy to get you the best deal. In fact, it’s probably the number one thing you can do to move your licensing agreement along quickly. Companies will be hesitant to invest in large projects that require a lot of time unless you can show some market demand for the product. Being able to show market demand will take away risk for your potential licensee and give you leverage in negotiations. Market demand can be created by showing your product to a buyer for a major retailer. Their approval can be huge because they are ready to buy. When there’s business to be had, a potential licensee is far less likely to be picky about minimum guarantees, royalty rates, and improvement clauses.

I learned this firsthand with my SpinLabel idea. It was extremely difficult to get manufacturers to license my technology until I found a customer that wanted to order this technology. This customer wanted to order 50 million labels! After showing my potential licensee this market demand, they quickly wanted to sign a contract. And because of their excitement, negotiating the licensing agreement in my favor became much easier. I had leverage. Have an idea of manufacturing costs. To move your negotiations along, having an idea of the manufacturing costs can be helpful. For this information, you can reach out to a US based contract manufacturer. Always have them sign an NDA. Remember that their estimated cost will be higher than the actual cost because manufacturing will probably take place overseas. Also, design and file your intellectual property to reflect the lowest cost variation of your idea. File a well-written provisional patent application. Having a wellwritten provisional patent application is one of the best tools when negotiating with a company of any size. Yes, a provisional patent application is an optional first step toward a patent, and there are substantial benefits to filing one. The United States abandoned its historic first to invent system in favor of a first to file system with the America Invents Act of 2011. Filing a well-written provisional patent application that sufficiently describes your idea will establish priority for a future patent by satisfying the need ‘to act swiftly’ under these new rules. A PPA will take less time to write compared to a standard non-provisional patent application. Your first step should be doing a Google image search, so you know your product’s point of difference. This is critical information for your PPA. And of course, these points of difference should be highlighted in your marketing material. Next, do a prior art search. This will help you understand your point of difference when your potential licensee asks about prior patents. You’re trying to learn as much as you can about the context of your idea. At a minimum, you have to make sure you don’t find your invention! Submitting a product idea with no point of difference is an amateur mistake. Frankly, if you are in any way unsure or uncomfortable about doing a prior art search yourself, I would definitely recommend hiring an independent search firm to do the job for you.

Yes, it’s very likely you will find prior patents. If you do find prior patents that are similar to your idea, find out why these ideas haven’t made it to market. This is an important step you shouldn’t take lightly because your provisional patent application should include workarounds and variations. For this reason, your search can be very time consuming. You can get help to do this as I mentioned before. However, having the knowledge to do this yourself is an incredibly powerful skill for any professional product developer. For an extensive guide on writing an effective PPA, please consult my last book, Sell Your Ideas With or Without a Patent. Filing intellectual property is one of the first steps to negotiations. If you understand the product category your idea falls into, you’ll be able to craft the right intellectual property strategy for future negotiations. Patents and provisional patent applications give you perceived ownership of your inventions and take away fear from your potential licensee. This gives you strength and leverage when negotiating. There are other tools to create perceived ownership such as trademarks, copyrights, trade secrets and design patents. All these tools work in your favor during negotiations. There are quite a few companies, especially in the kitchen product category, that absolutely require design patents. Also, companies that exclusively sell online highly value copyrights, design patents, and trademarks to help them combat copycats and infringers. One other note on provisional patent applications. Sometimes inventors tell me that a potential licensee is asking for their provisional patent application number and wonder if they should be concerned about sharing it. I asked patent attorney Damon Kali, whom I’ve known for many years, “Should you ever give out your provisional patent application number?” He said that it’s perfectly fine, the only consequence/downside being that the person with whom you share the number knows when you filed and when you have to a file a non-provisional patent application. No one can go in and make changes or alter the application just because they have the number. Build a proof-of-concept prototype. I’ve given you many reasons why I don’t build prototypes at the beginning of my product submission process, namely the relatively high cost. But once you have solid interest from a

potential licensee, I think the cost and time to build one is probably warranted. If you work out some of the details and resolve potential issues which means less for your licensee to do – and makes getting accurate manufacturing costs estimates more likely. Before negotiating a contract, agree to basic terms. Before you negotiate the more difficult details of your licensing contract, it's standard practice to agree to some basic terms. You do that with a term sheet—a onepage document that outlines the business terms of your relationship. ftink broad strokes here. You’re establishing how you’re going to work together. If you don't share the same perspective on big-picture issues, or can’t work together to get there, why bother spending time and money thinking about a contract? The difficult issues in most contracts are things like royalty rates, minimum guarantees, improvement clauses, and paying for intellectual property. These issues are better negotiated later. Why? If you bring up contentious issues early on, you may dissuade a potential partner from working with you. When I craft a term sheet, I make sure to bring up important issues, but never the most difficult ones. Bringing up difficult issues at the very beginning is like going on your first date and exposing all the baggage in your life. There’s a good chance you won’t have a second date. Also, timing matters. They may become more invested as they test your idea, making it work to your advantage. A potential licensee will show your product idea to buyers, they will ask their manufacturers for quotes, and they will run it by their sales team. Positive feedback from any of these players will better your hand at the negotiating table. It’s preferable to tackle more difficult issues once both parties have become emotionally and financially involved, once there’s some momentum in the project. Term sheets are really just the very start of a negotiation. With the right attitude, you can always come to some sort of compromise. At the very beginning, you want to send a clear message that you’re reasonable. Tell them how pleased you are to be working with them. You can ask pointblank, "What do you need to be successful?" That's really what it's all about, isn't it? Then I ask the following big-picture questions: Do you need an exclusive? I know everyone wants an exclusive. They’re going to say yes.

In which territories would you like the exclusive? Most companies want a worldwide exclusive. Who doesn’t want to own the world? In which distribution channels would you like the exclusive? Some companies only sell in certain types of stores. Disney is a great example of carve-out retail licenses. They have different contracts for products sold exclusively in theme parks versus those you can buy in a mass retailer. Your licensee might not sell to convenience stores or big box stores, so you may want to “carve out” ahead of time where it is that they want to sell your product. How long would you like the exclusive? You’re asking about the term or length of the licensing agreement. From past experience, companies want the exclusive for as long as the product sells, maybe for the lifetime of the patent if there is one. At this point, I don’t even bring up the royalty rate. If they ask, you can ask them about their standard royalty rate. Again, you want to come across as reasonable. In my opinion, it’s too early to negotiate a royalty rate without working through some important issues such as minimum guarantees. Remember, you should start with broad questions so you can easily get to a licensing agreement. If you ask for too much at the very beginning, like a licensing fee, that may be perceived as a red flag. One of the biggest mistakes I see inventors make when working on a term sheet is asking for too much too soon. Don’t rush to ask for a large advance payment, ownership of all improvements made to the concept, or a large minimum guarantee. Don't get me wrong. I think you do need to own all improvements in order to preserve your perceived ownership. And without minimum guarantees, your contract isn't worth much. My point is, after the company has expressed sincere interest in your idea and has begun working with you, they'll be more likely to agree to your requests. Especially after you've showed that you’re willing to give them what they need to be successful, such as an exclusive, specific territories, and the right term length. Timing is everything. If you have a good relationship with your potential licensee, I would discuss the terms of your term sheet and licensing agreement over the phone. And as I mentioned, if you’ve haven’t done this before, having someone coaching you behind the scenes is a must. Always approach the

conversation with a sense of humor. This can be a great relationship building experience. Listen carefully to their arguments, be polite, courteous, and of course, reasonable. Never agree to any terms over the phone. You need to give yourself time to think about it. And always follow up in a written form by confirming what was discussed and the next steps you agreed to take. Having a paper trail can be extremely important, especially when the final licensing agreement comes over to you. Sometimes people forget on what they agreed on. If you’re not comfortable with negotiations, which is the case for most people, do this through email. Just don’t be too long-winded. Be short and to the point. The term sheet will probably go back and forth several times. Once the term sheet is agreed upon, you can proceed to the contract draft stage. Please see an example of a very basic term sheet in the appendix. Inventors who have been licensing products for years may have a far more sophisticated term sheet – this example covers just the basics and again is the start of conversation. The licensing agreement: First steps Over the course of many years, I’ve seen thousands of licensing agreements. Some have been as short as two pages and others have been as thick as two inches. Most typical licensing agreements follow a very simple format. I believe this is so they’re easy to understand, especially if there are any type of litigation issues. Clearly defining each term — making things as clear as possible — in the agreement is very helpful, especially when there’s a dispute. But in the end, it’s important to know that anything can be argued. And sometimes it doesn’t matter how well a term is spelled out; issues can arise anyway. That’s why we have lawyers. What’s interesting to me is that many of the contracts I see today don’t even have definitions of some of the business terms. That surprises me. The best strategy is a 1-2 punch. First, work with someone who understands and is familiar with the business terms. Then have a licensing attorney review all of the technical details. Before we get started, here are some basic things I have observed.

The licensing agreement should come from the company, not the inventor. The licensee is in the driver seat; they know what they need to be successful so let them take the lead. This way, they also pay for it. Please know that the first boilerplate licensing agreement they send over will be ugly and you will need to negotiate better terms. Sure, the agreement may be strongly biased in their favor, but you can move forward and negotiate the business terms yourself. What’s important at first is getting the licensing agreement. Once you come to terms about the more difficult points, you can work with a licensing attorney to sort out any remaining legal issues. This strategy will save you time and money and give you the best chance of coming to an agreement. I remember one inventRight student who didn’t take this advice. He opted to draft his own licensing agreement with his licensing attorney. Of course, it was completely one-sided. The potential licensee looked at their agreement and realized it was not going to work for them. There were too many issues to negotiate through, so they ended up walking away from the deal altogether. In fact, I wouldn’t even bring an attorney to the negotiation table. Don’t bring a patent attorney. Don’t even bring a licensing attorney, who’s more specialized in negotiations. The minute you “lawyer up,” so will your potential licensee. It’s your attorney’s job to protect you, that’s what they’re paid for. In practice, they can overprotect you and kill a potential deal. Over the years, I’ve seen many licensing attorneys take a boilerplate licensing agreement and mark it up until it bleeds red—so much so that the potential licensee walks away from the deal. Just the other day, one of our students sent a licensing agreement over to his licensing attorney after the first round of negotiations. The attorney made so many changes, it actually became a problem for the licensee. It looked like they would be starting from scratch. And some of the issues were not even that important. The best strategy is to try to negotiate the business terms yourself. If you’re new to the process, I highly recommend you enlist the help of someone who is experienced in negotiating the business terms of a licensing agreement. People with experience in the matter are incredibly valuable assets. Later, when you’re comfortable with the process, you’ll be able to do more of it yourself.

When your potential licensee first sends over the licensing agreement, it will be boilerplate—much of it will be standard language. It could also be pretty ugly. Don’t freak out. Sometimes they’re just testing you to see how much you actually understand and are willing to agree to. They will underestimate you. It’s a good position to be in. Know that everything is negotiable. It will just take some time and patience. Over the years, I’ve seen some very one-sided licensing agreements turn quite fair by the end of negotiations. The best approach is to work on the easier points first to build some momentum. Definitely look at their agreement line by line, but don’t feel compelled to argue every issue from the beginning. Start with the less contentious issues. I’m sure you want to get this over with as quickly as possible, but it doesn’t work that way. You have to play the long game. Sometimes you do need to bring your licensing attorney in to negotiations if you cannot work through some of the issues. This happened to me when negotiating with Coca-Cola for one of my technologies. I did most of the negotiating myself, but we did get stuck in a disagreement over a few points at the end. That was a perfect time to bring in my licensing attorney for help. The bigger the deal, the more experience you’re going to need. I’ve realized that working with attorneys that specialize in licensing agreements might be a little bit more expensive than business attorneys that don’t, but their knowledge is definitely worth the extra cost. If there’s something in negotiations that I don’t understand, I’ll always ask my licensing attorney for advice. Also, I have never signed a licensing agreement before my licensing attorney has reviewed it. Never. Negotiating with multiple companies Occasionally you have submitted your product to multiple companies and two or even three of them will be interested. If the overall strategy is to build relationships within an entire industry, how do you navigate those early discussions so you don’t burn bridges when you ultimately choose one company to license your idea to? For one, understand that just because there’s interest from a company, it doesn’t guarantee that you will sign a licensing agreement with that company. Typically, one company’s interest level will rise above the rest and the situation will become much easier to handle. Don’t be more

aggressive than you need to by trying to leverage one company’s interest versus another. Remember, the best approach is relationship building. If any of the interested parties asks you if you’re showing your product to other companies, that’s a great opportunity to tell them yes. You might mention that there’s interest from other companies but make sure to do this in a very subtle way. If they ask you who’s interested, please tell them you’re under an NDA. They will appreciate your commitment to confidentiality and that will build trust. If you start negotiations with two or more companies, it would be a good idea to tell all parties involved. It’s a warning that they need to step it up if they’re really interested or they might lose out. If you can walk away from a deal, you very well might be able to cut a better one. The power of, "No thanks, I'll pass" is huge. Giving your potential licensee the opportunity to move a little faster is doing the right thing. This way you’ve given them a fair warning and it will be easier to deny one company and choose another. If you’re transparent, it’s less likely that one company will feel a little disappointed or even burned. You have to realize that it takes time and money to go down the path of negotiations. In most situations, by the time a company is negotiating for a product, they have shown it to their buyers, sales team, and of course marketing. And for them to lose out at the very end without being notified that there’s another contender could give them reason to not work with you in the future. So be polite. Keep your potential licensees informed but don’t try to leverage one against another. Basic licensing terms As I said before, negotiating a licensing agreement is a complex process. Each negotiation will be different depending on the players, the product, and the industry involved. In the end, there’s no substitute for experience, so I recommend that you consult an expert for your first licensing deals. Ultimately, your goal is a win-win agreement for both parties. That’s how the pros operate. Real professional product developers don’t give their licensees any reason to work around them. They are considered assets. Here are some basic licensing terms that every aspiring professional developer should be familiar with: Royalty rate

this is what you’ll be paid by your licensee. Royalties are payments made by the licensee to the licensor in exchange for the right to use intellectual property or physical assets owned by the licensor. In 99% of all licensing deals I’ve seen, the licensee has no asset (think patent), only perceived ownership. A well-written provisional patent application, design patent, copyright, trademark, or trade secret can all contribute to perceived ownership. Product licensing royalty rates are typically a percentage of net wholesale sales of each sale of the product. Royalty rates differ across industries. Occasionally, a royalty might be a fixed amount per unit sold. Knowing what's typical in your industry can be extremely helpful when negotiating, so get familiar with the specifics. In my experience, royalty rates for high- volume products are about three percent. Five percent is pretty average. It's not out of the ordinary to see seven percent. These figures are typical for simple consumer product ideas. I tell everyone that to in order to really understand what a “fair” royalty rate is, it’s best to do the math. People are always trying to get the highest royalty rate. But the way I see it, what’s more important is doing the math. this is how you do it. First, estimate how many stores the licensee is currently selling in. You can ask them directly for this information. Assume each store will sell one unit of the item a week. If not, it will get kicked to the curb to make room for something else. Now you have an idea of what the minimum number of products sold would be. Next, estimate what the wholesale price of the product will be. And then play around with your royalty rate, which is likely to be between 3-7%. This allows you to have a much clearer idea of what your royalty will be. For me, without doing these calculations and therefore understanding your potential revenue, it’s hard to ask for a specific royalty rate. If the company is in a great volume of stores, you might be happy with 3%. On the other hand, if they have limited distribution, you might be able to negotiate a higher royalty rate. In my experience working with inventRight students, 5% is very standard. The more you bring to the table, the higher the royalty rate can be. That could include everything from patents, CAD drawings, pre-production samples, and so on. Once again, everything is negotiable. But, typically

speaking, the more you do and the more risk you take away the higher a royalty rate you can obtain. Please note that in some situations, your royalty may be a set dollar amount. I don’t see this very often. But if there are any issues determining how to set up the potential net revenue, approaching your royalty this way can simplify the situation. For example, some companies will try to include the cost of marketing, samples, promotions, and then calculate the net revenue from the gross. This can get very complicated. Basically, they’re trying to throw in the kitchen sink to deduct from gross sales — leaving a smaller net revenue from which your royalty is derived from. Here are a few things that could affect your royalty rate: Upfront fees. If you happen to be paid an upfront fee that is nonrecoupable, (you get to keep it no matter what) you might receive a lower royalty rate. On the other hand, not receiving any licensing fee at all might be a good argument for a higher royalty rate. Company standard rates. Companies that have licensed ideas in the past sometimes have standard royalty rates. But your royalty rate can still be negotiated. I have found that it’s very hard to negotiate your royalty rate with successful companies. It doesn’t mean you’ll get a fantastic deal just because they’re successful. They’re probably successful because they’re tight fisted. Commercialization. The closer you are to commercialization, the less risk the licensee will face, and the higher the royalty rate will be. As I’ve said before, anytime you have market demand, you may get a higher royalty rate. Intellectual property. If you already have patents issued for your idea, that could warrant a higher royalty rate. A well-written provisional patent application can also have value. If it includes a lot of variations, it can stop potential work-around opportunities. Step-up rates. This allows the licensee to pay a lower royalty rate early on and a higher rate later; triggered by certain events like trade shows, orders, production, etc. This structure acknowledges the reality of startup costs and benefits your licensee while their startup costs are ramping up. Step-down rates. Step-down rates allow the licensee to pay a declining royalty rate as they ramp up production of products that incorporate the licensed technology. As sales volumes increase, you can make more money,

even with a lower rate. This can be a huge incentive for them to market and get behind your product. Richard Levy is a famous inventor who has licensed over 100 product ideas. He is the creator of Furby. I asked him how he gets the best royalty rate. He said two words. “Just ask.” You never know. If there’s a reason why the royalty rate should be lower than what you want, they will explain it to you. Also, if negotiations are stalling out at say, four percent, you could ask to receive a specific amount, like 40 cents a unit, instead. It doesn't always work, but it can change the conversation. And as a result, you could end up with closer to a six percent royalty. The most effective negotiators don’t get tunnel vision trying to get the highest royalty rate or a quick signature on their agreement. Instead, they try to build a lucrative long-term relationship by being a reasonable partner. So, big-picture wise, don't obsess about your royalty rate. There are other more important considerations, like making sure your contract includes some kind of performance clause. Advance against royalties Asking for a big lump-sum payment upfront is the number-one way that entrepreneurs and independent product developers kill a deal. This is called “top-loading” a licensing agreement, and it’s a not a good way to build a long-term relationship. It does not take into consideration the manufacturer’s situation, signaling to a potential licensee that you are looking out only for yourself. The company may argue that they need to spend that money on marketing. I get that recouping some of your costs is important. But if you try to top load a deal, most companies will walk. In my experience, the toy industry is more open to paying advances, although they are not that large in size. Maybe $5,000-$10,000. Typically, this is deducted from future royalties. Also possible in the toy industry is a “holding fee,” which is paid to you to give the company an agreed-upon amount of time to evaluate your product exclusively (meaning you aren’t showing it to anyone else). Most potential licensees will agree to pay a small advance. However, they will not offer it, so you will need to ask for it. Here is what I like to do: In lieu of a big advance, I ask the manufacturer to pay for my patents. In fact, that is how I’ve paid for many of my patents. My attorneys filed them and I own them, but my licensees

paid for them. While an advance is a gesture of goodwill, having a company pay for your patents is good business. It protects the company’s interests as well as yours, and it helps incentivize and motivate the licensee to bring your idea to market so they can recoup the patent costs. If they say no to a lump sum for your intellectual property, ask them if they’re willing to make that payment recoupable against future royalties. That way, the cost is spread throughout the year. Who would say no to that? You’re looking out for both of your interests. A lot of deals are signed using variations of this concept. Sometimes, the licensee will be willing to pay a small cash advance in addition to paying for your patents. It all depends on how big your idea is and how much money they stand to make. Minimum guarantees The minimum guarantee is the minimum the licensee guarantees to pay you regardless of sales. Whether the licensee sells one unit or 500,000, this minimum guarantee must be paid to the licensor. This is an essential point in licensing agreements and a difficult matter for licensing partners to negotiate. A minimum guarantee is essentially a performance clause. When you grant a license to a company, you need to make sure they’re going to perform. If they can’t bring your product to market, they should lose the opportunity to sell your invention. Without a performance clause, they would be able to sit on your idea forever without consequence. You don’t make even one dollar in royalties if your product never sells in the marketplace. Performance clauses can also come in other forms. You can include certain provisions in the licensing agreement that your licensee has to achieve, such as showing your product at a specific trade show. You can also require a manufacturing deadline and ship date. But in my opinion, having your performance clause tied to sales is the best strategy. Sales can be tracked, so a minimum guarantee based on sales can work as a great motivator for your licensee. Most companies are not wild about this. It’s understandable. They don’t want to lose the chance to sell your product after investing time and money. That’s why it’s important to give them the time they need to be successful. It takes time to develop a product, test it, design packaging, ship it, get it

ready for trade shows, and take orders. So, you must give them enough time to complete these tasks. But you can’t be a pushover. You should agree to a certain deadline. Typically, a year to a year and a half. One common sense way to come to a number for the minimum guarantee is to ask your potential licensee how low sales have to be for them to give up on the product. Use that number as the minimum guarantee. If a company would give up if they don’t sell more than 2000 units, the minimum guarantee would be the royalty from 2000 units. You can ask your potential licensee about their estimated sales for your product. Of course, they will give you a low number because they will anticipate that you will ask for a minimum guarantee. For that reason, it’s important to ask your potential licensee about distribution early in your relationship. As mentioned before, at the early stages, they’re trying to sell you as much as you’re trying to sell them, so they’re more willing to provide this kind of information. If they give you a number that’s too low, there won’t be much reason for you to grant them an exclusive, so you’ll be playing a cat and mouse game. Regardless of what they tell you, you should do some math on your own. First, count how many stores are selling products from your potential licensee. Assume every store will sell one unit per week. Assume your royalty rate will be 5% on the wholesale price. And realize that it will take time for them to get your product to market through mass distribution. A reasonable proposition is your minimum guarantee would be lowest for the first year. It could be a little higher for the second year. It would be reasonable to assume that they will have full distribution in place by year three. Your minimum guarantee would be in terms of percentage of the expected royalty, which is calculated by generating an annual sales forecast. I’ve been in situations where there was a flat fee, but that’s hard to estimate when you’re projecting sales, so I prefer percentages. A fair minimum guarantee in my opinion could be 25% of the expected royalty in the first year, 50% in the second year, and the 75% in the third year. Because the minimum guarantee in the first year is so low, they will not be intimidated by it. It’s a reasonable strategy. With a low minimum guarantee the first year, they will face less risk. Once they’re selling the product, they’re less likely to pull out.

Like I said, overall, most companies do not want to pay for minimum guarantees. But there has to be some type of performance clause so in the event that they don’t hit a certain sales number, you get your technology/product back. In some industries, like DRTV, I’ve seen contracts that included minimum guarantees as high as $250,000! Most common is anywhere from $20-$50,000. Typically, minimum guarantees start about a year and a half after the contract is signed; sometimes as short as a year. They have to start selling something in order to produce revenue for you, and that does take time. Don’t be alarmed when that runway is built in your contract. Grant of License All licensing agreements have a “grant of license” section. This section spells out, in very specific language, what it is that you are licensing to the company. Essentially it answers the question, “What are they paying me for?” Many companies want this section to include your PPA or, if you have one, your patent. I like to expand it to include all intellectual property such as trademarks, copyrights, trade secrets, design patents, and improvements. But I recommend taking it one step further and literally including your product itself. If the company agrees that it is licensing your product, then your contract will continue whether or not a patent or any other intellectual property even issues. Meaning, you still get paid. For more strategies like this, see my book Sell Your Ideas With or Without a Patent. So, make sure the grant of license includes any applications you have, as well as future improvements and other types of intellectual property. Improvements clauses Negotiating an improvements clause in your product licensing agreement is crucial to your success. This clause should include improvements, variations, updates, modifications, and enhancements made solely by the licensee or any sublicensee of the license relating to the technology. Trust me, you must own the rights to these improvements or else things can get messy. Improvements will be made. For example, your product might need to be adapted and improved for high speed manufacturing equipment. If you don't own the improvements made, you may end up in the bizarre predicament of having to license the technology from your former licensee.

The truth is, protecting the technology benefits both of you. You had the idea and you're giving them the exclusive right to market and sell it, not own it. Having multiple people filing intellectual property can be very expensive and confusing. In some situations, you would have to pay them a royalty if you wanted to license any of those improvements. It’s actually not that difficult to negotiate these terms. You can tell your licensee that you are continuing the development of your intellectual property and must have full ownership for them to have exclusive access to it. Licensees generally seem to be satisfied with that argument. You can include such a clause when you have a potential licensee sign an NDA. Require that there will be no reverse engineering and that any improvements they make must be assigned to you. It’s all about creating leverage. No need to let improvements be made to your concept before you’ve signed a contract. Another tactic would be to slide in an improvement clause later on during negotiations. A different position to take would be joint ownership. This can become very messy if you both terminate the license agreement. Sure, it’s understandable that they want to own any improvements that they make but realize that they will be able to license and collect a revenue stream from that improvement, which might compete with your original idea. At the least, try to negotiate the contract so if it’s terminated, you have rights to any improvements that have been made, without being on the hook to pay royalties for those improvements. Audits The last thing you’ll want to request is the right to audit the licensee’s accounting records if you suspect you are not being paid what you’re supposed to. Auditing a company’s books does not foster trust, and licensees do not like this. So how do you get an audit clause into your contract? Well, like every other aspect of negotiating a deal, you make it fair to both you and the licensee. Here is how you do that: You ask for the right to audit the licensee if you suspect a discrepancy between how much of your product is being manufactured and sold and the royalty checks you are receiving. Then— and this is where the fair part comes in and why the company will likely agree to this clause—you agree to pay for the certified public accountant (CPA) if no significant discrepancy is found. If the CPA finds a serious

error that resulted in a loss of, say, five percent or more in paid-out royalties, then the licensee will have to pay for the CPA’s audit. If there is a discrepancy, ask your licensee to pay not only the difference, but also interest on the difference—that’s what is fair. As I mentioned earlier, negotiating a licensing agreement is incredibly complex and difficult, even for the most experienced inventors. In fact, I think negotiating is the most complicated part of the entire process, so I’m currently writing an entire book about it. Different industries have unique approaches and standards for licensing agreements. For this reason, this chapter should give you a general overview of the process. When negotiating your contract, I highly recommend you find someone who’s experienced in negotiating licensing agreements to help you with the business terms of your deal. In the back of this book, you’ll find a simple licensing agreement for you to review. It is not to be used. Breach of Contract There’s a very good chance your licensee will breach their contract. Don’t be alarmed by this. Contracts are living, breathing documents. This actually gives you a chance to renegotiate. You may possibly walk away. But if you give them a chance and they can improve their performance, it’s better to build a working relationship. Success in the marketplace is definitely a team effort. Try to understand what some of the problems are and make sure they’re still interested in going forward. Always, be reasonable.

Negotiating a Licensing Deal Interview Inventor: Paul Tomita Products licensed: Running Light, by FlipBelt Paul’s first career was in design engineering, but he eventually transitioned to patent law and has been practicing as a patent attorney for over 20 years. Paul has lectured at Cal Poly San Luis Obispo’s Center for Innovation and Entrepreneurship and is currently an adjunct professor at the University of San Francisco’s School of Law. Paul designed a light for runners that’s more functional than commonly used headlamps. His experience in looking for a potential licensee was atypical in that he targeted just one specific company. His idea was a modification of an existing successful product in their line. Paul told me that reaching out to this company wasn’t difficult. They were interested in his product and even contacted him for extra samples. The tough part of Paul’s experience was negotiating the licensing agreement: Paul: The negotiation was not particularly easy. At one point it broke down…. As an engineer, I’m constantly improving my product. What I licensed to this company was the first generation of my design. Since then, I’ve come up with the second version, which is favored by ultramarathoners. The issue that we had was that the licensee wanted exclusivity to all my patents. I could not make my own product if I was giving them an exclusive license. I’m interested in continuing to develop my product… and it would have been a situation where I would not have been able to work on or manufacture this product. So, things broke down and they said, “No exclusivity no deal.” And that lasted for a couple of months. And then they came back to the table and we were able to negotiate better terms. Stephen: Was it nerve-wracking? Paul: It was initially. But then you just need to say this is a business transaction. It’s nothing personal. Don’t get upset. My attitude was, “If you don’t want to do this deal, that’s fine.” But that’s what worked for me.

Stephen: If you have the power to say no, that’s pretty powerful. Often times, if you can walk away from a deal, eventually you’ll be able to cut a better one, even with the same company. Check out my full interview with Paul on inventRightTV.

PART SIX Taking Your Ideas to the Next Level

12. WHERE'S THE MONEY?

T

ime and time again people have asked me how much money I’ve made through licensing or how much money a typical inventor makes once they’ve licensed a product idea. People also want to know how much an inventRight student might make on a successful licensing agreement. These are all very reasonable questions, however, for most people these questions step over the line of confidentiality.` Recently, a woman from Australia who licensed her idea following the process I teach in my book One Simple Idea and on inventRightTV was willing to disclose the size of her first royalty check. It was for $11,000. To my surprise, she was willing to share this information on camera! She shared other information that many others don’t, like the name of her licensee and how much they paid for her patents. It was unusual. You can find the video on my YouTube channel. But in general, inventors are very reluctant to share how much money they make. It’s like being asked to disclose your salary. In many situations, inventors have signed an NDA that explicitly prohibits them from sharing financial information. One inventRight student agreed to sell a patented technology to the auto industry. It was an extremely large buyout, which is quite uncommon. The inventor had to sign a very strict NDA that prohibited him from publicly disclosing the amount of money he received. He also had to agree to not discuss the deal with the press. I was involved with the negotiations and cannot discuss them to this day. As far as my personal experiences with licensing, I’m happy to be an “open book.” So, in this chapter, I’ll try to answer all of these questions. I

will also give you my perspective on the potential for profit in various industries. But before I begin, I have an important disclaimer: If you’re doing this just for money, you should do something else. Licensing isn’t a get rich quick scheme. Just as in any business there are many ups and downs. It’s going to take you longer than you think. It’s going to be very stressful. And you need to be motivated and passionate. ftat being said, with licensing, there’s very little risk compared to venturing or manufacturing a product. You could spend as little as $500 per idea with licensing whereas if you were venturing, $100,000 would be at the low end of the spectrum. Venturing will take much more of your time as well. My approach maximizes your chance of licensing success. I think you should come up with many ideas, but not spend much money on all of them. You should test the marketability of your ideas by pitching to inventor-friendly companies. I’ve seen many successes using this method, but the bottom line is, it takes time. I like to tell everybody, “you’re a no collector.” Licensing is a business of rejection. So, if you don’t love the art of creation and sharing your creativity with others, you should stop right here and do something else. That’s just the truth about licensing. Before we leap into the numbers, I need to offer a disclaimer. The information below was collected on the internet in the year 2019 and may not be accurate. Meaning some of the numbers may be high, some may be low. I have done my best to rely on reputable trade organizations. They are intended to give you an idea of the size of the opportunity. “I have never done anything in my life for money. I’ve done it because of the love, the passion, the challenge of it. The money comes or the money doesn’t.” — Richard Levy, toy inventor with over 100 licensed toy ideas, including selling 75 million Furbies from Hasbro.

Doing the Math It does not matter what industry you’re in, it all comes down to math. How many products are being sold? Here’s an example. Most products will be discontinued if they don’t sell at least one per week because retail shelf space is extremely valuable. So, estimate how many stores your product will be in, assume each will sell one a week, estimate the wholesale price, and multiply by the royalty rate, which is typically 5%. Example: If your product is in 10,000 stores, where the estimated wholesale price of your product is $10, and your average royalty is 5%, you’re making $.50 on every item sold. That’s $5,000 a week. Times 52 weeks in a year. Is $260,000 in royalties a year. Now, take a product like Coca Cola which sells about a billion sodas a day. You do the math. Even if you received a fraction of a penny per unit, it’s a lot of money. It’s important to remember that large companies don’t typically license ideas. When they do want an idea, they'll buy it outright. It would be less expensive for them to pay an inventor a one-time large buyout than a royalty per unit. It’s very rare to find this. It’s the midsize companies that are looking for ideas from outside their company. They’re more willing to take risk. Large companies already have shelf-space and products that are selling and so are relatively risk-averse. I have seen large companies license ideas, but it usually takes longer and they are more difficult to negotiate with. That’s why I highly recommend working with midsize or even small businesses. In my opinion, consumables are where the largest volume of royalties are found. I’ll share my personal experiences, as well as what I’ve learned from coaching many students at inventRight over 20 years.

Novelty gifts this was the industry where I first licensed an idea. In 2019, the novelty gift industry was $17 billion in retail sales with 23,000 stores just in the United States. I grew up in Los Gatos, CA and we had a famous local entrepreneur named Gary Dahl that created a product called the “Pet Rock.” In 1975, the Pet Rock sold 1.5 million units in six months! Like everyone else, I was impressed and thought I could do the same thing. I liked the Pet Rock because it was very simple, whimsical, and put a smile on your face. I must have been influenced by Gary because after college, I started selling whimsical soft sculptures with smiling faces. I particularly liked this industry because it wasn’t about new "inventions." They sold products just to put a smile on someone’s face. That’s what I was doing before I started inventing. I wasn’t solving any problems, I just wanted to entertain people with my products. So, I started creating ideas in the novelty gift industry by observing products that were selling in drugstores and gift stores at the mall. These days there are entire stores, such as Spencer’s Gifts or Hallmark Cards, dedicated to this category. Also, because of the high markup of novelty gifts, (meaning the large profit margin) there are many other retailers that carry a selection of novelty gifts as well (airports, grocery stores, and mass merchandise stores to name a few). Over a few years, I licensed at least 20 product ideas in the novelty gift industry. Seeing my ideas go from a simple sketch to store shelves was remarkable. I loved every one of those ideas, even the hundreds that got rejected. Was it profitable? Yes and no. In the novelty gift industry, the main goal is to produce items for seasonal holidays—graduation, Valentines’ Day, Mother’s Day, etc. And that’s the major problem. These products have very short selling seasons. Companies do not want to overproduce, so they manage their inventory very carefully. They produce just enough to fill their pipeline of distribution because the extra inventory can sink the company. The average income for me was about $10,000 per item. You’re not going to get rich unless you license a lot of ideas and come up with new ones all the time.

For me, it felt like a job. But I got a lot out of the experience. The experience of successfully licensing ideas was a huge confidence builder. It taught me that I could compete. I built a portfolio of products that were licensed in my name and I got to see my creations in retail stores. I got to understand different companies’ innovation process by working with inhouse designers. I even did some freelance work for Applause, a company that I licensed many ideas to. (this company was eventually bought out by Russ Berrie.) Go to the ‘About Stephen’ page at inventRight.com to check out specific products that I licensed over the years. Novelty gifts is an extremely fun industry that needs lots of ideas. If I were to do this again, I would come up with product ideas that are not tied to seasonal holidays but rather purchased year-round, such as products for birthdays and anniversaries. I didn’t know this when I was inventing for this industry. There are actually many novelty gift companies selling products designed for year-round purchase. One such company is SUCK UK. It takes functional products and adds a little humor to each one. With that type of strategy, those products sell every single day. “Not a day goes by without someone sending us an idea of some kind, and quite often it’s literally a barrage of ideas.” — Sam Hurt, Cofounder SUCK UK (Novelty gifts) Pro tip: Along with SUCK UK, Kikkerland Design and Fred are companies that love working with independent product developers. Benefits: • • • •

This is a fun industry that’s constantly looking for ideas. Most companies don’t require prototypes. A simple drawing will do. Intellectual property is not required.

Many companies have a very simple invention submission process. • They are very inventor-friendly. You can build relationships with these companies. Downsides:

• I don’t think there are any. However, if you want to save the world I wouldn’t design in this particular category. Toys Global retail sales for the toy industry are over $90 billion. In the U.S. alone, it’s a little bit over $27 billion. The projected global retail sales for toys by the year 2023 is $120 billion. Toy Fair in New York is the “can’t miss” trade show. Toy Fair welcomes an estimated 30,000 global professionals. There are buyers from up to 100 countries connecting with 1,000 exhibitors! My first real job was at a startup toy company called Worlds of Wonder —WOW. I was 29 years old and it was my first real job. I think I was employee number 20 and my title was Manager of Design. Among others, we brought two hit toys to market—Teddy Ruxpin and Laser Tag. It was an incredible experience. WOW generated $93 million in sales in its first year and $327 million in its second! I met some remarkable people that changed my life forever including my wife Janice. I was at WOW for a couple years but left because I wanted to license my own ideas. I remember pitching my ideas straight to the CEO, Don Kingsborough (much to the dismay of my immediate supervisors)! To tell you the truth, the company was not open to the idea of licensing an idea from an employee, so deep down I knew I had to leave if I wanted to license my own ideas. I believe truly creative people struggle to work for anyone else. They create for the love of seeing their ideas in the world, not for the paycheck. My big take-away from working with WOW and freelancing for other toy companies was knowledge about the product submission and evaluation process. I got a real “behind the scenes” experience. At WOW I was able to participate in the product review process so I was able to see all the products that were submitted from outside inventors and watch how the company reviewed them and selected ones to license. From prototypes to storyboards, I got to see it all. That’s when I learned that many, many people have to evaluate a product submission in order for it to be accepted. From Sales and Marketing to Manufacturing and Engineering, it was a team effort. I left WOW to start my own company, Stephen Key Design LLC, and started submitting ideas to Worlds of Wonder and other toy companies as

well. WOW ended up asking me to do some freelance work for them which was to reduce the manufacturing cost of Teddy Ruxpin. I was also able to freelance for other companies such as Leapfrog and Mattel. I was able to be part of toy history. I worked with wonderful people at Disney and Henson and got to travel the world. I even got to see my product being used by Michael Jordan on TV. The takeaway? Build relationships with companies. I submitted over 30 ideas to WOW. They took just one idea called Hattie Surprise and gave me a holding fee of $15,000. Holding fees are somewhat typical in the toy industry. A holding fee gives a company time to evaluate a product during which you agree not to submit it to any other toy company. Ultimately, WOW decided not to license the idea. I licensed a basketball game to Ohio Art called the Michael Jordan Wall- ball with just a paper prototype. I had no intellectual property whatsoever (and looking back, my marketing copy was absolutely awful). They later extended the product line by adding other basketball stars such as Penny Hardaway and Grant Hill. The Michael Jordan Wall-ball and another wall- balls sold for over ten years. I shared the royalty with one of my first partners, Russell Hicks. Royalties from the first year were about $100,000. After I licensed the Michael Jordan Wall-ball I submitted many more ideas to Ohio Art and they were all turned down. It’s always a numbers game. I also submitted many ideas to Hasbro and Mattel with no luck. “A lot of ideas are clever combinations of new ways to play or matching ideas and presenting them in a new format.” — Brian Chapman, President and Head of Global Design and Development at Hasbro, the world’s largest toy company by revenue. In my opinion, the toy industry is difficult. You have to love it. For me, I had to find a different industry with less competition. I recognized that I wasn’t in love with the toy industry. The main problem is that the industry has been working with independent toy inventors forever, so there’s plenty of competition. It’s not easy to break ground if you’re new. The toy industry has changed over the years. Because of my past employment with WOW, I could make contact with the people there and other companies (I used the fact that I had worked in the industry to get me in the door.). But most inventors used to have to go through toy brokers if

they were new to the industry. The toy brokers would take a cut and act as the screening mechanism for the large players. “Toy brokers offered two benefits traditionally. One was access – a broker was able to “jump the line” for some folks. But the other thing that brokers did was handle the business side of things. Most inventors didn’t (and don’t) want to be out schlepping stuff to 50 meetings a year, negotiating contracts, or hiring lawyers. It was a partnership matching ingenuity with business savvy. For some inventors, they (brokers) are a necessity, for others, not.” — Ben Dermer, SVP of Creative Development at Spin Master, the #2 manufacturer of games and puzzles in North America. Today, you can get in directly to just about everyone. Because of social media and open innovation, most toy companies have opened their doors to all of us. The New York Toy Fair is not inventor-friendly if you don’t have a reputation already developed in the industry. As an independent inventor, it’s hard to get into the show and quite expensive. Once you get in however, you can pretty much see everyone in the industry in one place! In 2020, Toy Fair invited inventors to apply to pitch their toy and game ideas to inventor relations teams in person. Besides the New York Toy Fair, there are other trade shows such as ChiTAG (Chicago Toy and Game) Week, that are great places to start. I know of a new toy inventor that went to ChiTag and was able to meet toy companies and ultimately license his toy idea. If there’s any downside, it is another expensive trade show to attend. “Thursday and Friday are inventor conferences. And we have four tracks for those: 1) new inventors, 2) professional inventors, 3) design students, and 4) product acquisition executives. Last year we had close to 100 product acquisition executives from almost 70 companies there looking for ideas.” — Mary Couzin, Founder ChiTAG “ChiTAG is an exceptional event for new toy and game inventors and professionals alike! The education, networking, and relationships built during the show are key contributors to inventors’ success. It’s a great opportunity to meet with companies and pitch concepts, gaining essential feedback that benefits current as well as future concepts. Attending

ChiTAG gave me the very best chance of licensing my toy invention without the need of having to resort to using a toy broker and having to share royalties with them or submit to toy companies through online portals and being forced to sign a lopsided NDA. I would recommend that novice toy inventors attend ChiTAG first if they have a guaranteed hit on their hands!” — April Mitchell, inventRight Coach and Toy and Game Inventor If you want to meet specialty retailers and toy companies, you can go to the ASTRA (American Specialty Toy Retailing Association) trade show. This is a traveling trade show. It’s also a great way to start if you’re just beginning. Everyone will be very friendly. The downside to specialty toys is that there are only about 3,000 retailers. The distribution is much smaller compared to toys that retail in big box stores. I’m actually on ASTRA’s advisory board to help inventors this year. ASTRA is actively looking for ways to help inventors that become members. I think it’s wonderful that they are discussing what they can do at their conventions to educate inventors. Benefits: • You get to play and see the world through the eyes of a child. • It’s a very creative environment. • In most situations, intellectual property is not required. • A 5% royalty rate with a performance clause is fairly standard. Downsides: • • •

The industry has a lot of competition. Because of the competition, it takes some time to get to know the industry.

There are about 3,500 independent toys stores. The upside to this is that many of the big retailers (Costco, Target. Walmart) have picked up the slack since Toys R US began struggling to stay in business. For now, it looks like it’s coming back. • The royalties are lower with very large toy companies. But of course, they have the largest distribution.

•

this is one industry that requires prototypes in addition to sell sheets and videos. • Toys can have a very short lifespan. Kitchen and housewares this is one large industry! Retail sales in the kitchen and housewares industry are $75 billion in the U.S. alone. The International Home + Housewares Show in Chicago has 2,200 exhibitions and is one of the top 20 largest trade shows in the U.S. Each year, a group of the inventRight staff attends this show. We usually have over 50 inventRight students attend this show to pitch their ideas to potential licensees. We see more signed licensing deals in this industry than any other. “Every year we work with a different inventor.” — Jenna Sellers Miller, President of Architec Brands, a woman-run kitchen products brand using the fundamentals of architecture to design better products. For kitchen gadgets, the lifespan is fairly short. But if you make improvements on existing items the lifespan can be ten years. Royalty rates are fairly standard at about 5%. When you’re working with kitchen companies that don’t sell brand new gadgets but products that have small improvements on existing items, look and feel is very important. These companies license a lot of outside products, but mostly from professional design firms. Submitting to these companies will take time and you will have to be qualified—they will want to see a portfolio of beautifully designed products. Generally, you see this from developers that have gone to design school. Joseph Joseph, from the UK, is an example of a company that prefers to work exclusively with design firms. “We design really functional useful products that are used every day. And that happens to be in the home, around the kitchen, trash, sink, and cleaning organization. We work with external product designers – if you are a designer and want to get in touch with us, please do so.” — Richard Joseph, Cofounder, Joseph Joseph, one of the fastest growing companies in the worldwide housewares market; sells in more than 100 countries.

this information applies to consumer kitchen and houseware products. There is also great opportunity for licensing in the commercial kitchen (think restaurants) space. I’ll talk more about restaurants and hotels in the hospitality section later in this chapter. Benefits: • This industry has a wide range of product offerings. Small appliances, cookie cutters, kitchen tools, beverage dispensers, pots and pans, kitchen storage, cups and plates, and many more. • There are many open innovation companies that are easy to reach out to. • Companies generally require simple prototypes in addition to sell sheets and videos. • Most of the time, patents are not required. A well-written PPA will do the job. A simple, low-cost design patent can be of great benefit. • Distribution points are fairly large. Downside: •

Royalty rates for individual inventors are a little lower from companies that typically work with design firms. Packaging this another large industry. Globally, I believe it’s over $500 billion. This includes flexible packaging, corrugated cardboard, and more. The 2019 PACK EXPO trade show in Las Vegas had over 2,000 exhibitions with companies from over 40 industries ranging from food to pharmaceuticals and drew 30,000 attendees. The PACK EXPO International in Chicago in 2018 was the largest packing trade show in history and had over 50,000 attendees. Total royalties can be quite substantial because of the volumes of consumables. Think about earning a small royalty on every Coke sold or bottle of Vitamin E. A great example is the “Upside-down Bottle” invented by Paul Brown. He was able to license his invention to Heinz (for use on ketchup) and several shampoo manufacturers. Eventually he sold the rights to his design and his company for over $14 million dollars! That being said, this is not an easy industry to license products in if you don’t have some prior knowledge of supply chains and machinery.

“Pricing is critical because we are not talking small volumes. Some of the projects could be at 45 million pieces a year, so they are not small.” — Barron McKillip, Research Scientist at Multi- Color Corp and Former VP of R&D at CCL Label, two of the largest packaging firms in the world. Also, know that this a very slow-moving industry. Equipment in the packaging industry ranges anywhere from $250,000-$1 million per machine. Because capital costs are so high to implement new innovations, things move slowly. As an example, Coca-Cola is produced in over 900 manufacturing facilities worldwide because most of its products are not shipped more than 500 miles from the point of manufacturing. Implementing a new packaging innovation for Coke, even within one specific territory, would require lots of new machines! Obviously, this can get quite expensive so these changes will not happen quickly. I stumbled into this industry by accident! I was reading an article in a local paper, the Modesto Bee which discussed the need for more space on labels for drug facts—important information that would stay on the container and not get thrown away with the box. I had previously licensed a rotating canteen and cup to a Canadian company called Trudeau that was selling in all Disney theme parks and Disney stores worldwide. I took the concept from the rotating canteen and cup and turned it into a double- label system that would deliver extra space with a spin of the outer label. I had to learn a great deal about how labels are manufactured and applied to containers to make this idea actually manufacturable, and along the way I was able to file and receive many patents. It took me many years to understand all the machinery required to execute this idea. The “SpinLabel” was, by far, my biggest licensed product. It was licensed to a large manufacturer, CCL Label, and sold tens of millions of labels through U.S. brands such as Rexall Sundown vitamins and supplements and Jim Beam distilled spirits, and was also licensed to Nescafé coffee in Japan. The SpinLabel won Best of Show at the Packaging Expo in Chicago and was on the covers of multiple packaging magazines. It received two “Edison” awards for innovation within the packaging industry. I stayed in the packaging industry for over 20 years because of the royalties it was producing. The SpinLabel portfolio was eventually

acquired. Between the royalty payments and the patent portfolio buyout, I was paid several million dollars. I am currently working with Fishbone Packaging, a start-up company, to help with intellectual property and licensing agreements. “Fishbone” is a packaging innovation that eliminates the plastic rings on six-packs of drinks. Benefits: • With consumables, the volume and the distribution can be massive, so the potential revenue is quite large. • Companies can be inventor-friendly. Downsides: • It’s one tough industry. You’re dealing with extremely large companies and they move very slowly. • Decisions about large scale projects require more time so the industry is slow to innovate. • Ideas are extremely difficult to implement. Without some type of prior knowledge of machinery, it’s almost impossible. • Intellectual property, such as patents, is required in most situations. For these reasons, I try to talk people out of this industry. The best opportunity for a packaging innovation is a small improvement that can be implemented on existing equipment that does not impact the cost of production. If your idea impacts cost or reduces manufacturing line speeds, it will be very difficult for anyone to implement. On the other hand, if you can create demand for a packaging idea, almost everyone in the industry will want to talk to you. Market demand in this industry can move mountains. Remember that this is a very competitive industry. Please use NDAs and file intellectual property to keep everyone honest. If you have an idea in packaging, always work with an industry expert and make sure it’s an actual innovation. Hardware

Hardware industry sales are almost $400 billion. In 2019, the National Hardware Show in Las Vegas had home improvement, lawn, garden and outdoor products to name a few with 2,600 exhibitors representing 15 major product categories showing 250,000 products. Over 30,000 hardware industry professionals attended the show. Many inventRight students have licensed ideas in this industry. This is an industry that needs new ideas often because of short product lifespans. More and more companies are embracing open innovation and are willing to work with inventors. A 5% royalty rate with a performance cause is fairly common. Hyde Tools provides a good example of an inventor-friendly company in this industry. They have a great invention submission portal. One of their executives told me that they value inventors and treat them as individuals, not numbers, which is one way that Hyde stands apart from larger companies. He also said that they get many ideas through trade shows. Trade shows are not about selling and taking orders as much as they used to be, they’re about new ideas and advertising. Please note, some trade shows have an area for inventors with new products where you can buy a booth. I don’t recommend this strategy if you’re trying to license your idea. I’ve already given you some tips on how to work a trade show in Chapter 6. Benefits: •

Easy-to-work with companies. Open innovation is growing in this industry. • Fairly standard royalty rates at 5%. Minimum guarantees are also standard. • Intellectual property is nice to have but not required. •

Creating a new tool typically will result in a long lifespan.

Downside: • Prototypes are required. Filing at least a provisional patent application is a good idea. When working with large hardware companies, the majority will want to have intellectual property on tools that will have a long lifespan.

•

Some of the larger companies do not take outside product submissions. Black & Decker changed their policy in 2019 to not accept outside submissions. Please note, these policy changes happen all the time. If a company is not open to outside product submissions, make sure to check back later. DRTV Direct response TV or As Seen on TV was about a $300 billion industry in 2019. It is a very unique industry in which product lifespans are incredibly short but there is potential for big money. Naturally, that attracts a lot of people. These companies only need a couple of big hits a year so “Sell first and sell fast” is truly the name of the game. Because of that, intellectual property is really not important. Being new or first to market with a product with a big wow factor is much more important here than patent protection. This is why DRTV companies are constantly looking for new products. One caveat for this industry: Because of the rush to get to market, you don’t want to be working with two DRTV companies at the same time. Submit your idea to one, wait until you get a firm “yes” or “no” before moving on to the next. And, you should know too that this industry has had issues in the past with copycats and infringement. Don’t be fearful but do be cautious. Make sure to research any company (from any industry) by typing the company name and “complaints and lawsuits” into your internet search bar. Know who you are working with! Over the years this industry has changed. In my opinion, the products used to be a little “cheesy.” You will remember commercials on late night TV. Most DRTV products now are sold on the shelves of major retailers with the “As Seen on TV” logo. DRTV companies still run television commercials, but digital marketing has become the more frequent marketing medium. DRTV now sells a wider range of products at a wider range of retail price points and targets their marketing to specific consumers. I also think that the industry is producing better quality products since retailers don’t want to deal with returns. Great examples of successful DRTV products are fairly easy to find. There’s the George Foreman Grill which has sold over 100 million units since 1994. And who doesn’t love the “Snuggie” created by Scott Boilen

and sold by Allstar Innovations? More than 30 million of the body blankets have been sold, grossing Allstar over $500 million in sales. There are quite a few DRTV companies. Take a look around and make sure you do your homework on each one. Also, there are “feeder” companies that will look at your product submission, test it, and then submit it on your behalf to the larger DRTV companies. Realize that anyone can be a feeder company. Yes, anyone can become a feeder company. DRTV companies will pay you for submitting the product to them. Please note, these fees range depending on the amount of work you’ve done. A great DRTV product has the following elements: 1) it solves a big problem that many people can relate to which means it has a large target market, 2) the product has a significant “wow” factor that can be demonstrated, and 3) the price of manufacturing allows for a 5 to 1 retail price to manufacturing cost ratio which means if a product costs $5 to manufacture you will be able to sell it for $25. And, DRTV companies will want to sell a lot. Typically, a company will actually run a test of your idea to see how many will sell before they actually commit to manufacturing. The strategy of making simple improvements on existing products does not work in this particular category. Your product must be new and have a wow factor. The most popular price point is $19.95 but because of targeted ads on social media, the industry is now looking for products at different, even higher price points. You no longer have to have the “major” hits to make money in this industry. With the new digital marketing platforms there are more opportunities than before. If you’re submitting ideas to this industry, a one-minute video is an absolute must. If there is interest, you will need a prototype. Make sure you research existing marketing videos and adopt their format. Your product must have a large audience and a big wow factor. Don’t just send them anything; they already get a lot of junk ideas and it’s a waste of everyone’s time. If you understand their goals, you can be an asset to them, and they will work with you. Benefits: •

3% standard royalty rate with high minimum guarantees.

•

In general, high volumes.

• •

Quick turnover. This industry is always looking for the next idea. It’s very easy to submit ideas and companies will get back to you very quickly because they do product reviews every week. • this industry is opening up to larger markets because of digital marketing. They are looking for a wider range of products at different price points. Downsides: • You will need good marketing videos and prototypes are typically required. • You should only submit to one at a time. Because intellectual property is less important in this industry, if a company tests your idea and likes it, they may proceed without your approval. • Ideally your product should not be similar to anything else on the market. • Copycats and infringement issues are always a problem. Always do some research on companies you’re submitting ideas to. Make sure to check for lawsuits involving any potential licensee. • In general, this industry does not sell as many products when the economy is doing well. • The holding time period to evaluate or test your idea in this industry is about 120 days. Music I absolutely love this industry. Generally, people in this industry are musicians or just love music and as a result, people are extremely welcoming. It’s one of those industries where people really love what they do. From the big players to small players, it’s one happy industry. Even though I never licensed an idea in this industry, I know many of the companies who are always looking for new innovations. This is one industry where you should absolutely go to trade shows. In my experience, I was able to meet just about everyone. Even publications such as Guitar World and Revolver Magazine were extremely helpful. I started a company called “Hot Picks” which designed “lifestyle” guitar picks. My biggest hit was called “Grave Picker,” a guitar pick in the shape of a skull. My company became one of the largest producers of guitar picks

in the world with thousands of designs. By becoming a Disney licensee and using 3-D lenticular lens, a flick of a guitar pick would show 13 frames of a Disney movie. We also became a Taylor Swift licensee. Hot Picks won “Best of Show” in the small musical accessories category for two years in a row at the National Association of Music Merchants (NAMM) in Anaheim, California. It was quite an accomplishment for a company built around a small piece of plastic. Basically, I took my creativity from the novelty gift industry and applied it to guitar picks! But I didn’t license my ideas, I elected to start a company and ultimately learned that I didn’t really enjoy the stress of managing all the day-to-day operations! Benefits: • this industry is open to working with inventors. Companies are generally quite friendly and welcoming. • You can reach out to the major players as easily as the smaller ones. Downsides: •

Prototypes are always preferred. Please file for copyrights and/or trademarks. Also, a provisional patent applications never hurts. • It’s not a particularly large industry, unless you can get your products sold at concert venues and mass retailers. • There are many independent music stores but only a few big chains, so distribution is somewhat limited. Pet The pet industry was a $72 billion industry in 2018 in the U.S. This industry has been on fire for years and it doesn’t look like it’s slowing down. 70% of all households own a pet which translates into over 84 million households. Who doesn’t love their pets? People are always looking for new pet toys, which means companies want to offer them! I have attended the SuperZoo, the pet expo in Las Vegas, and found that this is a very open industry for inventors. At inventRight we have had many students license multiple ideas in the pet industry. We’ve even had a trademark licensed—VetMD. These successful inventors have all told me similar things about the industry -

namely, build relationships so you get your ideas in to the right people. Just as with any industry, you can expect plenty of rejections, but the better you understand a specific company’s product line you can develop and submit ideas that really fit. Also, understanding costing can be very helpful in designing products that can be manufactured at an attractive price point. this is another industry that’s been watching social media for product ideas. ftree great companies that work with inventors are Ethical Pets, Petrageous Designs, and Hyper Pet. Benefits: •

This is a very inventor-friendly industry.

•

Average royalty rates are about 5%.

•

If you are a pet lover, it’s a fun industry in which to create.

Downsides: • Distribution is somewhat limited because there are many independent pet stores and only a few big box stores. Women’s and girls’ apparel/Jewelry/Men’s and Boy’s apparel The fashion industry is a $348 billion industry in the U.S. and worldwide closer to 2 trillion. This is a difficult industry in which to license products. In most situations, your product idea should have some type of functionality or utility. It’s hard to protect fashion because most products in this industry don’t have any kind of new utility. If your idea does not have any utility or intellectual property protection, you only have a trade secret, trademark, or concept, and have to navigate very carefully. We have an inventRight student named Candice F. who licensed a product called Bikini Bands. I believe she was able to license her product because she already had a brand that was selling, meaning she had proven market demand. Unless your fashion product has some type of utility, creating a brand around it like Candice did might be a good option. If you go this route, trademarks for your brand will be very important. I recently interviewed Mike Fisher, an independent inventor, who was able to license a men’s accessory. His idea is a small improvement on an existing idea—collar stays. He created a buttonhook. It makes it very easy to get to those hard-to-reach buttons to push through. It’s especially great

for people who have difficulty buttoning their shirts. He licensed his patented buttonhook to Wurkin Stiffs. The more common path in this business is to start your own company (which as a rule you know I don’t recommend). Sara Blakely had an idea for women’s shapewear and started Spanx – which is now estimated to have $400 million in sales. “Shark” Daymond John grew his clothing line FUBU from a few sewing machines in his mother’s house into a $350 million company. If you have a product idea in this industry (and you don’t want to start a company), reach out to a potential licensee and check their policy about working with inventors. If the benefit of your idea is very attractive, some companies will consider signing an NDA. NDAs with very strict “no reverse engineering” language or improvement clauses can protect you if there is no end date to the NDA. Basically, you’re giving them is a trade secret and it needs to be handled as such. I highly recommended working with a licensing attorney to craft an NDA for your purposes. Benefits: •

this is an extremely large industry.

•

Easy to build prototypes and start to manufacture.

•

Quick to market.

Downsides: • •

This industry is not for the inexperienced inventor. There is very little intellectual property involved in this industry. Because patents are granted for the utility in an innovation, you might have to take a different approach such as building a brand to establish any perceived ownership. Cannabis The global market for legal marijuana products is projected to exceed $146 billion by 2025. Holy smokes this is one big industry and it’s exploding. The industry is seeing many creative innovations from marijuana entrepreneurs. The recreational cannabis market is driving sales not just for marijuana, but for lifestyle products and smoking accessories as well.

Many innovations are unique to marijuana consumption. Products related to packaging, dispensing, pipes, grinders, rolling papers, edibles, and marijuana infused beverages are examples. The hottest category and biggest growth area in the market is vaporizers and everything that goes with them. We have a couple of inventRight students actively submitting products in this new industry. Their experience is that companies are very open to outside product submissions. Paul Lin’s experience is somewhat typical: Out of 25 companies he contacted only one did not want to see his product idea. He received responses to his sell sheet very quickly and is currently in negotiation for a licensing deal. Paul made a great observation – since this industry is so new there is very little prior art (prior patents) which makes licensing new ideas really easy! “The cannabis industry is very easy to get into because everyone is growing so rapidly.” — Arkady G., inventRight student who licensed to a global cannabis packaging company “It’s very open – they know where this is going, millions will turn into billions.” — Chad D., inventRight student, Palm Beach FL There are also plenty of innovations that are cannabis-related but actually sell in different categories. Here are some examples of innovation within cannabis-related products. 1. The greeting card industry. This is a $7 billion industry and creative marijuana entrepreneurs are quickly stealing market share. There is a company called KushKards that sells marijuana themed greeting cards that include a pre-rolled joint affixed to each card. 2. Cost cutting. In most industries cost cutting innovations are a important. Turbo Trimmerz is a good example. They enable marijuana users to trim faster with less physical stress. Automation is another way to reduce costs and a company called Bloom Automation has developed a robot that can trim cannabis buds. The robot uses computer vision and machine learning do a job that’s currently done by human trimmers. 3. Cultivation. There will be opportunities to make products to assist with cultivation, facilities will see many changes.

4. Marijuana infused beverages. Almost all of the major alcoholic beverage companies are researching and developing new products with THC and CBD infused formulations that are meant to offer an alternative to current alcoholic drinks. Many entrepreneurs are filing patents to protect their inventions. In 2018, the USPTO issued 39 patents containing the word “cannabis.”

Recently, a patent was issued for an oral care composition with cannabinoids. Michael Brubaker, patent attorney with Cannapatents, says “(the cannabis industry) has these areas where you can grab broad patents and license them to companies that will hopefully come into the market in the next few years,” he said. “The broader the patent, the better the patent.” Here are some examples of broad, large scale innovations in the industry: formulations for hemp to be used in household goods, such as sunscreen and make up, a method for making coffee products containing cannabis ingredients, single serve beverage pods that contain cannabis. I don’t have real data yet about how many products are being licensed at this time, but it is a very new and exciting space. I would reach out to a potential licensee and ask what their policies are on outside submissions. Also, there are many trade shows for cannabis! Check out the Cannabis Business Times for a pretty comprehensive list. Benefits: •

The industry is growing by leaps and bounds.

•

There is a need and desire for new products.

•

Right now, most companies are inventor-friendly.

Downsides: • • •

New companies require education on licensing.

Government regulations, which are likely, are unknown. As companies continue to consolidate and get larger, they will be hard to get into as in any other industry. Hospitality The hospitality industry is a broad industry that encompasses a variety of fields within the service industry and includes food and beverage service, hotels, event planning, transportation, and tourism. The global food service equipment market alone was $31 billion in 2018.

In general, most inventors come up with ideas for the consumer market. There are not that many independent inventors who are designing commercial products, but I think there are huge opportunities here because of the scope of this industry. Three inventRight coaches have licensed product ideas that are being utilized in different areas of hospitality. All three inventions have in common the benefit of saving time for employees. Paul Sorenson, currently a senior coach at inventRight, licensed a large spatula that can empty large (number 10) tomato paste cans with just one twist. David Fedewa, a former inventRight coach, was able to license a pitcher that allows you to fill it quickly with beer without a lot of foam. Karen Steinbock, another former inventRight coach, licensed a pillowcase that allows for faster pillowcase changes by hotel staff. All three inventions save time and therefore labor costs. I think there are many opportunities for inventions that can save time in this industry. You have to be very price conscious when designing for the hospitality industry. This industry is about volume and works on very low margins. Whatever you’re designing has to have a cost that’s very similar to or less than the product you’re replacing. There is a need for products that improve efficiency, reduce costs, and reduce the environmental footprint. “Hotels are looking for ways to reduce costs! Another goal is to make the workplace safer for their staff and their guests.” — David Middleberg, Director of Global Sourcing and Purchasing, Star Linen US and UK Karen’s alternative to regular pillowcases had to utilize preexisting supply chains be manufactured with the same materials, and cost the same no higher than the old pillowcases. It took her some time to learn enough about the manufacturing process to be able to get her product down to the right price point. When you’re working with any industry at this large of scale, know that the process will take that much longer. Often, the extra time will pay off due to the higher revenue potential. Sometimes commercial product ideas for the hospitality industry can be licensed for consumer use as well. Paul has licensed different sized versions of his spatula for the consumer market and Karen plans to license her pillowcase to consumers as well. The reverse can also be true. Companies involved in consumer goods can sell their products commercially. If you’re attending industry trade shows, it might be wise to look beyond

commercially specific trade shows such as the National Restaurant Association Show and consider shows like the International Home + Housewares Show in Chicago as well. Benefits: •

Large industry.

•

Relatively untapped by inventors at this time.

•

Once you get a product licensed, the volumes will be large.

Drawbacks: •

Finding companies is harder, their presence on the internet is a bit less obvious. • Price points are crucial – you need to have knowledge about manufacturing. • Because not all of the industry will be used to the idea of licensing, companies will need education. • Probably helpful to know someone on the “inside”. Consumer technology In 2020, this industry will be $1.1 trillion! CES (Consumer Electronics Show) is one of the largest trade shows I’ve ever attended with over 175,000 people and 4,500 companies attending last year. There are products in 33 categories including 3-D printing, gaming, artificial intelligence and robotics, baby tech, drones, fitness, smart home, home cinema, wearables, self-driving cars, music, digital health, and many more. If you attend this trade show in Las Vegas it will blow your mind. There’s over two million square feet of exhibit space with 24 marketplaces. Eureka Park is an area at CES for start-ups. 1,200 startups from over 40 countries display their latest products and many investors come to Eureka Park to find their next “unicorn.” Global media comes to look for the next story, companies come to look for partnerships and acquisitions. I believe many potential ideas in these categories are big in scale, meaning product ideas that require an entire team to work out functionality and proof of demand—big ideas that require a wall of intellectual property. Basically, ideas that are more appropriate for start-ups companies, not for licensing. These ideas require more than a sell sheet and a video!

If you are an independent inventor with ideas in this field, you are going to need more than I have suggested for other categories! You are going to need: Proof of concept, a working prototype, CAD drawings and a complete understanding of mechanical and electrical parts. You must use strongly worded NDAs when sharing confidential information. Being an insider in this industry is definitely a plus. You’re going to need skills to navigate the corporate system. You must have up-to-date knowledge of all the technologies in your particular field. If you haven’t, I would highly recommend attending CES. The people you will meet can help you determine what path to take. Benefit: •

this is a huge global industry!

Downsides: • You probably need to be a startup company not an independent inventor. That means you have to build a team, raise money, and have a proof of concept. Showing proof of demand can also be extremely helpful. • This is not for the beginner inventor. I don’t know many independent inventors playing in this field. • Intellectual property will play a big part in this industry. Become an expert and always know your point of difference, you’d be surprised at how many start-ups don’t. Promotional products You’ve seen these products. Every time you go to a trade show, someone’s trying to hand you a promotional item with their name on it. They’re everywhere, even dentist offices hand out promotional items. Just last month, I received a jacket with the logo of an organization I’m part of. This is a $23 billion industry. PPAI Expo features over 13,000 distributors and 4,000 companies for a five-day conference and trade show. It has more than 1,200 exhibiting companies showcasing tens of thousands of promotional products. This is not an easy industry in which to license. Most of the products in the promotional product industry are everyday products like pens, pencils, umbrellas, notepads, binders, and clothes. They are all personalized with brand logos. Product ideas that are new and novel are not particularly

desirable. Small variations on existing product ideas that people are familiar have better chances of success. Copycats are rampant in this industry so please do a good background check on anyone you want to work with. Benefits: • •

Huge industry. Simple improvements on existing products is all that is really needed.

Downsides: •

Industry is full of copycats.

•

Difficult to introduce something new and unique.

Sporting goods The U.S. sporting goods industry was more than $47 billion in 2019. This includes footwear, exercise equipment, licensed sports merchandise, and athletic apparel. Based on our inventRight students’ past experiences, this is not the most inventor-friendly industry in my opinion. There are a few major players that have bought out many smaller companies. Because of this, there aren’t many companies to reach out to license products in some smaller categories. You can get in to these bigger companies, but it takes more time. Many fitness products do extremely well in the DRTV format. If you’re having a hard time getting into fitness companies, try reaching out to a company in the DRTV space. Benefits: •

This is an industry that is personal for many people so holds high interest. • There has been a shift away from gyms to working out at home, thus meaning a growth in home products. • An ageing population means there will be need for new gear and equipment. Downsides: • It’s not a particularly big industry – major players tend to buy up new products and companies.

•

Proof-of-concept is a must.

•

Testimonials are almost a requirement.

Software The good news: Worldwide revenue for mobile apps in 2018 was $365 billion. The bad news: The industry is notorious for stealing technology. The industry is extremely fast moving, and products become outdated very quickly, so infringement is rampant and protection is difficult. Protecting software ideas is not the easiest thing to do. In some countries they won’t even grant software patents because software is too abstract. In the United States, they do grant software patents, but they are very difficult to obtain at best. One of our inventRight students sold his software to a company for $10 million before he came to us. He was a software engineer and had coded the program. I asked him why he became an inventRight student. After all – he had just sold his company for a rather nice sum! He said he didn’t know enough to include sharing in the sublicensing rights. He left millions of dollars on the table. Another inventRight student licensed software to one of the largest car companies in the United States. He did have a prototype and patents on his idea. Copyrighting code can be a fast way to protect software, but workarounds are very common. You just have to change a little bit of the code! Licensing software is somewhat tricky. You can do it but it’s going to require more work compared to licensing in other industries. You’ll need more than a sell sheet and video to make a pitch to a company. Traditionally, people have started a company to produce a prototype or beta version of software. Once they work out all the bugs, they look for a partnership, buyer, startup funding, or an IPO exit. What about some of us that just have a new app idea? To bring that idea to market through licensing, you will absolutely need a working prototype (a beta test version). Many inventors want a software engineer to develop their app on a speculative (or “spec”) basis – meaning the engineer will get their money after the app is licensed. Not too many programmers will work this way. If you have to pay someone upfront you will spend considerably more time and money to develop your idea than a “sell sheet” so the entire approach is different from typical consumer product licensing.

Intellectual property will be very important. I highly recommend having a software patent attorney help you draft your provisional patent application. For the do’s and don’ts on software patents, you can find great information on Gene Quinn‘s IPWatchdog website. Also, don’t forget that potential licensees will want to see some type of user engagement or proof of demand. If you can find the right company to which your software is a perfect fit with their current product line, a well-written PPA with a good storyboard might work. I would absolutely have an NDA in place before disclosing important information. But know that the best protection you can have in this situation is finding a company that has a good history of working with independent developers. Even if you don’t work out a licensing deal immediately, you may get some feedback. Feedback can be very valuable, whether you end up developing your idea with them or with someone else. Just don’t forget, this industry moves extremely fast and ideas get “borrowed” all the time. Benefits: •

Big potential payoffs.

Downsides: • You will need a working prototype. Engineers will want to be paid upfront. • You will need intellectual property. •

Even with intellectual property, workarounds are common.

Clearly you can license ideas in many different industries. Frankly, I continue to learn that there are opportunities in industries I didn’t think were possible. A great example of that is the food industry. Typically, recipes cannot be protected so it’s very difficult to license an innovative food – you typically have to start a business, build a brand, and then hope to sell it to a larger company. Sometimes you can treat a recipe as a trade secret (think Coca Cola) and that can be of value. But, if your food product has a unique manufacturing process or delivery system, you might be able to license that. For example, we just had an inventRight student license a process for cold smoking raw eggs. In her case, she licensed a manufacturing process. It’s probably one of the biggest licensing

agreements I’ve ever seen. It turns out, there’s a huge worldwide market for cold smoked eggs! The novelty candy industry is a fun one – if you think about it there are a lot of candy products that are combined with toys or very clever packaging. For a while I tried to create and license products in this industry, but I had no luck. Having said that, my contacts were quite open to outside submissions and very easy to work with. And, the volumes can be quite large. There is also the promotional premium business (toys that are given away in the fast food industry as an example) – which is also very fun. The issue here is that you have to create products that can be manufactured and packaged for under $.50 which is quite challenging. And of course, there is a tremendous emphasis on licensed characters nowadays. The industry is looking to reduce its environmental footprint, so they are looking for nonplastic items. It might make for a really great challenge for an inventor – and the volumes are huge! As far as where the money is, it really comes down to how many distribution outlets your potential licensee has. You should always do the math. The numbers will be different for every product, potential licensee, and industry. Typically, if you make $50,000 to $100,000 per product, you’re doing pretty well. I’ve seen many products where royalties are in the millions. But understand that doing the math is just a way to get a ballpark idea of the numbers for a given idea. You should be aware of the numbers, but your payday should not be your top priority. This is my advice because the goal of this book is to give you a long-term model for licensing success. I very much believe that the key to success as a professional product developer is to immerse yourself in an industry that you really care about, to get to understand all the ins and outs, and build relationships with the relevant players. As I mentioned before, licensing is a numbers game. You’re a “no collector.” So, I want you to chase your passion, not the dollars. This way, you’ll be resilient through all the ups and downs of the process and find success in the long run. If you’re looking to strike it rich, I would try something else. If you want to be creative, licensing your product ideas is a wonderful avenue. Just

test the marketability of your ideas, don’t spend a lot of money on any one idea, reach out to inventor-friendly companies, and always do the math. “It’s really about building relationships over years before you really get some solid traction. And that’s gonna take a little patience, tenacity, and some pain. It’s going to be a journey.” — Scott Baumann, Professional inventor and CEO of Procreate Brands, LLC., which has more than 40 worldwide licensed products in its portfolio. inventRight student.

13. FIGHTING TO GET PAID this chapter, I want to go over some important aspects of becoming a I nprofessional inventor. First, I want to introduce you to the concept of fighting to get paid. Okay, maybe fighting is the wrong word. But if you want to become a professional inventor, you need to plan ahead so people end up paying you. Once, when speaking to a group of startups in Australia, someone asked, “How do you know so much about intellectual property given that you’re not a patent attorney?” Very simple! It’s called Survival 101. When I finally had a big idea that was producing a lot of income, I concentrated on how I was going to protect it so that I would keep getting paid. That’s why I ended up with a portfolio of more than 20 patents related to the same packaging innovation. The packaging industry is cutthroat. People will go to war over half a penny! And they’ll do whatever they can to work around you. So, I taught myself how to protect myself with intellectual property, including nondisclosure agreements and trade secrets. Another priceless experience was suing one of the largest toy companies in the world, Lego, for patent infringement. After three long years, I watched our attorneys duel over just two words in federal court in San Francisco. Two words! For a patent to truly have value in the market, I discovered, it must include manufacturing knowledge and workaround language. Perhaps even more importantly, I realized I had let my emotions get the best of me — and that moving forward, I would do everything in my power to avoid getting into the same costly situation.

So, what is the key to getting paid as an inventor/entrepreneur/product developer? Perceived ownership. I don’t believe any of us ever really own anything. That said, absolutely there are things you can do to ensure you profit from your creativity. It all starts with doing your homework and making preparing for pitfalls part of your go-to-market strategy. If you’re pursuing a licensing agreement for your invention, get ready to answer hard questions from potential licensees about why they should pay you. To help you navigate selling at retail and online, it’s critical that you make sense of the current laws and practices governing intellectual property. (Negotiating a licensing agreement with an inventor-friendly company isn’t much of a battle; rather, you’re just working out some of the details.) If your product is successful, copycats won’t be far behind. The way I see it, it’s pointless to view copycats in terms of right or wrong or fairness. It’s called competition. With intellectual property, it is wise to keep in mind that here are no black and whites and no guarantees. I cannot stress enough that these are tools, not strategies in and of themselves. The good news? There are more places to sell products than ever before and more resources available to help creative people than have existed at any other time on the planet. Open innovation — the phenomenon in which intellectual property flows in and out of companies — is the dominant paradigm. With that in mind, these are my tips for you to fight the good fight — and get paid regardless of whether you have any intellectual property. And if this sounds like a lot? Well, it is. Choose not to be intimidated. Education is key to your success. Do your homework. Know your point of difference in the marketplace. Study the landscape of similar products closely so you are able to explain how your product is different and needed. Creating something new, different, or even just an improvement on a simple idea is important. Don’t waste your time on product ideas that are not marketable. Familiarize yourself with the prior art, aka patents that describe similar inventions. Prior art exists for everything. What’s important isn’t whether or not there is prior art; it’s how well you understand it and are able

to use that knowledge to your advantage. Because when you understand the landscape of prior patents and are able to clearly identify your point of difference, it’s easier to convince potential licensees why they should license your invention from you. When someone inevitably asks you about the prior art, you can respond confidently: “Yes, this patent will issue, and this is why.” In reality, no one knows for sure. Don’t dread or fear this line of inquiry. Instead, turn it into a selling point. People will always question your intellectual property. Expect this! File a provisional patent application that truly has value in the marketplace. This requires that you understand potential issues regarding manufacturing, which is often extremely valuable. You need this information to get your product to market! Include the most efficient way of making your technology in your application. To help you come up with variations, try stealing your invention from yourself. For a simple improvement to an existing product, a well-written provisional patent application gives you enough perceived ownership to get a licensing agreement. You and/or your licensee have the option of filing a non-provisional patent application moving forward. Consider filing a design patent to beef out your portfolio. If your product has to look a certain way, and copycats will copy you exactly, a design patent (which is relatively affordable compared to a utility patent) could have big value. Create marketing material that is enticing. The most effective sell sheets grab the viewer’s attention by focusing on the benefit of the item. Hire a professional to help you design yours; this is money well-spent. It’s not easy coming up with a one-line benefit statement/value proposition that is crystal clear and impactful. Your marketing material will be shared with retail buyers and other employees. When executed correctly, it creates its own demand. License to an inventor-friendly company that has a history of working with independent inventors. This is the best protection you can have to get paid because speed to market is still paramount. These companies need and value your contribution. And if by chance you are able

to license to a market leader, they will be able to police copycats based on their relationships with retailers. Focus on companies that have the right distribution channels. Make sure you understand how and where their products are sold. This allows you to potentially carve out areas for other licensing opportunities based on where they’re weak. Negotiate a strong licensing agreement, meaning one that has minimum guarantees and other types of performance clauses. If they don’t live up to their side of the contract, you need to able to get out. That’s where performance clauses come into play. Do not negotiate your own licensing agreement, especially the first time. Instead, work with someone who has negotiated many licensing agreements and truly understands the business terms. ften, at the very end, bring in a licensing attorney to make sure you haven’t missed any of the fine details. This way, you control the negotiation process and are able to begin building a strong relationship with your licensee. Here are some additional examples of how to make your licensing agreement stronger. Grant of license. I’ve mentioned this before. They’re going to want the grant of license section of the agreement to be narrow in scope. You want the opposite, meaning for it to include everything from copyrights, trademarks, design patents, and any and all future improvements. Here’s a pro tip: Make sure you include your product as well. That way, if no intellectual property ever issues, you still get paid. Line extensions. It is in your best interests to come up with line extensions. Line extensions extends the life of your original product. In many situations, your licensee will come up with line extensions themselves. In your licensing agreement, make sure it is stated that you own any line extensions. Trademarks. Sooner or later, your product will have a name and need to be protected. If online sellers decide to copy you, they will most likely copy the name of your product. If you own the trademark, it will help you stop them. Copyright. This is such an affordable and powerful tool (along with the trademarks) to stop online sellers stealing your images and imitating your

brand. Use non-disclosure agreements (NDAs) when appropriate. It’s not appropriate to ask a potential licensee to sign a non-disclosure agreement right away; in fact, I recommend against doing so. When they start to ask you for confidential information, that’s when you ask to sign their NDA. They won’t be signing yours! Please read it over very carefully and make sure it’s a mutual NDA and fair and balanced. NDAs are a great tool when you don’t have any type of intellectual property yet. I don’t believe NDAs protect people the way they think they do; they’re not so much a protection tool, as a tool for setting the right professional tone. Build an army of raging fans. Today, it’s not about suing people. The patent system is broken; to a certain degree I think it always has been. What I mean by that is, patents are just words — words that can be interpreted differently by a patent examiner, a judge, and a jury. To me, pursuing infringement in court is a losing battle. Your time and effort will be better spent shouting your story from the rooftops. Let everyone know: This is your creation! Telling your story well requires planning. Document your journey with imagery and words and approach podcasts, television, radio, YouTube channels, and more about your achievement. You have a voice — use it. Consider creating a custom hashtag and encouraging your community of fans to use it on social media. In this way, hashtags can act like a mini sell sheet for your company! I also recommend making customer service a priority. When a knockoff appears, your fans will let you know. Some of them will even come to your defense. Knocking off an inventor gives companies a black eye. A retailer’s brand is damaged by carrying a copycat. Create demand. The easiest way to license an idea with or without intellectual property is by creating demand. You can create demand by showing your sell sheet to retailer buyers and distributors. Would they carry your product? A yes demonstrates that there is business to be had. Smart companies know it’s not about protection, it’s all about selling. So, sell first and fast. Trade secrets. The y can be very powerful. All the little details about manufacturing your product you discover along the way add up to trade

secrets. Don’t disclose any of this information before there is a strong nondisclosure agreement (NDA) in place. Manufacturing quotes. Understand how your product can be manufactured, the cost, and pricing structures within different industries. This information gives you leverage to cut better licensing deals. Proof of concept. Building a prototype that works and demonstrates your product is a powerful tool that you can use to leverage a higher royalty rate and convince the company to move forward. It also helps you file stronger intellectual property because you know what works and what doesn’t work. Know your competition. In any fight or sport, knowing your competitor’s strengths and weaknesses is always valuable. For example, before you approach a company to inquire about licensing your product, do a prior art search on them. Is intellectual property important to the company? Familiarize yourself with the company’s history and culture as well. Is being first to market important? Before you speak with anyone about your invention, look up their profile on LinkedIn for background. What is their area of expertise? Insights like these allow you to design your product more strategically. For example, maybe you can alter your product so that it can be made more efficiently, possibly using technology their competitor doesn’t have. The more you know about their business the better. Build relationships with all major retailers. To prevent a retailer from carrying a copycat product, reach out early on and be the first to introduce your product and its story. Make sure they know you are the creator and your product, the original. Police trade shows. Verify that your product is being displayed appropriately at trade events. Can passerby see it? Do they grasp its benefit? Visiting trade shows in person is also a great opportunity to stay abreast of the competition. Keep innovating. The best way of staying ahead of the competition is by continuing to innovate. Improve your product and file additional intellectual property on those improvements. Look for line extensions. Your small size means you can be quick. You can outthink them.

It’s not the size of a company that gives it strength, it’s actually knowledge. Following these tips and strategies will create leverage for you to get a better licensing deal, work with the right company, and stop copycats when you do become successful selling your product. It’s all about becoming a professional inventor. This year, I shared the above information in a presentation I made to intellectual property professionals in Atlanta. This is what intellectual property attorney, Pete Wellborn, had to share in response. Wellborn is one of the most well-known attorneys in the United States, whose legal victories have been featured on the cover of the Wall Street Journal and featured on Good Morning America. “I am an attorney with a practice that includes intellectual property and commercial litigation, but no patent work whatsoever. I nonetheless ended up at one of Stephen Key’s patent-related presentations and – somewhat to my surprise – found his ideas and advice to be of immense value in both my trademark/copyright work and, even more important, in every other area in which I practice and advise clients. We live in a day and age when, for an inventor faced with virtually any issue or challenge during the life of his product or idea, the ‘expert advice’ almost always involves lawyering-up. Regardless of the outcome, this results far too often in a business-killing bill for legal services several magnitudes greater than expected. In that scenario, the lawyers on both sides win. Not so, however, for the inventor. The overarching theme of Stephen’s message was brilliant in its simplicity – a combination of common sense, novel thinking, self-help, and realization that the ‘nice’ approach is often the best. These strategies frequently fall by the wayside as the inventor’s attorney, as have generations of attorneys before, skips straight to the sternest and most threatening demand letter that he or she can pen. This guarantees that the courtroom will be the sole venue for – most likely – a lengthy and costly legal war. The particular patent-specific concepts that Stephen discussed were pure gold to the inventors, IP owners, and patent attorneys in the audience. Even more so, however, the underlying principles were invaluable to every businessperson and legal professional lucky enough to hear Stephen, regardless of their fields or disciplines. Stephen has the closest thing to a

‘blueprint for success’ that I have ever seen.” — Paul F. (“Pete”) Wellborn III Why you shouldn’t rely on a middleman To become a professional inventor, you need to be in control of your own destiny. I cannot stress this enough. If your goal is to license your product ideas, you must educate yourself to the point that you are able to communicate with companies directly and like a professional. This takes time -- time that is exceptionally well-spent, I’d argue, if you’re serious about this. Yes, absolutely, there is a learning curve. I would never recommend negotiating your own licensing agreement as a first-time inventor, for example. Without knowing the ins and outs of business terms typically included in licensing agreements, you’re far too likely to end up leaving money on the table. Many people think that inventing success is a matter of access. That if they had the name, contact information, and in with the right person, they’d find a home for their product. If only it were that easy! There are product scouts, feeder companies, third-party invention submission portals, toy brokers, and licensing agents all trying to help inventors by presenting their ideas to potential licensees on their behalf. But I’m here to tell you that if you educate yourself, you don’t need a middleman. You don’t need anyone to submit your product ideas for you. Middlemen will tell you, “I can spot a winning idea when I see one.” And that’s the issue. Maybe yes, maybe no. No one has a crystal ball, regardless of how long they’ve been in an industry. When it comes to licensing, there’s only one opinion that matters, which is that of the company you’re submitting to. Not gatekeepers. Ideally, you want a team of people, including representatives from manufacturing, sales, marketing, and legal, to review your submission. Everyone has a difference of opinion, and all of those perspectives are important to get a product to market and succeed there. You need to get their feedback. You need to hear what the issues are directly. You need to look at the facial expressions of the people in the room, understand who they are, and their concerns. That’s when you become a professional inventor, and why you must be in control of the process yourself.

Because most of the time, this is the moment your creativity is really gets called upon. It’s where it begins. What I mean by that is, very rarely are product ideas licensed as is. There are almost always changes — oftentimes significant changes — made to an initial submission. You need to hear what they have to say, so you can come back with solutions. You can’t count on anyone else to solve the issues for you, because they’ve got other tasks on their to-do list. You’re the inventor, you’ll actually work hard and long enough to make sure what needs to be fixed gets done. You care! An important disclaimer: If you’re inventing in the toy industry, working with a toy broker offers many benefits. The toy industry has a long and rich history of embracing outside product developers. Competition is high, and as a result, it’s one of the most difficult industries to achieve success in. Hiring a toy broker to show you the ropes can help you become familiar with the industry much more quickly. Toy brokers charge differently, so be sure to ask for clarification. Most will ask for part of your royalty. Some charge a fee to review submissions. (If you have just one idea for a toy, I would submit it to the appropriate toy companies directly.) Broadly speaking, if you’re developing new product ideas for a specific field, working with an industry expert can be extremely helpful. You should always kick the tires on anyone you’re considering working with. Ask a lot of questions. Understand how people charge for their services, then do the math. Are they willing to pass on their connections and relationships to you? There might be huge value in this. If not, I believe you should do the work yourself. To become successful at inventing and licensing new products, there are no quick results. It just takes time and effort. Be professional. Be reasonable. You can do this. The bottom line is this: At the end of the day, you’re going to have to establish your own relationships with the companies you want to invent for. You need to receive feedback from the people reviewing your concept, so you can re-present it with improvements and continue submitting other, better new ideas. The open innovation companies I interviewed for this book all told me the same thing, which is that they want to build a relationship. Specifically, they want to build a relationship with product developers who care about

their business and take the time to understand it. They’re looking to make the right people part of their team. For creative people, this is a huge opportunity. Be willing to invest in yourself! Displaying your invention at a trade show is like asking to get ripped off And finally, I want to explain why you should never display a prototype of your invention at a trade show. One of the best ways to gain an understanding of any marketplace is by attending the industry’s trade shows. This is true if you’re attempting to license your idea or venture it yourself. Over the years, I’ve been to many different trade shows and to my dismay, I always encounter inventors who have purchased a booth to display their invention. Typically, what they’re displaying is only a prototype, meaning the item is not in production yet. This is a huge mistake. These inventors stay locked in their booth all trade show long, waiting for someone to come and discover them. That’s what they’ve been sold on: That the right people will walk on by, that there will be pitching opportunities. But commercializing a product just doesn’t work like that. It never has. For one, the people you need to talk to about licensing your invention are staffing their own booths! They’re not out walking the show. Suppliers and retail buyers are the ones walking the show. When approached correctly, trade shows can be enormously beneficial for independent inventors. In fact, I highly encourage product developers who are serious about commercializing their inventions to attend the trade show their concepts pertain to. ftat said, there are significant risks in sharing your invention for all the world to see before the timing is right. If your invention is in the prototype stage, I strongly advise against displaying it at a trade show. The same goes for products that have been manufactured, but aren’t quite ready for retail or have limited distribution. The experts I interviewed agreed: It’s an amateur, rookie move -- one that can have disastrous consequences. Simply put, it’s dangerous from a protection standpoint to publicly display a prototype of your invention at a trade show. It’s like asking someone to rip you off.

Sara Farber’s company Galactic Squeeze invents toys and games. ftree party games she licensed to Kikkerland Design — Goat Yoga, Maskarades, and Clock Block — hit the market this fall. A former director of content design for Fisher-Price, she’s also brought three games to market on her own. In a phone interview, she pointed out that it’s not only risky because there are bad actors, but also because people are inevitably inspired by what they see -- whether they realize it or not. “No, I wouldn't recommend just sitting at a booth with all your ideas. There probably are people who would intentionally rip stuff off, but there are also people who wouldn't intentionally rip stuff off, but sometimes you don't know where you see something, it gets into your head, it's in the ether, and then you come up with something similar, and you might not even know that you got it from seeing this other item,” she explained. She continued: “The whole point of having an inventor relations person is so that an inventor is not going in and pitching to all the actual designers; they’re pitching to a person who's the gatekeeper. It's the gatekeeper’s job to weed out some things and bring others to very specific people internally, with the understanding that it’s an external concept and that if they do this concept or something similar to this concept, then they will need to work with the inventor or give them a royalty.” Good point. George Michaels has been in the packaging industry for 40 years. Currently he’s a sales executive at Accraply, a global provider of label application equipment that was acquired by Barry-Wehmiller. At his industry’s trade shows, companies typically show only equipment that is available for purchase, he said. Was there was any danger in showing a prototype that was not in production yet, I asked? “Yes,” he replied. “Someone’s going to take the idea and run with it. If you have a prototype, you wouldn’t share that at a trade show, you’d do so privately.” His company only brings items to shows that it’s ready to sell because protection at trade shows is impossible. “The whole idea is that we want as many people as possible to see our new innovations,” he added. Even when taking photos and recording videos is unauthorized, it happens all the time.

Michael Weinstein, president of digital at Bluewater Media, has attended more than 100 trade shows. As the former chief marketing officer for DRTV company Allstar Innovations, he was responsible for launching one of the most successful products in the history of As Seen on TV. Unfortunately, he has “absolutely seen examples where inventors have presented prototypes to people at shows and then magically seen the same item called something else make its way to the market six months later. So yes, there is risk. If you don’t have a patent and you’re not ready for the market, I would very much agree it should be shown privately.” Before he cofounded Grand Fusion Housewares four years ago, Brendan Bauer worked in the kitchen industry for more than two decades. He estimated he’s attended more than 200 trade shows. Does his company bring prototypes to trade shows, I wondered? Sometimes, he said. When they have a prototype, they generally keep it hidden, bringing it out from under the table only when engaging with customers that they already have a good relationship with. “I wouldn’t literally put it out for the whole world to see, because you really shouldn’t do that until you’re ready to sell,” he said. “You have to move an item to market quickly before the imitators start to follow.” He just got back from a trade show in China, he added, where he saw items that his company had launched this year. Back in the late ‘80s, when I was in charge of product design at the toy startup Worlds of Wonder (which launched Teddy Ruxpin and Lazer Tag, two number-one hit toys) I remember building prototypes for Toy Fair in New York. How could I forget gluing the eyelashes on our talking Pamela doll at the last minute? Boy was that stressful. We built prototypes to test the market to see if there was interest, but we only let buyers see what we had; we never let the public. That strategy was smart 30 years ago and it holds true today. Exhibitors large and small don’t display prototypes at trade shows. They keep what they’re working on confidential and private until they’re ready to launch. Why would you risk the exposure, when copycats are able to move faster than ever? A trade show is not the place to test the waters or practice pitching your product. It’s true that you need good feedback about your invention. The place to get it is privately. If you’re seeking a licensing deal for your invention, I recommend approaching potential partners (aka

licensees) at trade shows booth by booth to introduce yourself and begin forging a relationship. Here are a few tips. 1. Do not purchase a booth to present a prototype or limited production run of your invention, regardless of whether your aim is to venture or license. Until you’re truly ready to ship product on a wide scale, this is to be avoided. 2. Before you plan to attend a show, verify the companies you’re interested in licensing your invention to will be in attendance. Trade associations maintain lists of exhibitors. 3. Bring a sell sheet and be ready to show it privately. A video or small prototype could be extremely helpful. But please realize that obtaining the contact information of the right person at the companies you want to work with is a win too. 4. File intellectual property protection first. Filing a provisional patent application, trademark, or copyright is easy and relatively inexpensive. 5. Approach companies cautiously. Ask them if they work with outside inventors. If not, move on.

PART SEVEN Learn From the Best

14. 28 INTERVIEWS WITH INDUSTRY INSIDERS interviewing 28 experts across 17 industries, I can say with A fter confidence that open innovation is thriving. This presents a huge opportunity for inventive people! Across industries, the principles that govern submitting product ideas for licensing potential are the same, basically — regardless of what is actually being sold. The toy industry is the furthest along because they’ve been practicing open innovation the longest. Still, overall, the same principles stand. There are a few small differences to be aware of, so please read the following interviews carefully. At the end of each interview, I summarize the main takeaways and my advice. Patent licensing dates back to the 19th century. One of the earliest inventors to license his patents out was none other than ftomas Edison. One of the first industries to widely embrace licensing inventions and product ideas was the toy industry. When I interviewed leading toy companies like Hasbro and Spin Master, they all told me it’s extremely important to them to build relationships with toy inventors — because it’s extremely important for their business! Because of this, they have built online submission portals and even have a division within their companies just for handling outside product submissions from independent toy inventors. Because it’s been like this for so many years, toy and game companies are more sophisticated in the way

they handle working with independent inventors. To me, they’re clearly the best at this. More and more industries are embracing the benefits of working with independent inventors. But many haven’t developed well-defined policies and practices for online product submissions. I want to make you aware of another form of licensing referred to as “licensing in.” This is when manufacturers license or rent well-known brands to help sell their products. This is also known as brand licensing, and it’s an absolutely enormous business —$300 billion to be exact! I have licensed in as well as licensed out. Specifically, when I had the guitar pick business Hot Picks, I became a Disney licensee. That story can be found in my red book, One Simple Idea For Startups and Entrepreneurs . After interviewing companies that practice open innovation today and realizing that so many of the same principles hold true, I started to reflect back on my personal experience with licensing. My first job was at a toy startup called Worlds of Wonder back in the late 80s in Fremont, California. We had two major number-one hits toys, and that put us on the map. Our first monster hit — the world’s first talking teddy bear, Teddy Ruxpin — was licensed from toy inventor Ken Forsse. This toy definitely had magic. Everyone could see it; it was extremely obvious. Still, there were so many decisions that had to be made about how to bring it to market. The prototype was extremely rough. (I have one of original prototypes in my office, which I’m very proud of.) But besides that, the engineering department had to take this prototype and re-engineer it for production. In fact, it took an entire team of people to evaluate its potential. Could it be redesigned so that it looked cuter and could be produced at a price point that people would purchase? We knew we could we market the magic. At most companies, a team of people — typically consisting of engineers, marketers, designers, and salespeople — evaluate outside product submissions. Regardless of what category your idea is in, doing this evaluation requires a tremendous amount of work. When I asked toy companies how important outside toy inventors are to their success, they were emphatic. They all said, “ftey’re critical!” Like I said, Worlds of Wonder was a startup back then. If it wasn’t for this outside product submission from a talented inventor, there’s a very

good chance the company would’ve never made it. That’s how important this product was to WOW. During my employment at WOW, I was able to sit in on many of the meetings that were held to discuss outside product submission from inventors. It was truly fascinating. When they saw something they liked, they quickly offered the inventor a holding fee. This is very typical; they know toy inventors are shopping their products to everyone in the industry. Many of the ideas that I evaluated looked extremely polished. Prototypes were beautiful and functioned extremely well. A few of submissions had storyboards to accompany the prototypes. Some showed the packaging and even line extensions. Outside product submissions that were made out of materials like plush landed in my department. I would look at the product and pull a pattern to send over to China for a price quote. Costing was and is a big factor when determining whether to take on an outside product submission. When the submitter had experience with building a prototype, meaning laying out the fabric correctly and providing a spec sheet for the material, that was extremely helpful in getting the quote from China. You can’t always rely on an engineer in the company’s department to do this for you, because everyone is so busy. I was also responsible for taking approved samples to China to be manufactured and work with the factories there. When prototypes came in, the engineering and marketing teams would play with them outside their offices. Having a prototype, proof of concept, is in many situations critical. We were testing to see if they were fun to play and if the prototypes worked. At Toy Fair, we had prototypes that looked very good and worked to show to buyers before we committed to going into full production. We never displayed these prototypes, we only shared them privately. The evaluation process is pretty much the same today. You have to evaluate the product. Do a cost analysis. And test for proof of concept. It was wonderful experiencing that process firsthand, and it no doubt informed my strategy moving forward whether I realized it at the time or not. Does your product have a wow factor and a point of difference in the marketplace?

Can it be manufactured at a price point people will purchase? Will the retailers buy it? Does it fit into our product line and support our brand promise? These are things you need to consider. Once you realize how important these things are, you can craft your pitch to achieve licensing success — like making sure your product actually fits into the company’s product line. You can do some cost-analysis yourself to make sure the item fits the appropriate pricing structure. Having some type of market demand/proof of concept can be extremely important. That’s why I wrote this book — to give you the insider perspective you need to submit your product ideas correctly. After watching everything unfold at WOW, I was hooked. I mean, we launched products that became number-one hit toys! Working behind the scenes to take rough prototypes and make them look presentable was priceless. I made sure the manufacturing process in China worked correctly, and then I saw the same toys I had seen on factory lines on store shelves and commercials on TV. It was wild. After I left WOW to begin licensing my ideas for products, I consulted for a few other toy companies including Mattel and also continued working in Asia on manufacturing. One of the first companies I licensed to was a toy company called Ohio Art. Without the experience I had already had working in the industry, I believe it would have taken me much longer. First, I studied their product line extremely carefully. I had a passion for basketball and they had a basketball line that included a license of the basketball player Michael Jordan’s image. I changed the shape of one of their Nerf indoor basketball game backboards into the image of Michael Jordan, and they loved it. They called it the Michael Jordan Wall-Ball. The change I suggested (from plastic to paper) made it easier to manufacture at a lower price point while better leveraging the image of Michael Jordan. That’s a win! It was better for marketing and easier to ship. Maybe that’s why it sold for over 10 years. As an inventor, there are many things for you to consider when presenting your ideas to companies. When I came up with the concept of the rotating label, Spinformation, there were two major things I had to do to license it. First, I had to figure out how to manufacture it. In most situations

you will not have to do this. But that was one obstacle I had to overcome, because it had never been made before! And it also had to be manufactured at a price point that people would purchase. And finally, I had to figure out the right way to market it to the right companies — companies that would be willing to pay a little more for a little more space. There will always be obstacles for all of us inventors to overcome. That’s what we do! But again, without having had some prior knowledge of manufacturing processes and working with engineers and marketers, it would have been more difficult. Listen carefully to the engineers and marketers that describe how they evaluate ideas in this section of the book. Yes, every product and every licensing deal will be a little different. But fundamentally you must understand how companies are looking at your product and the difficulties they must overcome to say yes to a deal. With this type of insight, you can present your ideas in such a way that they take away risk. That’s the key.

INTERVIEWS Interviews With 28 Experts in 17 Industries

TOYS

BRIAN CHAPMAN President and Head of Global Design and Development for Toy, Game, and Consumer Products at Hasbro Toys Founded in 1923, Hasbro is currently one of the biggest toy companies in the world in terms of revenue and stock market value. Among its products are Monopoly, G.I. Joe, Furby, Nerf, Transformers, Twister, and the Power Rangers franchise. Hasbro is an industry leader that relies on its network of professional inventors to stay ahead of the competition. How important are independent inventors to Hasbro? Brian: The y're extremely important. I look at them as a big part of our lifeblood. At Hasbro we're really about finding the best ideas. We do that in two ways. We have a lot of processes and techniques for nurturing and growing ideas internally. We focus just as much on ideas outside of Hasbro. We look all around the world to find inventors who can bring us ideas as well as solicit ideas from our consumers. We run a lot of different idea forums where we bring in divergent thinkers who think differently than our internal teams. What is required to qualify as a professional toy inventor? Is it the quality of work? The relationship? Brian: It's kind of a repeated history of successful ideas that we either option or take to market. If you look at our portfolio at any given time, we bring in about 10 to 15 percent of our revenue through brand new ideas in a year. ftose ideas accumulate over time, you know? Some of those ideas become big brands for us and bring in a much greater percentage. It's

probably closer to 50 to 60 percent of our portfolio that started as an idea from the outside. Will you shed a little light on what happens after you receive a new submission? Brian: Typically, an idea will come in through our Global Product Acquisitions Team. That idea first and foremost has to be logged and documented so there's no confusion about the source of the idea. Once it's logged and documented by the global product acquisitions team they are asking, where is the best fit for that concept? For example, if it's something related to Nerf or if it's something that's more of a game-based play, they will assemble the appropriate internal decision makers and stakeholders to review that idea. They will either pitch it or they will ask the inventor to come in and pitch it. Basically, that team is reviewing that outside idea against all the existing ideas that we have today and they are saying, "Is that idea better than what we have, or is it not?" If it's better, we option it for a period of time (usually about three to four months) so we can really explore things like feasibility, manufacturing, costs, and gameplay mechanics if it's a game. If it passes all those tests, then we go to a contract and we produce the item. As far as timeline, it happens as quickly as we take items from scratch to market —which can be anywhere from 55 weeks to being able to turn things around in 10 weeks. If it's the right idea, we need to get it into the hands of consumers. How important is intellectual property? Brian: I'm not going to say it's not important because I think that if you have a protectable idea it just gives you a little bit of an advantage. It means that it will be harder for people to either knock it off or try to do something similar but at Hasbro we're just looking for great ideas as well. A lot of ideas are clever combinations of new ways to play or are mashing ideas and presenting them together in a new format. So, while some of those types of play experiences aren't protectable legally through patents, we're still interested in them. What could inventors be doing better?

Brian: Don’t bypass the submission process because that can really stall an idea. If you know someone who works at Hasbro don't send them your idea. Send it in to the Global Product Acquisitions Team instead. It's that balance of being true to your idea but also understanding the business and commercial needs. Typically, with our top inventors we give them live feedback on their idea and they'll say, "Hey look, I get it. Let me take it back. Let me shape it into a little bit more of what you're expecting and come back and re-present it. Inventors who have the capability of taking an early idea and altering it to meet the needs of our business have a very high likelihood, when they come back in and re-pitch that idea, of that item going into the line and being produced. I would also say, listen to people who have a different view, more of the business view of what is needed with an item, and help to solve those problems. those are the kinds of inventors that we love to work with. How important is it that inventors attend trade shows and other events? Brian: Extremely important. I think especially as you become an established inventor. Because the more touch points you have with our teams here, the better you'll understand the business, which will give you a higher likelihood of converting your ideas into feasible products. We will meet with some of our top inventors four or five, even six times a year, depending on the projects that we're working on. We'll bring them in-house to work side by side with our development teams to shape those ideas. A lot of them have their own model making facilities and they will shape them outside and we will go and visit them in their studios. That relationship is critically important. Once you establish it, you want to continue to work it. We love our inventors who are like an extended part of our team and I think that's when we have the most success. We love the ideas we receive from the outside because they truly give us a different perspective. They make us think about our business in a different way! I want to emphasize the importance of relationships. Getting to know the people at these companies is critical for your success. This is one reason why you need to stay in one industry long enough to know the products, people, and anything else that is unique to that industry.

The doors are open in the toy industry. A very large part of Hasbro’s success has to do with outside inventors. Toy brokers used to be the industry standard but they’re no longer required. I’ve noticed a big shift from when I visited Toy Fair a couple years ago. The industry is much more open. Companies are looking for a wider variety of ideas from more sources than ever before because of online retail and social media, This is a very competitive industry. Professional toy inventors do everything from making models to building great prototypes. You’re going to have to up your game to be successful in this industry.

BEN DERMER Senior Vice President of Creative Development at Toy and Game company Spin Master Spin Master is a global children’s toy and entertainment company originating from Canada known for the degree to which it nurtures its relationships with inventors. Founded in 1994, it has been nominated for Innovative Toy of the Year more times than any of its competitors and created six television series, including two international hits. Tell me about your invention submission process. Where do the best new ideas come from? Ben: Ninety five percent of the ideas for new products that we deal with come through personal relationships. It's actually pretty rare that a cold submission — meaning one sent through the portal we host on our website — gets that far. Typically, professional inventors contact us and share what they're doing. People who are invested in the space either know us or know how to get to us at the right venues and shows. The portal exists as an opportunity for people that we don't have a relationship with to connect with us. It's also a way to keep things organized, because we get quite a few submissions. So, it's fair at least standardize the procedure. What happens after you receive a submission? How do you evaluate it? Who's in the room? How long does it take? Ben: I'd like to preface the following by saying we're probably the top inventor company in the toy industry in terms of sheer number of submissions and number of meetings we take with inventors. And we

produce products in almost every category imaginable, so we're searching for new ideas in every category as well. It's very senior people in the company who participate in this process. After we receive a submission in one form or another (typically in a video or a prototype), we then do an internal review with the Inventor Relations team which is largely organizational. We make sure we understand the idea and that we have all of the pieces and parts. Then we conduct biweekly meetings with each of our different business groups. Our company is divided up into business units based primarily on category; robotics, activities, preschool, etc. Approximately every two weeks, we have a full review meeting with each of the business and design leads from all of those units where we look at new products and get updates on where in the process other ideas that we have looked at during previous meetings are. It's a fairly involved process. There is quite a bit of conversation among the designers and business leaders in the company. Every two weeks we're doing at least eight to 10 hours of product review. Is there a best time to submit ideas? Ben: We always have an open mindset, so we receive stuff at all times. That said, it's a push-pull. The toy business is obviously very seasonal and you have to be somewhat proactive. It's difficult to get a product in this year if you show it too late. In terms of an ideal time for toy inventors to show products to us, midAugust to mid-November is really the sweet spot for products that are aimed at the following Christmas. In other words, we're looking for products to launch in the fall of 2021 in the fall of 2019. That's not to say that if we see something at Toy Fair in New York (which occurs in February) or some other time that we wouldn't jump on it, but I do think it's good for professional inventors to embrace the seasonality of this business and try and sync up with company timelines. How important is intellectual property? Copyrights, trademarks, patents. Are those important? Ben: I think it can be. I don't think it's the best lens by which to look at things though. Patents are certainly valuable to the extent that they're useful. If you can come up with something that's truly unique and exciting and has a lot of potential and you can patent it, that's certainly worthwhile.

But I would estimate that 95% of things that we see aren't patented and never will be partially just because of the turnaround times in the toy industry and partially because invention in the toy industry has as much to do with style and marketing and other aspects. So, utility protection is not always essential. Then again, if you're a technical inventor who's just developed an amazing mechanism and you believe it's got 50 potential applications, then a patent is certainly worthwhile. Once again, building relationships is extremely important. You must take your time! Do not rush. Companies in many industries will tell you they look at products all year long, but in reality, there's always a window of opportunity. Timing is extremely important, especially in this industry. Again, a patent is a tool to be used when appropriate. You can learn a lot from the toy industry. Toy inventors have been at the licensing game for a long time. If you can swing it in the toy industry, you can be a professional in any industry.

DAVID SMALL Professional Toy Inventor David co-founded Shoot the Moon, a company that has licensed more than 100 products creating $4 billion in retail sales. It also designed some of the most sought after toys of 2018 including: Nerf Laser Ops from Hasbro, Wrapples from Moose Toys, Barbie Dancin’ Fun Horse from Mattel, Hatchimals HatchiBabies from Spin Master and Scribbles Scrubbies from Crayola. this interview was taken back in 2008 when David had the number- one hit toy, Live Elmo. In 2019 David and his partner Paul Rago were recognized with a Lifetime Achievement Award at ChiTAG. ftey’re considered some of the best toy inventors today! Also, Dave was my boss at Worlds of Wonder! He’s the smartest guy I've ever met. David, I know your background. Of course, it's engineering but how much… I know you have a lot of knowledge in manufacturing because once you build your prototype you show it to a client then you've got to produce it overseas… How much does that play a part when you're building a prototype, that knowledge of what can be done overseas? David: Well, I think that knowledge of manufacturing dramatically helped Shoot the Moon's ability to license products. We are unique in our space, in the inventing space, in that we have a good understanding of operations and manufacturing and cost structures, and the processes that happen in the East. Because I used to do this, I mean, that was my job to make sure that things could be engineered and manufactured in the East. So, I've spent a lot of time there setting up manufacturing and having products go through that process. So, when we present an item to our clients, we present not only just the idea but also a lot of background as to how it's going to be manufactured.

What the cost is going to be and the best way to manufacture it and the best components to use. So, our team is well versed in all of those elements and I really think that helps us when we develop a product and we show it to a client. They can hit the ground running and take this product into their processes much easier than if we just were to present them a kernel of an idea. We not only present the idea, we present a physical model and then we usually back that up with cost, data, etc. I've known you for a long time, more than 20 years, and time and time again you create number one hits. How have you stayed on top for all these years? What can you pass on to everyone else? What can you leave us with so that we understand? This is what I need to do to be at the top of my game. David: Well, wow. That's a big question and I don't know if you can really answer it accurately. Some of it's, I'm sure, some degree of luck and some of it is the people that you surround yourself with. Some of it is knowing that your ideas are not necessarily going to be recognized by your clients; therefore, you need to come up with many, many ideas, fine tune them to a reasonable degree so that you can show them to whoever your target is. I think that the problem that a lot of fledging ventures have and this goes for almost anything that you're doing in a marketplace that's fashion is you have to present a lot of ideas and a lot of concepts. So, don't necessarily get stuck on one. If that concept or that product is not coming to life the way you expect it to come to life, move on. Do the next one and the next one and the next one. You need to have very thick skin, because a lot of your ideas well... we have some ideas around here that we just really love but we can't get the client to appreciate it as much as we appreciate it and then you just have to move on and do something else. If you do enough of them and you can maintain that creativity and I believe creativity breeds creativity. So, you do one product and you finish it and your creative juices are flowing, you can immediately go to the next one and then immediately go to the next one. For me, I'm kind of ADD, so I need to do a whole lot of things at the same time. As you recall, Steve, I was all over the place. I like doing a little here, a little there, a little here, a little there, a little here, a little there. Our company does that. We can move from one product to the next really, really quickly.

I think that surrounding yourself with the right creative people — which we have here; our staff is very, very good — and not getting too caught up in any one idea are the key elements to making sure that you can stay on the top of your game. The advice David gave is extremely practical and it is coming from the best! Achieving success in this industry takes time. Don't quit your day job. If you’re just starting out he recommends taking a job at a traditional toy company to learn as much as you can and get your feet wet. You need to be very realistic. Remember you’re going to need a lot of ideas and concepts! It will take time to generate revenue. So, you have to have another way to pay for food, clothing, and housing during that time. He also states you need to study this business. You could be working on something for years only to find out it was done two years ago and it failed in the marketplace. Study the history! This is a competitive industry given the high volume of submissions, Costing is mentioned once again. You need to have someone on your team that understands the process of manufacturing in this industry. You can hire people on the outside to help with this. Giving your potential licensee this type of information can speed up the process. David was able to gain this type of information when he worked at Worlds of Wonder as head of engineering and manufacturing. It gave him an advantage.

SARA FARBER Professional Inventor Toy and Game Industry Sara Farber’s background is in the toy and game industry developing content for toys. She worked at Sesame Workshop, the producer of Sesame Street, and VTech, the global supplier of electronic learning products, before heading up the content design department at Fisher-Price for almost 6 years. At Fisher-Price she developed content for characters from Sesame Street, Nickelodeon, and Disney — think Elmo, Winnie the Pooh, Mickey Mouse, SpongeBob, and Dora the Explorer. When she left, she began doing consulting work. Companies like Spin Master and Gund would reach out to her to get help developing intellectual properties based on inventions. After someone would present a toy company with, "Here's this gadget that does this thing," she would then work on developing what the play pattern could be for different ages including what intellectual property or brand could be created around it and the characters and world of that toy. Eventually she thought, “Well, why don't I just invent stuff? If I'm doing all this creative work, maybe I should try.” At that point she had worked on hundreds of toys! She teamed up with her husband Bryan, whose background was in advertising, to start their own company, Galactic Sneeze. Galactic Sneeze has since licensed numerous games and ventured three products of their own. I’d love to learn more about what it was like developing intellectual properties. Were you looking at it from a branding or trademark or copyright standpoint? Was there any type of functionality in these games? I mean, how were you looking at that? Sara: I was looking at it really from a storytelling perspective creating a brand and characters in a world. So, for example, if there was a toy gadget

that did a certain thing or moved in a certain way, they would tell me, "Maybe this is good for a line of toys or a line of fairies. Can you help us figure out what that line might be?" I would go back and think, here's the backstory of that world of fairies — taking fairies for example — here's the backstory of this world. And I'd start off by giving them a bunch of options, like “Here are five different takes on what a backstory and a world could be for these fairies.” And then they'd come back to me and say, “We really like this one or these two. Can you kind of develop them further?” And then I'd say, “Okay, great. Here's the backstory blown out a little bit more. Here are some of names of the different characters in that world and the conflicts that they might have, and here's what some features of the toy could be that relate back to this world.” It's almost like pitching a TV series, really. The same sort of thought is being put into developing the world of a character but it involves a little more emphasis on play patterns. this was back when I was focused more on toys than games. Many of these products never saw the light of day because they were inventions that someone had brought to the company and the company was evaluating and asking, "What do we do with it?" So, I would work on creating the story behind it, what the world was, how it could be blown out into different SKUs, and what potential names could be for the characters. For example, sometimes I would write the little blurb if it were a collectible plush line that goes on the hang tag. this was when I worked in-house as the Director of Content Design at Fisher-Price. I oversaw a team of content producers who would write and produce all of the content that went into the toys. When you squeeze Elmo or you press a button on an electronic toy and it says something or sings something or there's some sort of educational content or gameplay; that was our responsibility to create. So, we wrote the songs and produced the music and recorded the voice talent. If there was a specific educational aspect, we'd work with an expert. Why did you leave? Sara: I got laid off! It was 2008. Whenever the market crashes, I get laid off. Yeah, it was 2008 and they had massive lay-offs at Fisher-Price.

Was that a great thing for you looking back? Probably not at the time but now looking back? Sara: At the time, it was extremely upsetting because I very much enjoyed what I was doing and I was overseeing a department. I really liked the people that I was working with. When I sat in interviews for other positions, I’d think to myself, you know, “I kind of just want to be working on my own stuff.” So, actually, the timing was really good. I wasn't interested in pursuing another fulltime position right after that and I ended up starting Galactic Sneeze with my husband pretty soon after that. Let's talk about developing your own brand and coming up with ideas. Every time I ask people this question, they always stumble. When I was doing a lot of creating for companies and coming up my own ideas I had a systematic approach because I knew if I was really going to be successful I was going to have to come up with a lot of ideas and I was going to have to have a process where I could pull ideas from every single day. When I ask people who are not inventing fulltime, they always say they're kind of waiting for inspiration to strike. So, how do you do it? Sara: I agree with you. I often think about how some people will say, “Oh, I came up with this idea in the shower, or I was brushing my teeth.” Sure, that happens sometimes. But for me, creativity is a very deliberate process and the process has a structure. It involves a lot of research, knowledge, and years of experience of knowing what goes into creating a toy or game; what's on the market currently, where the openings are, who's making what kinds of games or toys, what didn’t work, and trying to figure out what might not have been done yet. Then, once I get to that space, I actually have a few different ways that I approach creativity from especially from the game perspective. With games, I have three favorites that we use. Because my background is in content and I really like wordplay, we often start with a name that's either a silly word or a play on words or a portmanteau or something or a pun, and we come up with a game from there. So, for example, one of the games we licensed to Kikkerland is called Maskarades. It’s essentially charades with a mask. We actually started with the name on that one. We were just kind of brainstorming charades kind of games and we said,

"Maskarades," and I'm like, "Oh, my gosh, it has a mask!" So, sometimes we get to a game through starting with the name. Another approach we take is looking at popular trends, so really sitting down and researching and saying, "Okay, what are the trends? What are people doing on YouTube? What's popular on social media? What could be a big blockbuster game on the shelf that will relate to the people who are into these trends?” And that's how we came up with the Goat Yoga Party Game because we started seeing goat yoga. At first it seemed like this weird thing we'd sometimes see on the morning news. Then we noticed it on Instagram, then we saw celebrities were doing it, and then it was in, I think, a Hotels.com commercial. Now there's an Instant Pot commercial with goat yoga in it! When it hit the mainstream we were like, “Okay, it's time for a game. Let's be the ones to do it first.” The third thing that we do to come up with game ideas is start with the mechanic. So, we'll start with a type of gameplay and then try to come up with something that's a twist on that. For example, our adult party game Spank the Yeti is a twist on a classic kind of spoken parlor game that's kind of adult which is called “Fuck, Marry, Kill.” You know, the game where you list three people like your first-grade teacher, Tilda Swinton, and Jennifer Lopez, and then say, “Which would you sleep with? Which would you marry? Which would you kill?” There are all different names for it. Right around the time we came up with that, HedBanz was a really popular game from Spin Master, which was essentially a party game that people would play where you'd put a name on your back and then walk around asking questions to try to figure out who you were. They did a really smart thing by putting the name on a headband. So, we thought, “What other popular parlor games could we take and then fit into a box?” So, we took that game, which is really fun, and we thought, well, “Why should it only be these three options every time? What if it's a whole deck of cards that are activities or actions that you could do to or with someone?” Like, spend a night in Bangkok with, tongue bathe, elect as President, three-legged race with, whatever! All different actions and verbs essentially and then a stack of cards that are all the people or things you could do that to or with, everyone from your mother to Abe

Lincoln, to Jeff Goldblum, to mild salsa, to a squirrel who's all up in your business. We had a lot of fun with the content and then we essentially figured out an interesting mechanic that matched with the gameplay. That’s where the innovation came, in the gameplay, how you matched up these three things across from each other in a clever way. What is a typical day like for you? Is there such a thing? Sara: I love this question because it's hilarious. I start out and I have my to-do list and my little notebook which I never leave or go anywhere without which includes little check boxes of the things I'm going to do. And then immediately I get some email about some other thing that I have to take care of that has nothing to do with anything on my list, like shipping inventory to Amazon Canada, which is a new thing I'm dealing with right now. So, I’ll have to sort out some sort of customs thing for our selfmanufactured games, Schmovie and Spank the Yeti, or get a contract for an item that I then have to review with my lawyer. There are always logistics to deal with regarding the backend of our company. By the time I actually get to the things I set out to do it's a lot later than I had hoped. Usually I have several projects in the mix at different points. I might be at the very beginning of one thing. I might also have another project where I'm writing a script and recording voiceover for a pitch video. I might be physically working on a prototype. How important is establishing relationships with the companies you want to invent for and how do you do it? Sara: Relationships are everything in any business and in life, I think. I was fortunate in that since I came from the toy world. I was able to get in the doors of a lot of companies. Because I was doing work for a lot of these companies independently as a consultant or freelance, I was able to reach out to my contacts and say, “Hey, who could I connect with in the inventor relations group?” One thing about the toy industry, and I don't know if this is true in other industries, is the larger companies have a very structured process for taking external submissions from inventors, and they actually have an inventor relations division, or at least one person, if not a whole group, which is amazing. So, there's a specific person you reach out to if you have a toy concept, a specific person if you have a game concept, etc.

So, I slowly connected with those people through my existing connections. I also used LinkedIn — which I still do sometimes — to figure out who that person was. I would send them a note which has worked successfully a few times. Sometimes, but rarely, I'll ask another inventor if they can help make a connection and maybe I'll swap a connection with them. I don't really like to ask for that because inventors have worked hard for these relationships so I don't like to take advantage of that and ask people to help connect me. When you have established a relationship, do they give you any direction? Will they say, "Hey, we’re looking for something like this."? Sara: Certain companies make more of an effort to really create that relationship with inventors than others do. And it's funny, because some of the inventor relations people that I have the best relationships with aren't even necessarily ones that I've licensed or optioned products to but these people really make us feel like they believe in us and they want to work with us. They’ll send us their wish list a couple times a year that says, “Here are the categories in which we're looking.” Even more specifically we've had companies reach out to us and say, “Hey, Galactic Sneeze, we're looking for a party game with this sort of theme or in this area. We'd love for you to take a pass at pitching us some stuff.” And that is great when you get to that point because you're not just throwing something at the wall! We’ve had this happen where we pitch stuff and the response is, “Oh, we're already working on something really similar, I wish we'd known that.” So, it's nice when you get to the point where they can kind of tell you a little bit more of the types of things they're looking for. To keep those relationships going, you want to continue to meet with them. You want to continue to try to come up with concepts a couple times a year or more frequently and have some face-to-face time. How important is pitching face-to-face? Sara: I think it's the best because then you can have a conversation as opposed to just getting an email that says, "Pass." or "Hold." or "Send in prototype." If it's not the right fit you can gain insights as to why. If they like it but there's something that they think maybe doesn't quite work, or they only like a certain aspect of it they can convey that to you in a

conversation, and you can maybe figure out something that might be a better fit for them. I mean, now with Skype, you don't have to wait for New York Toy Fair to pitch an idea; you can Skype with a company that's on the other side of the country or in another country, so thank goodness for that. Looking at their facial expressions probably is pretty helpful, right? Getting that feedback allows you to come back and maybe re-design and re-pitch which is critical. Sara: Absolutely. There are still some companies we work with where they just want us to upload a video; and honestly, I don't love that because there's no conversation. There's no back-and-forth… I'm just uploading a video and then I'm getting a yay or a nay or maybe two sentences as to why. Usually something like, "Not the right fit." or "We went with something else." And it doesn't really help me as an inventor bring them something else in the future that's better. Back in the day it used to be sell sheets and storyboards that were used to pitch, but now it’s videos. Is that correct? Sara: Correct. Correct. When we started, we were doing a lot of sell sheets only. Well, that’s not quite true. We made the first edition of our first game, Schmovie, in 2013. The reason we ended up making it ourselves was because we had pitched it and there was a big company that almost was going to make it. It got to the last round and then they passed and we were so devastated. It was that early phase where you have this one item and you're so excited about it, and we had this beautiful prototype. I mean, it looked so professional. When we had these meetings people would say, “Wow, that's...you don't really have to…you don't have to build a prototype that looks like that. You could just kind of come in with some index cards or a sell sheet.” So, after that, we started pitching things that were a little bit more scaled back. You don't want to go too far with something; it's like putting all your eggs in one basket. And if there's something they like about it but they want a theme changed then what do you do with the prototype you've made? So, you don't want to go too far down the road.

Well, if you build prototypes for every idea you have you're probably going to waste a lot? Sara: Yes. How long are the videos you create for pitching? Sara: We usually try to keep them to a minute or less. Let’s talk about protection for a moment. Have you ever bought a booth at a trade show to show your products in with the hope that someone’s going to walk by and see you? Sara: We have; however, it was after we were already planning on bringing the product to market on our own. So, it was less of a, “Hey, look at all of our ideas, and then do what you want with them.” When we had a booth for Schmovie at New York Toy Fair, that was after we were already manufacturing it and we were more looking for orders from buyers and for press. We also have had booths at Chicago Toy and Game Fair, which I highly recommend for any aspiring game and toy inventors out there. It is fantastic and a great way to connect with the inventor relations folks at all these different companies. So, we've had booths there for our games Schmovie and Spank the Yeti, but not in a way of, “Hey, here's a thing we invented. Rip it off or license it!” We haven't done that. Right, because there’s too much exposure showing a prototype. It's just too much, isn't it? And you don't know who's really walking by sometimes either, do you? Sara: Exactly. There probably are people who would intentionally rip stuff off, but there are also people who wouldn't intentionally rip stuff off, but you don't know where you see something sometimes. It gets into your head and it gets into the ether and then you might come up with something similar and you don’t even know that you got it from seeing this other item. So, yeah. I wouldn't recommend just sitting at a booth with all your ideas. I think you're absolutely right. In fact, I think you're more than right. Sara: I mean, even when you pitch to a toy company, the whole point of the inventor relations team is so that you're not going in and pitching to all the actual designers. You're pitching to a person who's the gatekeeper. It's their job to weed out some things and then bring others to very specific people internally with the understanding that it’s an external concept and if

the company wants the concept or to do something similar then it will need to work with the inventor or give them a royalty. Remind me when you started Galactic Sneeze? Sara: I think we technically started our company in 2011. During that time, we also did freelance work and work for hire. For example, Bryan got a freelance gig for a year doing some advertising work. I also write for some children’s TV shows and do work for toy and game companies, as well. It's good to have a balance, isn’t it? I mean, to pay the bills… Sara: Yes, being able to pay the bills is nice. I get excited about creative projects period. So, whether it's my own thing that I'm working on, or another creative project that I really like I'm excited. And you get to meet a lot of people that way too, don't you? Sara: Absolutely, yeah. There was a time when it was just the two of us working and how our desks are situated in our apartment, which is where Galactic Sneeze is headquartered, I was staring at the back of my husband’s head all day. I remember meeting up with an old colleague of mine from Sesame and when he asked how things were going, I was like, “You know, I really love it, but I just kind of stare at the back of my husband's head all day and I'd like more backs of heads, different backs of heads to stare at.” He told me he was starting up a new studio and could use someone a couple days a week to work on this thing. I ended up working there for a year and a half just a few days a week and it worked out perfectly. How many ideas have you licensed now? Sara: So, we’ve brought three products to market on our own; the two games are Schmovie and Spank the Yeti. We’ve optioned a bunch of things. We licensed two games that never came to market. We've licensed three games that just came to market and we've licensed two more games that are coming to market in 2020. Is there anything else that you would like to say about being a Professional Inventor that will help someone else just starting out? Sara: Yes. Don't quit your day job which we did and right as we had our daughter. Starting Galactic Sneeze was great but also maybe not the smartest timing. I had just gotten laid off and my husband had just left his job at BBDO [the global advertising agency] and we had a newborn. People

say “Don't quit your day job” all the time — but really, don't quit your day job! Second, be open to feedback. We’ve helped a lot of other game designers and inventors who have reached out to us locally here in New York. We have good relationships with all the local game stores and game cafés. Someone might tell them they're working on something and they don't know what to do and they’ll encourage the inventor to call us. For a while we were meeting with a lot of people. I've had to shorten how much time I spend with people a little bit just because I don't have enough time in the day. So, we might do a quick call now, as opposed to meeting for a coffee somewhere. When they’d show me this thing they're working on, I had notice that sometimes people weren’t that open to feedback. I might say, “Have you tried this?” or “this is great, but maybe this one aspect you might want to rethink?” Sometimes I could tell that people weren’t that open to it especially if they weren’t a professional creative and weren’t used to dealing with a creative critique. When you're meeting with an inventor relations person at a company, listen and take notes. Even if they don't want the concept or you decide to license it elsewhere, they have invaluable feedback! You're meeting with an expert in the field who sees thousands of products a year so listen to what they're saying, write it down, and ask questions. Especially if it's not the right fit, ask questions. My other piece of advice is always… well, I mean, I guess there are people who put all their eggs in one basket and they have this one item and they pitch it and pitch it until they sell it and then they sell millions, so I guess it’s not fair for me to say, “Don't put all your eggs in one basket.” But I think, if one of your ideas has been rejected, don't keep going back with that same item. Don't be that person who's known as, “Oh, the bracelet guy, he keeps pitching this thing.” You want to diversify a little bit. We kind of felt like the Schmovie people for a while because we had one game and we pitched it around and then we ended up making it on our own. We were working on other stuff but people just knew us as the Schmovie people because we just had this one game and we would show up everywhere with this one game! And then finally we made another game and we were no longer the Schmovie people.

How many ideas do you pitch a year? Sara: Not enough. Recently? I want to say probably 20 to 30 ideas but it used to be more. I'd say sometimes maybe 10 which doesn't feel like enough. I know people who pitch hundreds which blows my mind. When you go in to pitch, do you bring a couple of ideas with you? How many do you bring? Sara: I try not to have a meeting unless I have about three concepts to share. Unless there's something that's a really great fit for that one company and I already have a relationship and I just want to show them this thing because of timing. But typically, I don't really schedule an in-person meeting or Skype unless I have about three things. I have gone in with as few as one and as many as probably 11 but those are rarer occasions. Usually it's three. There’s a lot to learn from people who have to be creative in their dayto-day job. Sara is a very good example of such a person when you looking at her past employment. She has taken the skills she honed forward when developing games for licensing. There’s no doubt about it: To be a professional inventor you have to stay current on not only what’s going on in the industry but also daily life. Stay current! Develop a creative process! She uses a process to challenge herself to come up with alternatives and variations of existing products to come up with new ideas. Most professional creative people have a process that’s extremely structured. I loved playing games to come up with variations of existing products. Sara loves playing with words. This is a sign of someone who can call upon their creativity at any moment. She also looks at popular trends and designs products around them. She’s truly a professional. Sara also knows it’s a numbers game. She feels having a relationship with companies and getting their feedback is critical. When pitching an idea, she likes to look at facial expressions because they say it all. I have to agree. You cannot rely on a middleman. The best way to present ideas is in private and through acquisition departments within the toy companies. You have to be open to criticism so you can make improvements. She also agrees with me that you have to be careful not to develop a product too far. It’s very expensive and time consuming. Anytime you can get the point across quickly, that’s a benefit. You need a lot of eggs in your

basket, not just one, but don’t go too crazy either. You don’t want to submit too many ideas at one time. You run the risk of confusing your clients. So, be selective and don’t quit your day job just yet!

BOB RUGINIS Former Director of Electrical Engineering at Hasbro Bob was the Director of Electrical Engineering at the toy and game company Hasbro from 1991-2004. For the past 15 years he has offered turnkey product development support from brainstorming concepts through production in the consumer electronic and the electronic toy and game industries. Inventors can be impatient. What’s really going on behind the scenes when an idea lands on your desk? Bob: Yeah, it's tough. When I was running Hasbro's electronics group for 13 years, we were busy. The inventor group would come to us and say, "Cost this out." And the biggest thing that inventors need to know is, what they submit is what gets costed most of the time, because the engineers don't have time to redesign it. So, inventors need think about how their prototype can be made more efficiently. For most electronic items that came in it was clear that people didn’t know the type of electronics that are used in the toy industry. There is a large number of companies, mainly in Taiwan, that produce chips, microprocessors, and stuff that is specifically made for toys and consumer electronics. When an idea submission comes in, the inventor relations people send information about the product to the different groups, like electronics and mechanical. The costing group measures the item’s weight and figures out the manufacturing costs. The labor and mechanical people will look at the mechanism and say whether it's producible. And the electronics team will take a look at the electronic designs. Engineers are tasked with working on products that have already been approved and are heading to market. So, let’s say you're using a Raspberry

Pi processor to control your prototype. The inventor relations people will send the engineers a schematic, which they then cost out. If a Raspberry Pi processor costs $1.20, that’s what they put in. They don't say, "Oh, this might be able to use an Alpha Microelectronics 4-bit microprocessor that cost six cents, or 10 cents." The micros in the industry go down to three and a half cents and up. Wow. Bob: Tha t’s why inventors need to spend some time thinking about costs because when things get costed out a lot of the time the people who are doing the costing are approaching it as quickly and easily as they can. They’re not thinking, “Oh wow, this is neat.” They just cost it as is. So, when you’re submitting concepts, you really need to look and try and figure out, is there a more cost-effective way? And include that in your submission, especially if it’s a big company. The same is true for companies that send your submission to China to be assessed for costs. The Chinese guys will just look at what you’ve got and cost that. ftose engineers are even busier than the engineers here in the United States because they're dealing with factories. I do work for Hasbro’s R&D group and in the past have done work for Spin Master’s R&D group as well. Their engineers don’t have the time to support them because they’re working on concepts that have been approved. Usually outside groups are approached to build their prototypes, to do the electronics and the mechanical design. So, when something comes in and management goes, “Oh yeah, it looks good.” and it gets thrown to an engineer, the engineer is usually trying to complete that assignment as quickly and painlessly as possible. Sometimes they’ll see a video or a prototype and go, "Oh, this is neat. They're using this but they shouldn't. They should use this instead." But it's not too often. Inventors shouldn’t count on that happening, then. Bob: Yes. We would often just cost out what was presented. The inventors and companies that are successful know the electronics and the toy industry. Even if they use a different processor, for example, they deliver a schematic to the inventor relations people saying what cheaper chips can perform the product.

The inventor relations people will often tell an inventor, “We’re passing because of the cost.” That’s all you get told! They don’t tell you how much it costs. So, it’s really the inventor's job to figure out how to cost reduce the item. Should inventors consult with an electrical or mechanical engineer? Do you need one or both? Bob: It totally depends on your item. If you have a complex mechanism you need both or someone who has experience in both. I have done a lot of mechanical stuff but I always bring in an expert. The people I work with are ex-Hasbro people who have retired. It’s best to get both. Different people work differently. Some freelancers want a fee. Others will work and partner with the inventor. I think the big takeaway is that if you want to become a professional inventor, having some type of knowledge of manufacturing cost can be essential. If you do not have that knowledge then find someone who does. Understanding how to manufacture your product cost effectively determines whether a company takes it or not in many industries. Without this type of insight there’s a good chance you might over design. This is also why including manufacturing knowledge in a patent application can have huge value.

JESSE FAUNCE Mechanical Engineer and Consultant Jesse’s company Faunce Enterprises offers affordable engineering, product development, and prototype services for inventors, small companies, entrepreneurs, and large companies as well. His services include feasibility consultation, 3D design, 3D printing, CNC Machining, Prototyping and Fixtures. Tell me about what you do. Jesse: I am a mechanical engineer and I own a small prototyping product development type company. We specialize in taking an idea in the form of a napkin sketch or just a verbal concept from entrepreneurs and inventors, as well as companies that have established products in the market, through to the process of realizing that idea. Sometimes that’s just CAD drawings or 3D models that demonstrate a bunch of different ways to accomplish what they're trying to do. We also prototype 3D models. Sometimes it’s just a quick project that they can hold in their hand to feel the ergonomics of something and sometimes it's as basic as working out a mechanism. For example, a client wants to try to fit a mechanism in a certain sized package. Can we do that? Can you work out something? Things like that. Other times, I work with someone who has a product similar to another product, but they want to make it their own. They want to add their own features and that sort of thing and I will take their ideas and put them on paper and put them on the screen so that we can see how the different components will work together. There are a million different things I've done in the past! I’ve worked for a couple of different product development companies. Those products included juvenile sippy cups, utensils, bath slings, potties,

all kinds of interesting things like that. Also the toy industry, correct? Jesse: Yes. At the previous company I was employed we worked closely with Hasbro. We were always doing games and some little robotic toys. We worked with pretty much all the major toy companies actually, like Mattel. If I just need to show proof of concept, that can be pretty ugly, right? Do you help people with that and what would that look like? Jesse: Yes. What I would try to do is model something in 3D. That’s what I would call a “looks-like feels-like type of prototype.” That’s to give the inventor a shape of the idea, something that they can hold in their hands, something that they can look at for a few weeks and say, "Do I want this, or do I want that?" Maybe it's something that, like I said, requires a mechanism they want to see — how something works. Maybe the mechanism isn't reminiscent of what the final product will be, but they can test the feel of how something is spring loaded or if things are moving correctly. It's important to get the physical aspect of a prototype down and then narrow it down into how it looks or how it works. There are so many different aspects of how a prototype interacts with its audience, so to speak. So, let's say you do the first one and then they want to see a little bit more? Maybe the invention has got moving parts or maybe it has some electrical components to it. What’s that called? Jesse: I would call that a working prototype which is something that demonstrates a little more than how it looks and how it feels. A working prototype is a little closer to the end result and something that might be easily serviced. You can take it apart and change a few things inside, or maybe there's a circuit board in there and the size of the circuit board needs to be increased or something like that. You have a little wiggle room with it in other words. It still might not be the refined end result but it's something that you can work with. I try to design in a little bit of wiggle room sometimes, not knowing how things might change in the future. That way, you're not building six prototypes every time. You have look hooks to be able to modify your prototype, maybe get a little more value out of that prototype. Let's say I want this thing to look like the real deal, maybe it’s even ready for production. What is that called?

Jesse: I would probably say that's closer to maybe, not a final prototype, but very close to a production quality prototype. That might be something that has parts that are assembled together with standard manufacturing processes, screws, snaps, and so on. It demonstrates a little bit more than what the product actually is. It also partially demonstrates how the parts are manufactured and how the product is manufactured. How important is it to really know how your product is going to be made? Jesse: I think at the final stage when you're at the point where you're ready to start production it's very important to have your final prototype be as close to the manufactured good as possible. So, your plastic parts would probably have draft in them. Your screw bosses would be where you want them to be, aesthetically and that sort of thing, and you'd want to also be looking at billing materials, costing, making sure that the things that you're doing, maybe even have some of the plastic parts quoted for tooling just so that you know where you stand with those things and also the feasibility of some operations in plastic parts. There are some things that you just can't do certain ways. There are some parts that need to be molded and pulled from certain directions. I've ran into cases where someone had a prototype made by another company and brought it to us and said, "this is our prototype. It's impossible to make this manufacturable in its current state and we want you to take it to that next level and make it manufacturable." As a result, sometimes the shape has to change and the inventor didn't want that. They didn't want to change certain aspects of the product. There are things you can do from the beginning to help morph your product into manufacturing parts, like place hooks. What do you mean by the word hooks? You’ve said that a couple of times. Jesse: A hook is a feature that will help you apply a manufacturing strategy. If you work with someone who’s building a prototype, you want to make sure they have manufacturing knowledge. Is that correct? Jesse: Yes. I think that's very important because you could run into trouble later on in the prototyping stages and the inventor might not be happy with the outcome of their product in its manufacturable state.

Do you have to build this prototype that's ready for production at the very beginning, or is that a mistake? Jesse: No, I think you want to make sure that you have the hooks for production in your earlier prototypes but maybe not your first prototype. The purpose of your first prototype is really is to prove your concept, to make sure it looks the way you want it to look, to make sure it functions the way you want it to function with the hooks in there for future manufacturing. A lot of people can make you a prototype that may not be able to be manufactured in that state. What do you need to see to get started? Jesse: To get started I really just need an idea. Maybe somebody comes to me with just a verbal, "I'm looking for this. It does this and it has a handle.” Maybe they spend a little time on a storyboard which includes products that are similar or have a similar shape to what they're looking for. The same goes for mechanisms. They might say, "I want it to kind of operate like this mechanism." Spend a little time looking at other people's products. Go to your local store and take pictures of products and build a storyboard of how you want this thing to be designed. Like, “I want it to have this shape. I want it to have this look and this feel.” Prototypes get made in stages. I would start with a works-like prototype if a potential licensee wants to see proof of concept. Basically, you’re showing how it works. It doesn't have to be pretty. This is the least expensive prototype you can make. If your product is small enough, there's a very good chance it can be 3D printed. The second stage would be to make a looks-like prototype, which is going to get a little more expensive. Is their interest level high enough to warrant the cost? Next would be a prototype that's close to a production model. This will be very expensive depending on the size, complexity, and moving parts. If you're going to work with a prototype builder, make sure they have manufacturing experience. Otherwise you may end up with a prototype that is essentially worthless as you move forward. This is not uncommon.

HARDWARE

COREY TALBOT Vice President of Marketing and Product Development at Hyde Tools Hyde Tools is a manufacturer and seller of painting, drywall, and home improvement products that has wholeheartedly embraced open innovation. Founded originally as a cutlery manufacturer in 1875, the company produces more than 1,200 different products today. So, Hyde Tools embraces the benefits of working with inventors, also known as open innovation? Corey: Very much so. Once you have a process in place for working with inventors, it’s much easier. If you’re just doing it off the cuff without a plan or process in place it can be very grueling and result in a lot of wasted time for both the inventor and the company. I’ve been in product development and marketing for over 25 years. The process and speed have changed. These days we are taking in more information online. It’s easier for us to collect it that way and easier for inventors to submit their inventions. We have found that working with inventors who are properly screened and who have been briefed upfront about the process and expectations can actually increase speed to market and cut down on development costs. So, what happens after you receive a new product idea submission? Corey: At stage zero, we’re just gathering enough info to decide whether or not this product fits within a set of rudimentary criteria. Does it match up with who we are and what we offer and who we serve? Does it have a certain market size? Everyone on my product development team has more than 10 years of experience in understanding how big something might be based on how many consumers are in the marketplace. We have a margin requirement, meaning we need to be able to make a certain amount

of money given the effort required to develop new products. These factors help us make a fairly quick decision. Help me understand your invention submission process. Corey: It is a stage and gate process with the first stage being handled through an online portal from our website. Our first question after you click the link asks the inventor to select a category for their invention. These categories aren’t broad, and sub-categories are included as well. We really want inventors to understand what it is we’re looking into. From there, right off the bat, we lay out terms and conditions, putting the legal piece out in front of people right away. We tend to work with products that have patent applications filed or actual patents. We still receive a lot of product ideas that are not a good fit. One of my favorite stories is about my first week working at Hyde is I spent a couple of hours on the phone with a passionate gentleman who was trying to get me to understand his invention. This person did not have a patent or had filed a provisional patent application and wanted me to sign a non- disclosure agreement (NDA). When we ran through our criteria with him which, going back and forth, took the better part of a week everything matched up! But then when this individual visited our office and handed me his tool, I handed him one back that looked exactly like it. I had wasted my time and his, so I quickly decided to streamline the process. If he had an application filed, our phone conversation would have lasted about a half a minute because I would have seen a photo or drawing or video and that would have been the end of it. There are many benefits to our online system. I can log in and give feedback any time, day or night when I am able. It’s sped up the entire process. I can let inventors know when we’ve reviewed their submission and ask questions through the portal, creating a record. Many times, we ask inventors to go and gather more information. Sometimes we get back to an inventor within a day. Sometimes, if we’re interested but need more information, it can take as long as a year before deciding to move forward. It becomes very collaborative with the inventor taking an active role instead of wondering what is happening inside the organization. ftat whole first part of the process? Well, at big companies, it’s like you’ve entered a black hole. No one wants to talk to you until they have done some due diligence from a legal standpoint. And that legal person is

not a product manager and not connected to product in any way. Good ideas die from lack of understanding and legal concerns. Our online process allows people to see what’s happening, and the legal piece has already been covered. After we accept or decline the submission, there are phone calls and sometimes, face-to-face visits. I think what sets us apart is that we’re more forward-facing with inventors. We set expectations right away. During that first phone call I lay out exactly what our process is including how long we think it will take, the steps required, how much the inventor will be involved, etc. About how submissions do you receive a year? Corey: We’ve received about 800 submissions since we set up our online portal about six years ago. Not as many as you would think! To be clear, that number is just what has come through the portal. Of the submissions that have made it through to commercialization, half came from trade shows. For example, a buyer at one of our retailers connects us with an inventor who has a great product. Do you check out new product ideas at trade shows or prefer to follow up later? Corey: Every year our process becomes more refined. Trade shows have changed for suppliers and manufacturers. Fifteen to 20 years ago, we were at shows primarily to sell to our customers, which are retailers. That's not necessarily the case anymore, especially for national shows. Now they are a way to launch new products from an advertising standpoint and share product knowledge with representatives who sell for us. The first couple days at a show I’m busy doing marketing. The last day of every show I keep open to meet with inventors. We host a kind of mini Shark Tank. We have a sign-up sheet. That way, inventors know they're going to have a certain amount of time to pitch and have us look at their invention right there. Do you sign non-disclosure agreements (NDAs)? Corey: This is a very fast-paced and competitive marketplace in which we play. Unless the inventor claims a benefit of the product that is so compelling, like it does the job in half the time or 10 times as many jobs as before, we usually don’t sign NDAs and will direct the inventor to do a patent search, file, and then resubmit.

We’re here to make good decisions and to make money and as well. It’s a two-sided street. If you have a patent or provisional patent application, you’re pretty much covered. It’s not worth your time to do an NDA at that point. If someone tells me they have a drywall tool; well, I have 15 on the drawing board! I will sign an NDA if it’s worth it, but I need to be convinced of that. What are some red flags when working with inventors? Corey: “We’re going to sell millions of these things!” When I hear that, I shut the conversation down. Because 99% of the time it’s not true. That doesn’t mean your idea is bad. And it doesn’t mean you can’t make a lot of money! Realistic fact based expectations are important. What do you wish inventors understood better? Corey: Tha t there are only so many hours in a day, for one. We’re all people at the end of the day. We all have expectations of what we’re supposed to get done and how we’re supposed to function. Spending an hour on the phone with you means there is one hour less for proving out if the idea is marketable. I’ve been involved in organizations that aren’t thinking of the person behind the submission. It’s a number. The same is true for inventors. The most successful, in my experience, value time and fact based honesty as much as I do. We’re small enough that we still have individual conversations with inventors. It’s important to remember that companies are risk-averse. Space at a retailer isn’t kept easily. Every year buyers and retailers need to show gains in the right direction to stakeholders; more margin, more sales. You’re constantly evaluating out of the 100 products on the wall, which is the worst? What can I replace it with to hit the buyer’s goals? That’s how we make sure we’re doing right by our customer and meeting their expectations. The hardware industry is becoming friendlier. Still, I believe you have to find those midsize companies that value working with independent inventors, like Hyde does. Some large companies change their policies quite regularly. For example, in August of 2019, Black & Decker stopped taking outside submissions. Always check back in because their policy could change.

This industry leans on inventors that work in the trades because of their experience. It’s a perfect opportunity for do-it-yourself types and professional home builders. One of the big takeaways for me? I highly recommend filing some form of intellectual property. And like Corey said, once you file intellectual property, who cares about an NDA? They really like a well-written provisional patent application. It separates you. It’s one of those barriers to entry. So, I’d say it’s important to file. Like other industry insiders have explained, your product clearly has to have a point of difference. So please, search around on the internet. It’s very interesting to me that trade shows are not so much about selling products anymore, but introducing new products and working with inventors. Online portals are becoming more and more popular because it’s easier to manage submissions that way including for inventors. I also love that on their online portal they explain what they’re looking for. They give you a target to hit. And if you decide to submit to a hardware company whose process is not so straightforward? I would call them to ask about their process and expectations first. For you to be efficient and effective, this information is extremely important.

HEALTH AND BEAUTY, MASSAGE APPARATUS, TRAVEL ACCESSORIES

LAWRENCE CRUZ Chief Patent Counsel at Conair Corporation and Inventor Lawrence Cruz is Chief Patent Counsel at Conair Corporation, a $2 billion privately held household and personal products company, and has worked at the company for 17 and a half years. He started his career at the United States Patent & Trademark Office as a patent examiner in 1987 while attending evening law school. Before landing at Conair, he was inhouse counsel at FMC Corporation, a large multinational and publicly traded company. He also has provided in-house counsel at a medical startup, and worked at several boutique patent firms. What is your role at Conair? Lawrence: “My role at Conair is pretty broad. Because we work for a privately-owned company, we tend to have a very lean corporate staff. So, on the one hand it's a smaller environment and we're very busy, on the other hand it's very enjoyable and interesting. I manage, direct, and handle various matters related to patents and designs. This has quite a bit of overlap with other things like trademarks, anti-counterfeiting, trade secrets, trade dress. Also, things that have nothing to do with intellectual property sometimes fall under my work plate. It’s a great mixed bag in an exciting business. The business units in Conair include household appliances (some related to hair grooming and hair care and some related to personal convenience items like a massage apparatus) as well as travel accessories like travel pillows and luggage locks things like that. We also own Cuisinart and Waring. Cuisinart is a consumer cooking appliance brand. Waring’s cooking appliances supply restaurants and the commercial kitchen industry. We also own a few other brands related to

beauty or appliances in different parts of the world, but in general, that's the business. The company has been around for over 50 years. It's a healthy company. It is global and we're leaders in most of our categories, if not all. I was very fortunate early in my career to have had very good mentors, and to have worked in two of very large publicly traded companies in a more traditional in-house counsel role. I was lucky enough to have choices. I have been approached by legal recruiters over the years to return to more traditional roles in publicly traded companies, but I really like the variety and the atmosphere of a privately-owned company. It’s unique in that it does business on such a big scale. So, does Conair work with independent inventors? Lawrence: We do. We have an informal policy, which has largely been shaped by me because I'd been given the autonomy to do it the way that I think is best for the company. It’s very informal. I would say on average we have more than a hundred a year of unsolicited cold calls from inventors. Often, they're not engineers or research types because as you know, we sell a lot of household goods that consumers use. So, you have people from all walks of life, not just the end users of our products. For example, hairstylists, people who work in salons, people who cook for a living or as a hobby, or people who are familiar with our appliances. So, we get cold calls from people who are not necessarily well-versed in intellectual property or even licensing deals. I receive all their calls and try to be as patient as I can, in a way that makes them feel welcome and comfortable and at the same time keeps it professional. So, we have a pretty, I would say active flow of ideas coming in from people from the outside. And we do license rights, and on occasions, we might buy the rights. It's very common, and it's welcomed. As a company, we're thankful that people give us a chance to consider their ideas. And we treat everyone with a lot of respect so that we have a good reputation and we're trustworthy as a business partner. How do you help inventors? Lawrence: Well, obviously I can't spend a lot of time away from my other chores at work, so I'm limited in how much time I can spend with people, but I do like to at least have an initial conversation. And I have to, of course, be mindful that I'm not giving legal advice to people who are not my clients.

But sometimes they have a lot of questions and I can't really answer all of them because of ethical and professional liability. Also, at the same time, I don't want to have them inadvertently divulge their private information to me or divulge the company's information. So, there are boundaries and limits; at the same time, I try to make it simple and direct. The philosophy in general is... I think it goes all the way up to the people who are in the top of the company, including our late founder, Lee Rizutto and the people who still run the company and still own the company. They would be disappointed and he would have been disappointed if anyone in the company was treating people, the customers or the public or any outside party disrespectfully. So, that mentality, that approach, I think is taken with everyone we do business with and that means to me, when someone calls with an idea, I treat them as important as the next person. Everyone’s important and everyone’s idea is a good one, and that I think is the way you need to do business in general. That's refreshing. Lawrence: Tha nks. I might add, and I don't mean to toot my horn, but I should add that heard from people who call, they say, "ftank you so much." Because it's so hard to get a live person on the phone, much less someone at a high position to actually give them the time, just even a oneminute phone call. Some people, they never get past a letter, I think it's rejected and they don't even know who looked at it and they tell me these things, they tell me that they're pleased with Conair, that we give them that attention. What is your preferred way of having inventors submit an idea? Lawrence: Well, I always prefer email because electronic is instant. It's also easy for me to share certain portions of the information with the relevant people who need to make a decision. Also, it's great for record keeping as you know, we don't need to use paper. The responses are instantaneous when I can acknowledge that I received it, and they’re not wondering if I've got it yet. The decision between whether or not they should send a prototype, or their drawings, videos, text description, all the above — I leave that up to the person submitting the idea. I tell them that, "We don't necessarily need to see your patent application or when you filed it. Some of that is your private information. Let's see how far we go downstream and if we need

that when we get to that point, great, We might ask for it." But I'd tell them, "Just give me something that's initially trying to convey the product quickly to a team of people, marketing people, sales people and the managers. What the gist of the idea is that you think might be appealing." I really don't lay down any particular criteria. The person should be comfortable submitting something they're comfortable submitting. Do you sign non-disclosure agreements? Lawrence: We don't sign NDAs as a policy. When people cold call us we don't know what they're going to show us. We don't know that we're sitting on something like it already and we have people all over the globe that are our employees and we also have business partners on the outside. We have factories, people design for us. So, I tell the inventor, "Look, if it's true, as they often say, that you filed a patent application, let's wait for it to publish in 18 months. Or you have to take a chance and show it to us and trust us but that's up to you and your patent lawyer to talk about and decide what you're comfortable with." More often than not, I'd say 90% are fine sending me something. And if and when we need details, if and when we need specifics about a question like, “When did you file your patent? If you filed it, can we see a copy of it? Of your application? Or do you have some technical information?” Then we can talk about signing an NDA and picking a more traditional route. Also, sometimes there are people who are R&D types or people who we've done business with in the past that would be an exception where we do an NDA. Because it's not a cold call and it's not any lead to us but we're very careful about it. We don't want anyone to have a misunderstanding. I encourage inventors to protect themselves to an extent they feel comfortable with so they can actually share the idea. NDAs don’t work the way most people think they do. Lawrence: Over the years as an attorney dealing with different clients before Conair, you sometimes have to tell people, "The NDA isn't necessarily an ironclad suit of armor. It's really just to have something to talk about, if you have to go through the trouble of suing, which you don't want to have to deal with. It's expensive and it's uncertain." Now, the other thing with NDAs is, some of them are obtrusive in what they say and they put you in a position where you're easy to sue. I worked

in litigation and I direct a lot of litigation and I've dealt with a lot of patent trolls and deflected a lot of them. And to have a situation where you have an NDA and a person who feels wronged… Unfortunately sometimes there are attorneys who will take a case that really has no merit and they'll shake you down for some nuisance money. So, a private inventor who feels wronged by a large company? We don't need to open that flood gate. I tell people, "Go talk to your lawyer. Make sure you're comfortable sending this and then send it because we're not going to do an NDA." And knock on wood, I can tell you that's worked perfectly for all these years and we have no shortage of people sending ideas. And it's honestly maybe two out of 100 that will say, "Well, I'm not going to send it now." And I said, "Okay, well then don't." But, usually people trust that and they can choose what they want to send and what they don't want to send, and it's fine. The ones who feel they really have something to protect, they're going to make sure that their patent portfolio is buttoned up before they show it anyway. So, I think that takes care of itself. So, yeah. When you're reviewing an idea that lands on your desk, how important is it that it's protected with intellectual property? Are you looking for at least a provisional patent application? Do you want to see a portfolio of patents like you just mentioned? Are you ever willing to work with an inventor to apply for patent protection? Lawrence: We don't have a strict requirement. In the event that you have not yet filed an application, it's okay to show the idea to us, but if we do decide we really like the product and we want to do business with you, you're encouraged to file an application at some point soon, because the whole idea is that we're paying you for your current or future patent rights. Sometimes people call and bare their souls to me and say, "I don't have the money to be filing patents unless I know I have a customer." and I can't give them advice. I tell them very clearly, "I'm not your attorney. I'm not giving you legal advice. You should consult your own attorney but after you talk to your attorney, I’m telling you that we don't require you to file patents before you show it to us. That's your decision." I know I'm very clear. I don't want them to complain later on that I didn't give someone's client the right advice because I shouldn't be giving them advice. I don't want to give advice.

If things go well you're going to be maybe working together but before you’re going to be on opposite sides of the negotiation table. Yeah. Lawrence: People understand that until they feel they've been wronged. Then they have a litigation attorney talking and suddenly they're thinking, "Yeah, he didn't tell me that." You don't want that to happen. So I take huge cautionary steps. But to answer the question, when people ask me, "Do I need to file a patent application before I show it to you?" I say, "No, you don't." But then I also tell them, “We're probably going to want to do a license and your current or future patent rights are going to be the reason we're paying you. So, if you don't have them after some time we might wonder why we're paying you. So, not to hint, but you should do that if you haven't." I get that a lot of inventors don't have the resources and time to file a patent application for everything they do so it must be a tough spot. And if you read all the stories about the great successes in business, in innovation, in entrepreneurship, they all had a few failures before they had a few successes. So, you wonder how many are affordable failures you have before you run out of money on your attempts at fame and fortune? I get their dilemma. What is the evaluation process like? Lawrence: The re’s not really a formal structure. I do a little research on my own before I waste the time of other people because sometimes the idea been done before. Sometimes I end up sharing it with other people and often because we’re in the same building, we'll sit and talk about it. As far as how long they take to evaluate it, that's up to each individual, and also what they do and what their criteria is. Each department and each manager has their own sense of what products are selling and aren't selling, and whether or not there's a need and whether or not it's something that they want to take a chance on. So, it's really informal, and it's really on a case-by-case basis, both by subject matter and by the people involved, so there's no formal structure. I've always said that, "There are more good ideas than there are channels to sell them." And if you look at patents for a living like I do, you

see all these great things and very few of them ever make it to market. There's a lot of factors and sometimes it's timing. Sometimes it has to do with the conditions of competitive products or the willingness of people to put money in and their personal reputations on the line to develop the market and so on. But yeah, there are definitely more good ideas than there are channels to sell them, and some people get discouraged. Do you give feedback? Lawrence: I don't really like to do that, because doing so would potentially reveal the company's private business strategies, but also it leads to people wanting to have dialogues with me that I shouldn't be having with them. They're not my clients and I really have other work to do and it's not me being cold as much as, I've got business to take care of. How important is the cost of the item when evaluating? Lawrence: No surprise there. We need to make a profit off of it. It has to be something that you don't want to make too cheap. It has to be good. It has to be a good quality product but it has to fit within our model. And our model is our business. Tips and advice for inventors? Lawrence: The re’s one thing that comes up, and it’s a common theme. I see this not just from the part time inventors, I see it sometimes from engineering firms. People have a tendency to over engineer. They over design, making something that's just elaborate and wonderful. They don't understand that it's going to cost so much more, and that the challenge really is on the marketing people to convince the public that they need this new product instead of the one they've been using. So, I would say there's a tendency to over engineer stuff, yes. I mean, there's a beauty and a skill to engineering something that is efficient and cost effective. I mean, it doesn't sound as remarkable or as impressive, like when you read Popular Mechanics or Popular Science, but sometimes just taking a simple mundane everyday product and making it stronger and lighter, cheaper, less manufacturing steps — those improvements are brilliant. And there's a beauty to them and a finesse to them, and that's what people should be more focused on. How many licensing deals does Conair do a year?

Lawrence: Only a few. It's a small percentage of the ideas that come our way. Is there such a thing as a typical licensing deal at Conair? Lawrence: I can say that it's pretty standard. Standard meaning, what me and other people are familiar with; the same goes on in other companies. We try to do what we think is fair and in that we fall in line with what's typical. I think some of the largest companies don’t have the same attitude that you do about inventors. Lawrence: No, they don't. I once sent an invention to a large company and it was terrible. They negotiated this NDA with me that was really slanted. They said, "No thanks." and then about a year later I saw a published application where they had basically followed my idea and stuck it into their own. I would've made an issue of it, but the reason that I sent it to them was because they were in litigation and they had settled the litigation. Once I heard that they had settled I said, "Well, there's nearly no more market for this because their battle is over." So, I saw firsthand exactly what people tell me when they call me. Like, "Oh, it's great that you guys are talking to us. I can't get through." and this and that. I've been on the other side. I’ve noticed. Do you have more patents? Lawrence: At least one more. I might have even more than that, but the one for sure, it's a tattoo removal thing. I'm feeling embarrassed… Do you spend your time inventing these days? Lawrence: No. When I was younger, before my kids were born and when they were babies, I had more time to think about stuff like that. I even started up a company at one point, but lately I've been so busy. When I have my long commute I have a lot of great ideas popping in and out of my head. I guess maybe I should put some of them on paper and make more of an effort. I do invent within our business here at Conair. We have a team approach. We have the engineers, marketing people, the patent lawyer, all of us sitting in the same room to talk about this new product or that. My end of it is, "Here's the patents we need to stay clear of, here's what we can

do, here's what we can't do." And other people get their various feedback and then we as a group sometimes arrive at some nice designs — so, occasionally I have my hand in stuff. It's pretty cool!” Over the years I’ve heard many stories about what working with Conair is like — and to be honest, they haven’t been that great. But when I picked up the phone and called Larry Cruz, the company’s chief patent counsel, he picked up the phone right away and spoke with me informally. He was extremely casual actually. No gatekeepers whatsoever! He was completely available and forthright. I learned a very important lesson here, which is to not go by hearsay. Conair is a very large company that has a wide range of products, including hair appliances, kitchen appliances, travel accessories, and more. What have I noticed about large companies? Patents are important and that’s true in this case with Conair. Like other very large companies they don’t do a lot of licensing but they are willing to engage with inventors, and I like that very much. They will treat you fairly. Get your intellectual property filed! The opinions expressed here by Mr. Cruz are his own, not those of Conair Corporation.

PETS

JONATHAN ZELINGER President of Ethical Products Ethical Products is a family owned company that has been in the pet industry for 65 years. The business was started by Jonathan’s late father and Jonathan’s son now works for him in the business. Ethical Products is one of the more highly respected larger companies in the pet industry. Do you work with outside inventors? Jonathan: We do. A number of our products have come from both professional outside inventors as well as what we call hobbyists – meaning pet enthusiasts, typically pet owners who have ideas but are not necessarily professional inventors. Could you talk a little bit about how you licensed Amanda Hutton’s product Push-N-Pop? Jonathan: Sure. Amanda submitted an item to us about a year ago, which she pretty much gave it to us in a rather raw form, not yet totally finished. But we took it to our factories overseas and we created prototypes and different variations and we called the product Push-N-Pop. It's a device that holds pet treats. It’s about the size of a dinner plate, perhaps a little smaller. When the dog pushes it on the floor the treats pop out randomly. It’s spring loaded. If you’re familiar with the toy industry, it's not too different from some of the Fisher Price products that were on the market or still are on the market. It works off the same concept. When the dog nudges it with their paw or with their nose the treats pop out at random. Believe it or not, it’s won three best new product awards from three different pet associations. It’s actually highly unusual for any single product to claim that many awards. Just winning a single award is in itself very unique. That fact that we won three awards means that people really noticed the innovation and the ingenuity and we've been able to place

Amanda's product in some of the biggest pet retailers in the United States, Canada and Europe. So, it's been a very successful product for both our company as well as for Amanda. Congratulations! How did Amanda approach you? Was it a trade show? Online? LinkedIn? How did you get to know her? Jonathan: Well, we've known Amanda for many years. She’s submitted many items to us. As you know, the number of products that come to fruition versus what we look at, it's a small percentage. She's shown us many products. Several of them we've turned down. Several of them we've brought to market. I believe our first instance of meeting was at a trade show where she actually came to our booth and asked to meet with me and the Head of Product Development. We actually sat down right then and there and she took out her sample and her drawings and she introduced herself. We always urge inventors, especially the professional inventors who we work with, to come to the trade shows, to invest the money in an airline ticket and hotel room — because they have to know what's going on! They have to know what's on the market. I think the last thing you want to do is sit down with a new product inventor and he or she will show you a product and you have to turn to them and say, "You know what? This product has been on the market already for three years." Inventors have to do their homework and the easiest way for them to do it is by walking the trade shows to see what's out there. Not only does it help eliminate duplication it also gives them inspiration for fresh, new ideas and to pick up on trends. So, we think it's very valuable. The professional inventors who we have worked with who have been the most successful have been the ones who took the time and made the effort to go to shows and really get a feel for what's happening in the industry. How important is it to have a prototype, meaning proof of concept? Can an inventor submit a video or a drawing? What would you like to see? Jonathan: A video is great. At a very basic level we need a drawing. It doesn't have to be a very fancy drawing. It could be a sketch. We don't need blueprints or CAD drawings at the early stage. A lot of inventors now are providing us with homemade videos showing their product in action with a

pet which is very helpful as well. The more an inventor can do to convey the attributes of the product to us in a minimal amount of time the better. So yes, a video is important and a drawing is important. Could you talk a little bit about the submission process? When an idea comes to you, how long does it take for you to review it and what is that review process? Jonathan: Typically, an inventor will call us. If they're new and don't have experience, they'll reach out to our switchboard and they'll be directed to our Head of New Product Development to submit their images. Usually they will submit a non-disclosure agreement (NDA) which we'll sign. And then once an NDA is signed, they'll submit their new item to us. If they're local we invite them to come in and pitch it in person. With professional inventors though they'll usually come in and show us 20 to 30 items in a clip. We will probably dedicate at least a half a day to review all of their products. We will tell them pretty much at the get what we like and what we don't like. One thing we tell inventors is if you're going to be in this business you have to have a thick skin and you're going to get some rejection. Don't take it personally. There could be a multitude of reasons why we're rejecting it. It could be that the price point won't work for us. It could be that it’s too difficult to manufacture. It could be that it's a duplicate of something else that's out there. So, you know, rather than having the inventor walking away and hoping we like to give them initially some feedback and say, “Of the 30 ideas you’ve shown me, these are the five or six that we like, that we really want to digest.” And the rest, they’re free to take them elsewhere. We have no interest. And we can make that decision pretty quickly based upon the number of years we've been in the business. It's fair to them. It's fair to us. Neither side is being held up. If we like a product we meet internally with marketing and sales to talk about it. The next step is sending images overseas to obtain a price quote from our factory to see if the product is going to be feasible. There are a lot of great new products that have been brought to us over the years but the cost to produce them is simply too expensive. If it passes the price and the costing test then we will either go to the inventor and ask them for CAD drawings. In some cases, our factories

overseas in Asia are able to provide us with CAD drawings. Then, sometimes we'll get prototypes made up. 3D printing is being utilized worldwide now and that's a very inexpensive way for us to get a prototype into our hands. Do you ever show it to a retail buyer to get a read? Jonathan: Usually not. We’re better off showing them a finished product rather than an unfinished product because they often don't have the vision to see what it's going to look like; therefore, we'd prefer to show them a finished product. We do have some employees who used to work in retail environments in our industry who are pretty knowledgeable about what would appeal to a retail buyer. How important is intellectual property to you? Jonathan: It's not super important. It's nice to have. If somebody gives us a product and already has a patent on it, it's nice to have that. In most cases that can command a slightly higher royalty rate. But it's not, you know, totally necessary. If we have a product that we feel we can manufacture and be first to market, we will move forward and we will work on a royalty agreement even in the absence of a patent. What are your tips and advice for inventors who want to work with you? Jonathan: First, know the market. If you're a children's toy inventor coming from a children's market… well, the pet market is somewhat related, but it's a different market. Become familiar with it. Go into pet retail stores. Shop at the big box retailers, the Petcos and the PetSmarts. Go online to Chewy.com and other online purveyors of product like Amazon, etc. See what's out there. See what's selling. What's hot, what's popular, what's trending? That way, when you come in to make your presentation to a company like ours, you have knowledge, the facts, and you’re educated. Our time is valuable and your time is valuable. We want to make the most of these meetings and the more homework an inventor can do upfront, the more they can understand this industry and therefore the more they can understand our company. It's beneficial. They should take the time to look at our website to see the types of products that we're manufacturing and understand what our price points are.

We deal in a very specific niche. I would call it mid-tier priced pet products. If you come in and present the next new GPS tracker for dogs and it's going to retail for $500, that's not what we do. The inventor should know that before they come in so that they don't waste their time or our time. You can do a lot of research online these days! If you’re well-educated in advance, that makes meetings that much more meaningful. Once again, relationships are everything. Costing once again is very important as well. This is a very inventor-friendly industry. You can bring your product idea to a trade show and pitch it directly to these companies. Study the websites of these companies before you submit your product. Get to know their product line. Stay in the industry to familiarize yourself with trends!

AMANDA HUTTON Professional Inventor, Pet, Toy and Game Industries Amanda has invented and licensed products full time since 2002. She has licensed more than 50 product ideas over the course of her career! She specialized in the toy and game industry before exclusively focusing on the pet industry. The Push-N-Pop treat dispenser for dogs and cats that she licensed to Ethical Products has won three different awards from three different pet associations. So, you're a pet product inventor? Amanda: Yes. I started out in the toy industry back in the early '90s specializing in games and this magazine called Playthings that I read frequently had an ad in the back and it was Ethical and it said, "Hey, All you inventors/toy inventors out there, Have you thought about designing toys for the pet industry?" And I answered the ad and licensed a couple of plush products. I first met with them in, I think, late '03, early '04 and I had a product on the market with them by early '05. Do you have animals? Amanda: I do. I mean, I never had kids. Even though it's grown, it's so huge now, the pet industry still feels kind of small in a way. And I just loved it. I always had dogs and cats. So, I just thought, why haven't I been doing this from the beginning? I always loved playing games. So that's kind of how I got started designing board games. After I licensed a few products to Ethical Products, I kind of weaned myself off of the toy industry and have stayed with pets ever since. What are the differences and similarities between the toy and pet industries?

Amanda: The re are probably more similarities than differences. The whole process from ideation to licensing to getting the item on the market - all of those steps are the same. The difference to me, like I said, is that it just feels smaller. I have closer relationships with my clients in the pet industry than I did in the toy industry. Submitting ideas is the same, for example. I was lucky enough to have a mentor when I started in the toy industry who is now in the pet industry himself. He initially worked for Tyco Toys which was acquired by Mattel. He guided me to an agent and also gave me a lot of very good advice. I learned from him and my agent how to start presenting products. I did not major in business or marketing or even minor in college. I was a biology major. So, this person showed you the ropes. Would you recommend to someone starting out to maybe work with a toy broker or licensing agent? Amanda: I would, yes. Especially if they have no expertise in business, marketing, licensing. If you're really a beginner, obviously I would say, read some books on licensing. That definitely helped me but it always helps to have an experienced mentor. What do you use to present your ideas? Amanda: Obviously, the more finished a product, the better. The better it looks, the better it's going to be attractive to my client. I start out by making notes. Even though I go to the shows I still run into pet stores all the time to just see what's out there and also to give me ideas. I'm always researching. I'll make a list of ideas which eventually comes down to, "Yeah, that's not worth spending my time on." I'll kind of narrow it down to a couple of ideas. Sometimes some just pop right in my head, no pun intended. ftat's how I came up with Push-N-Pop. I just loved it from the beginning and I ran with it and I made a good working prototype. I did a sell sheet. I don't have a dog currently. I have a cat but actually my cat was able to use it so I had a video made of him using it. But I have friends who have dogs so I sent it out to them and they would record video for me. My husband actually is very good at taking videos and editing them, adding music and all that. He's kind of my techie. So, I pass those resources on to him to finalize it.

Do you build a prototype yourself? Amanda: Yes. A lot of times I'll take something and cannibalize it just to save some time. It depends on the product. If I can mold it myself, I will do that. I use Friendly Plastic, a modeling material, quite often. It's hard to get things perfect because it hardens quickly so you've got to sculpt very fast. But a lot of times I'll do that or I'll do sketches and do a 3D model. I use all of these different kinds of resources. How important is keeping cost in mind when you're designing? Amanda: Very important because that's the bottom line. In fact, with Push-N-Pop everyone loved it but cost was definitely an issue. Ethical loved it but they initially passed on it. Then all of a sudden six months later I got an email from them saying that they worked out a deal with their factory and we're moving ahead. It was the fastest deal I ever signed actually. They sent the contract to me within 24 hours and of course we've worked together before so the contract was pretty much the same. So, I just skimmed through it, signed it, they signed it, all done all in 24 hours! I've never had a deal that fast. I mean it was six months plus in the making but once they made the decision it went very quickly. Wonderful. Let's talk more about costs for just a minute. Is there anything that you can do to determine how to design something that's more cost effective? Do you have expertise in that? And if you don't, do you lean on anyone else to help you with that? Amanda: I do. I consult Chuck Lamprey, an inventRight alumni, because he knows a little more about molding than I do. When you have to mold a product you always have to take that into account because you know it's not going to be cheap. Molds are not cheap. So, I'll often run things by Chuck and say, "Do you think this is going to be way out there expense-wise?” and I might have to conclude, "Nope, that's not going to work for right now. It's just too expensive." I invent all kinds of products so obviously when I do rubber toys or plastic toys those are going to require molds. With plush, depending on the number of materials I use, that's not as worrisome as far as cost goes unless

I have too much detail, facial detail, things like that. Plush toys are a little easier. I don't have to worry so much about the cost. When you come up with an idea, do you come up with the name of the product, too? Amanda: Yes, I always name it. I'm not always thrilled with the names. Ethical changed the name. I had chosen Pop Treat initially but when they came up with Push-N-Pop, I was like, "Oh my gosh, I love it. I love it. It's wonderful." because it's the perfect name, it describes it. It’s catchy and cute. Most of the time my clients change the name. There's only been one product that was a game that I did years ago for the toy industry and I was really stuck on the name. The name kind of tied the whole thing together. Otherwise, I don't care if they change it or not but I always have a name for it so that I have a title for my sell sheet. Do you file intellectual property like a provisional patent application, maybe a copyright, or even a trademark? Amanda: Trademarks? Not so much. The only time I did was with that game I just mentioned because I really felt that was the ideal name for it but yes, I file provisional patent applications and copyrights. Sometimes my clients will cover the cost of the patents, sometimes I do; it depends. And I do both utility and design patents. How do you build relationships with your clients? Is it at trade shows? Amanda: With Ethical, at every trade show, the President of the company always says, "ftank you so much for coming.” Most of the time I don't even speak with my clients on the phone. That’s very rare. Everything’s over email which I like because then you have a record of all of your conversations. But that's why it's also so important I think to go to both the Global Pet Expo and SuperZoo, so you see each other at least twice a year instead of just the cyber communication. I've always felt face-to-face is best and especially for me because I like to present my products in person. I want to see their faces because I can usually tell if they really like something or something's not really grabbing their attention. If I just send things in the mail to them or via PowerPoint presentations, I have no idea how they're truly reacting to the item. I used to send a lot of products throughout the year. Now I kind of just save them up

and do everything at the shows because I really want to have that face-toface. Do you ever pitch at their corporate headquarters? Amanda: Before I moved to Florida in late '06, sometimes yes, because I was nearby in the Northeast but ever since then I just attend the shows. How many inventions do you pitch at a time and how? Amanda: Generally, I'll show four to five products. Obviously, not every product is right for each company. So, I might show a couple more to one company or just a couple to another. I'm getting into edibles now so I'm trying to build relationships with new clients because that's a new category for me but yeah, I always have a prototype for sure. I have a sell sheet. Depending on if it's something that I've come up with recently, I may not have had time to do a video, but I always try to do a video at some point. I always follow up after the show and whether they are interested in the product or not, I like to send a PowerPoint with all the products I've shown them so I know and they know what they’ve seen. I have a record. Then I'll generally follow up with a video or send prototypes and then follow up with a video. Do you consider the pet industry inventor-friendly? Amanda: Yes, very. The only part that is becoming a little frustrating is that it is getting to a little bit like the toy industry when I left. There used to be a lot of small companies when I started out in the early '90s and then the big boys, Mattel and Hasbro, began gobbling everyone up and I find that's happening a lot now in the pet industry. You have fewer people to present to when that happens. How do you present yourself to new clients? Amanda: Well, I try not be fly-by-night, as in I just have this one product. I always tell them a little bit about my background, that I've been in the industry for over 15 years. I have a number of products on the market and I list the clients that I work with so they know that I'm established. And if I have products on the market, which I usually do thankfully, I'll tell them about the products that I have on the market. Or specifically if I have one that's in the new product showcase I'll say, "Take a look at my products that are in the new product showcase or at so-and-so's booth." How important is it to stay in one industry and get to know everyone?

Amanda: Very. That's why I stay focused on the pet industry. I've found that trying to go back and forth with toys and pets... you can have similar products. I mean I'll see new fabric in the toy industry and all of a sudden it starts popping up in the pet industry but again, I find that I really like to have close relationships with the clients in the pet industry. And I just found that concentrating on one gave me more of a leg up than trying to keep track of doing both. Are you ever afraid of someone stealing your ideas? Amanda: Yes. Oh, yes. Unfortunately, it's happened. I think sometimes it also happens by accident, quite frankly. You'll show someone something and nothing comes of it. (And if they really had taken it, it would be out in the next year or two.) But then, three or four years down the road, you might see something very similar and think, "Oh, maybe back in their subconscious, they saw something similar but they don't realize it." It’s understandable because I’ve done the same thing; be inspired by a product, and come up with a similar idea without realizing it. It's amazing how all of a sudden there will be nothing out there like an idea, and you're working on something and another company's working on the same thing. That just happened. I went to a show and I opened up a trade magazine and there's an example of something I had just designed too. So, obviously we were thinking of it at the same time. But you just do your best to protect yourself with provisional patent applications and copyrights. I do worry about it but I have so much fun designing and coming up with new products and seeing them come to fruition. Having established very good relationships with my clients, I'm worrying less and less. It was more in the beginning when I wasn't sure quite what I was doing, getting experience. Are there any telltale signs of companies to avoid? I mean, can you tell firsthand, “I don't think I should work with that company.” Amanda: Yes. You'll always kind of get that feeling. I'm always pleasant, so I just say, "Okay, No. I don't think that's a company I really want to work with." It's just not worth the hassle and I have worked with some companies that have been difficult in the past and we just went our separate ways. I don't work with them anymore.

What do you mean by difficult? Amanda: I don't think they were being honest in their royalty reports. I was able to terminate the contract and luckily licensed that product elsewhere. We could spend a lot of time discussing licensing agreements. Is there one really major thing that you just have to have in your favor? Minimum guarantees, or what? What do you see in these licensing agreements that's important to you? Amanda: I actually have about six priorities for a licensing agreement. Let's see, minimum guarantees are important to me, definitely. One of my most important – besides how much of a percentage I can get, generally the standard is five – is when the product has run its course or they are just not interested because maybe sales are getting a little too low, I want the rights to revert back to me always. And if they want a patent, I want my name on it. Again, if they terminate, the rights go to me. Line extensions, obviously, I definitely want in there that I'm going to get royalties off of any kind of extension of the product. Minimum guarantees, manufacturing liability, and insurance. Those are important too. What's the typical lifespan of a pet product on the market or is there such a thing? Amanda: Generally, with plush about five years. I would say rubber is maybe a little bit longer. Plush is probably three to five years. Rubber might be like five to seven. Again, it really depends on, obviously, if the product is doing well. I have line extensions for several products. Do you help with the line extensions or do they come up with them? Amanda: The y usually come up with them but they will always ask my opinion on say, characters or fabrics depending on the product but yeah with colors they usually like to get input from the inventor. And sometimes I'll email them, "Hey, I've just come up with some line extensions. Are you interested?" I'm always trying to push line extensions if the product is doing fairly well. I always try to present new characters. For example, the Arm & Hammer Super Treadz, a dog dental product, is doing well on Chewy.com and at Meijer stores. So, they’re coming out with mini versions of them.

Okay, let's talk about your product Push-N-Pop. Were you inspired by Fisher-Price? Amanda: I looked at that later. Honestly, I was researching treat dispensers and it was really funny. I was making popcorn at the time, so I was in my office but I could hear the popping going on in the background and as I was just flipping through different treat dispensers, it literally, no pun intended, popped into my head. And that was one that I just thought, "Oh, my gosh, that is so cute." And then I did think later, you know with the Fisher-Price product like, "Oh, yeah, because every kid had that so maybe that would help with the tie-in." I immediately went to work on the prototype. I just knew that it was going to be great but I was worried about the cost. I knew the mold was not going to be cheap. I think you created a whole new category, so congratulations. I love it. Amanda: Tha nk you. I'm working on trying to think of other ways to dispense food. It’s just now out in Pet Supplies Plus and has been doing well on Amazon. This interview is one of my favorites. Amanda is definitely a professional. I love that she calls her licensees clients. She took the time to understand the industry first by working with a toy broker when she was just getting started. Like anything else, becoming a professional requires that you educate yourself. I think a big takeaway here is that the pet industry is pretty much the same as the toy industry in terms of presenting your ideas, protection, building prototypes, establishing relationships, and attending trade shows. After interviewing so many companies, I’m convinced the process is the same throughout all industries. Build relationships and ultimately proof of concept is needed to close a deal. Minimum guarantees are very important. Stay in an industry long enough to know how the business works and become part of their team.

WARD MYERS Owner of Spunky Pup Ward Myers has worked in the pet industry for two decades. Spunky Pup is dedicated to producing high-quality, durable, innovative, and fun dog toys directed at the pet-specialty market. Their product line has grown in multiple categories, including Glow-in-the-Dark, Flashing, Tough, Interactive, Launching and Flying, and Plush. Their goal is to continue to expand their product offerings to meet the needs of their retail partners, consumers, and spunky pups. Could you please talk a little bit about yourself and your company, Spunky Pup? Ward: I've been in the pet industry for 20 years or so now. I purchased Spunky Pup in 2017. Spunky Pup's primarily a dog toy company selling into retail. We have a lot of innovative, unique products, I think, that differentiate us from some of our competition. Our products vary from 100% organic plush toys, to interactive toys, to durable toys, to glow-inthe-dark toys. So, we have a nice variety of products. It really allows a pet store to go in and pick from our assortment and basically cover all the gamut of pet toys. We're just not specific to one certain subsection of toys. Wonderful. Do you work with inventors or outside product developers? Ward: We do. We've found some good products over the years working with inventors. We're always inviting inventors to submit their ideas to us. And if it makes sense for our business, we'll definitely work to set up a royalty or licensing deal with those inventors. How did you connect with inventor Josh Rifkin, the creator of the Squeak & Throw Ball Launcher, now licensed by Spunky Pup? Ward: Let me think here. Originally Josh approached me actually when I owned another company earlier. We'd connected through, I think, a friend

of a friend. He had shown me the product. I was in the process of actually selling that company, so I held off until I bought this new company. But it was through a friend of a friend within the pet industry. When he submitted that idea to you, was it a prototype? Was it a real sample, a drawing, or a video? Ward: He actually had a finished product that he was going to do with another company, but that fell through. So, we took that and changed it a bit, tweaking it, and ended up making our own tooling and creating our own product very similar to the product that he had given us. Typically, about how long does it take after an inventor submits an idea to you, for you to say yes or no that you're interested? Ward: A lot of it depends on the product, where it's being made, how far along the inventor is in their process. But our goal is when we look at a product to see if there's a place in the market that makes sense for that product and makes sense within our line as well. And then from there, we try to get an idea, a rough idea of the cost to manufacture it to make sure that we're going to be price-competitive in the marketplace and able to retail it at a price that we know it'll be successful. It could be six weeks. It could be six months, quite frankly. How important is intellectual property to you, such as patents? Ward: We're more interested in stuff that is protected with intellectual property and patents over stuff that is not. You come out with a successful product that has no protections, you'll find that you get knocked off very quickly. That's happened to us in the past. So, yeah, patents are important. How important is it for inventors to attend trade shows? Ward: I think it's really important. It helps you understand the industry, basically how large of an industry the pet product industry is, and how much competition is out there. You can determine if there are other similar products on the market already. I get a lot of inventors who come to us, and I have to say, "You know what? I saw a similar, very similar product on the market 10 years ago. It didn't do well. Sorry for the bad news. We're not interested." Got it. What tips or advice do you have for inventors who are submitting their ideas to you?

Ward: Do the homework. Make sure that what you have is unique and isn't out in the market already. We get cartoon drawings of stuff. I recommend taking your invention to a point where the person you’re submitting to really knows what it does, how it does. Having CAD drawings, even a prototype if possible, makes someone more apt to, obviously, license it. So, a video showing proof of concept and how it works is very important to you? Ward: Yes. A video would be good. What products are you excited about that you’ve launched or are about to launch? Ward: Right now, we're in the process of introducing a line of 100% certified organic plush toys. The market has gone from organic, all-natural food and treats and so, we're the first people to bring in a 100% certified organic toy. The fabric is organic. The fill is organic. The packaging is organic. The dyes are organic. Everything is organic. So, that's kind of a trend moving forward. Plus, another line that we're doing is made in the USA. We're doing a full line of Made in the USA toys that seem to be very hot right now, what with the state of importing from foreign countries. It’s hard to design something different and unique in any industry. We've been working on this organic line for a year trying to get something that is truly organic and price-competitive. Someone doesn't want to go out and spend $40 on a plush toy because it's organic. They'll spend $15, but they won't spend $40. The pet industry is booming and overall, inventor-friendly. This company is looking for a point of difference and willing to be the first. I’m not surprised. Midsized companies need ideas from us to stay competitive. They're willing to take a chance!

CANNABIS

JONAS MATOSSIAN Director of Strategic Development for the new Cannabis Sector of GPA Global GPA is a global packaging company providing custom design, engineering, and manufacturing all under one roof. Since its founding in 2007, GPA has worked with major brands all over the world. It has manufacturing capabilities of over 600,000 square feet and the capacity to “design, engineer, test, sample, manufacture, pack and distribute.” I think the cannabis industry is going to explode, especially with inventors. Jonas: Absolutely. What's funny about that is, like you, I started my career in toys and gifts and the collectible industry where I worked with tons of inventors. We'd always cast nets out. Our philosophy was: we want your invention ideas, so bring them to us first. If we thought it was a marketable product, we would license it and put the inventor in business. So, I kind of brought that philosophy with me when I began working in the cannabis industry. That’s how GPA ended up licensing the RoachPack from [inventRight student] Arkady Grigoryan. We worked with Hasbro and Mattel over the years. I spent 11 years in China doing manufacturing and product development from ground zero. I wanted to change my focus when things began to shift. Like you said, I see cannabis exploding. I find it very interesting. I like the people who are involved in it. I like that it's finally legal to an extent where it's not criminalized anymore, and people can really become innovative out in the open without having to hide. So, that grabbed my interest and I started developing my own child resistant boxes, because that's where the packaging aspect of the industry is

going. One thing led to another and I got in front of the CEO and President of GPA and showed them my designs. I think they were impressed by my spirit and that’s why they gave me this opportunity. I'm charged with bringing new child resistant products to the table. When I got the job at GPA they wanted new innovative ideas and the first person I thought of was Arkady, having developed his prototype for him at Paper Tube Co. I also genuinely believed in his product as a solution. One thing led to another and I brought his product to the table at GPA. They wanted to explore it further and we ended up licensing a product from him. RoachPack is going to be launched under the GPA banner. Wonderful. So, you’ve worked with independent designers in the past, and now your new position at GPA is to work with inventors and look for new ideas. Jonas: Absolutely. That's the most fun part of the job for me. When you're trying to develop something new every day sometimes you lose focus on what else is out there. I’ve always thought that working with inventors would bring some fresh perspective, and it has so far. GPA prides itself on being the inventor and inventing the right product for their clients, but to get that secondary perspective on what the market needs as well, in my opinion that’s invaluable. So, I believe in creating relationships with new people so we can bring new products to market that add to our offerings. I don't see this as a bad thing whatsoever. I would actually like for us to be the first stop for inventors if they have a new packaging solution to show to this company. The worst we can say is, "No." and maybe point them in the right direction. And the best-case scenario is that we license the product from them and hopefully we're both successful with it. What's a perfect submission? Do you like to see a prototype, a sell sheet, a video? What do you prefer to see when someone is submitting an idea? Jonas: I always love to see a prototype or a works-like, looks-like type of model, to truly convey the image of the product. But there's been instances where I've worked with inventors in the past when their ideas

were just a sketch on a napkin. We would develop the product based on the concept, invest in it to bring it to market, and do all the marketing behind it. To answer your question, I prefer to see a physical, works-like, lookslike model or prototype, but a video, a deck, anything will suffice as long as it conveys the image and maintains alignment with where we're going as a company as far as packaging. We're happy to work with whatever, see whatever. When a product comes in, how long does it take for you to get back to that inventor with a yes or no? And what is your process of evaluating it? Jonas: Well, for the RoachPack, the licensing agreement was signed within five weeks. So, not too terrible. That's fast. Jonas: Yeah. Tell that to the inventors though. They think it's really slow. Can you tell me how important cost is when you're evaluating an idea? Jonas: Cost is always crucial. But the good thing about the cannabis industry and packaging is that the value of the product offsets a lot of the packaging costs, in my experience. For example, when a package of prerolled marijuana cigarettes sells for $40, you're not going to balk at a $1 or a $2 price tag on a package that functions the way you want it to that has the child resistant certification and is a functional product. So, we've noticed in cannabis that there’s less resistance to cost, but as the market's becoming more saturated people are getting more priceoriented. At GPA we have solutions for every price point. We can make a package as fancy as the client wants, or we can make it as low key and simple as they want. Our primary concern is the child resistant function. How do we make that better and keep expanding on it and taking it to the next level? I think inventors will play a key role in that. What do you feel the overall attitude in the industry is about working with inventors? Your philosophy is to be very open. Do other companies feel the same way you do? Jonas: I would like to think so. I think they would be foolish if they didn't want some outside perspective and to work with other people. I guess

it comes down to company culture to be honest with you. Spending 11 years in Asia, I've seen intellectual property get ripped off before a product has even been launched, just after showing it to a manufacturer at a meeting table. You know what I'm saying? Yes. Jonas: I would like to think that in America and in this market companies value innovation and they'd like to honor that and commit to it and reward it. I think it's too soon to tell. I can only speak for myself and my company. I don't want to put words in other people's mouth but I would like to think the industry has an open door policy. I just like vendors to come to us first. How important is intellectual property? Jonas: Very. It's highly important to me. I’ve come up with products that I shopped around to contract manufacturers and then they show up on a store shelf. It’s highly frustrating. You know what I mean? And what can you really do about it if you're not protected? Some of these inventors, they can't invest tens of thousands of dollars to get patents and get child resistant testing, and all of that. The good thing about GPA is that if we believe in the product and it's a great item, we do have the backing to do that. Meaning, we can protect the inventor and the company. A big part of how Arkady got a licensing agreement signed for his product, keeping in mind that this is kind of a new way of doing business for the company, is because he did invest that money. He did get his patent protection. He did get his name trademarked. He did invest in the initial child resistant testing. That speaks volumes especially to a corner suite executive who is kind of distant from what's happening on the ground. They like to see that they're protected. That's less money for them to invest. That’s less risk for them to take on. So, from a corporate perspective, I think that if you're in the position where you can invest more in your product do it. If you're not, it's not a no, it's not a closed door. It just results in the company having to invest more and it may take more time to get the item to market. Because we can't put a child resistant package on the shelf before it's actually been tested. It’s still such a new industry. A lot of things are still getting worked out. There's a lot of misalignment in places and there's a lot of alignment in places. I think it's going to constantly evolve until they really buckle it

down. So, at this point adapt, improvise, and overcome. That's just how I see it. How important is it for an inventor to realize that yes, it will take some time, but it's really a relationship that you’re building? Because you're going to be working together and there are probably going to be some obstacles to overcome. How important is it for an inventor to think of it that way? The attitude of, "Hey, we're doing this together as a team." Jonas: Tha t's how I think of it. I don't think of them as a licensee and us as a licensor. I look at the inventor as a partner. Their success is our success and vice-versa. If we're going to invest in patents and marketing material and everything else — put all that backing behind it — we absolutely want to see the product succeed. And when an inventor gets his royalty check, seeing that smile on their face, is always a great thing. You know what I mean? Who doesn't want more passive income? Put another way, if an inventor comes to me with just a sketch of a product and I have to develop that product, that inventor is not going to get a higher royalty rate because the expense is higher. He will still get paid fairly, of course. I always tell them, "Look, the more you do, the more you walk in the door with, the more you get. The more risk you take away, the higher royalties are going to be." Jonas: Exactly. What are inventors doing wrong? Jonas: Good question. I don't know how to answer that in a way that won't hurt someone's feelings. I don't like the word wrong. It's not wrong. Living in China, there was a phrase that I learned there that is very common. What this saying means is, it’s not wrong. It doesn’t mean it’s right either. You know what I mean? Getting too attached to an idea, taking feedback the wrong way, is something I see. For example, if someone turns you down that doesn't mean your idea is bad. It just means that maybe it's not a fit. Don’t be turned off by being turned away. That just opens 100 more doors for you. You have got to keep

grinding and not take any rejection personally. I guess that’s the best advice I have. When you submit an idea there's going to be a lot of talk about it. There could be changes and inventors must be open to changes. Jonas: Absolutely. Yeah. There's a lot of creativity that goes on beyond the initial submission. Jonas: Packaging, toys, and electronics — they're all so different. But again, like you said, I’ve observed lots of tweaks and lots of adjustments, especially when products need to be child-certified. A lot of X factors means there's lots of fine-tuning and adjusting. That's why Arkady’s product progressed to a licensing deal so quickly. He had already been through the process of getting child resistant certified before we got him on board. Anything you can do to help yourself or help the company expedite the process in getting a license — or at least an answer — is to your benefit, in my opinion. And if you're not in a position to do that, just be prepared to sell your product. Get people to believe in it as much as you do. In your opinion, because you've been in different industries, is the creative process the same? Are there some similarities? Jonas: Absolutely. Absolutely. Absolutely! I think the creative process is the same. It’s just the materials we work with and the manufacturing processes they fall under that is different. But we all have R&D departments. We all have engineering departments. As someone who had never worked with paper, I wondered that there was such a thing as a paper engineer. I thought paper was paper. What engineering is required? But the engineering is actually more intricate than I realized, especially child resistant certifying these higher-end luxury boxes. It's far more detailed than plastics. And it's a lot cheaper product. I can sell a laser for $100 bucks, and I sell a child resistant package for a dollar. But the R&D that went in that child resistant package was more costly than the R&D that went into that laser show! That's what I'm learning here at GPA as well. It seems that the toy industry, because they've been working with outside inventors for so long, is probably the best at working with

inventors. Professional inventors have been in that field for so long. But still, there are similarities across all industries. Jonas: I completely agree with you. That's what I try and tell everyone. If you can create in one area, there's a good chance you can probably create in another. Jonas: I tend to agree with you. The processes are very similar as far as the development side goes. Just the materials are different. When the material is a little different there's a different manufacturing process. But on the development side of things, what I see is very, very similar. It's almost identical. We're just making different products out of different materials. I think one of the big takeaways here is that many industries want to have a new product concept conveyed to them in a way that they can completely understand it quickly. That could be a prototype or even be a sketch on a napkin — but they have to get it. So, making it easy for them to understand your product is a big plus. Filing intellectual property, including a trademark, building a prototype, and understanding costs can all be a big plus. Are these required? No. I know many of you are on tight budgets. Supplying them with good information is still helpful. This company recognizes the power of open innovation. I predict that you’re going to find more and more companies in this particular category that feel the same way. Why not? It’s the best way to find new and innovative products and in this category, the door is wide open. Everything from consumable packaging to different strains of cannabis, to lighting and irrigation for growing operations — you can license ideas across so many different categories. I don’t know of any other industry where there are so many opportunities. And because it’s basically new, you’re going to see a lot of innovation. It’s also going to be very competitive for these same reasons. These companies will treat you like part of their team. Getting to market is a partnership. Act like a team member and be flexible. There will be lots of re-designing. Once again, licensing success is all about having a good idea that you can convey easily and a prototype can help. Protection is always a good

idea.

ARKADY GRIGORYAN Inventor and inventRight student Arkady Grigoryan lives in Los Angeles, California. He is a Vice President at Century Auto, an auto broker where he has worked for 16 years. He licensed his packaging invention for pre-rolled joints to a global packaging company that recently entered the marijuana industry. Because it concerns pre-rolled joints, he expects it to roll out to the two other major markets for pre-rolls, which are cigars and cigarettes. The big benefits of his invention are that it’s child resistant and allows a smoker to store what is left of their joint in the same package. Why this category? Arkady: I was inspired by a problem I came across. I used to be a smoker as far as tobacco and I don't want to say I'm OCD, but you could say I'm a clean freak. When I quit cigarettes, I started smoking marijuana. I realized that you don't really finish an entire marijuana joint, but there was really no good way of storing it for later use. Hence my slogan actually, store it for later. What I did is create a package that stores the item for later use or disposal. Did you build a prototype? Arkady: Yes, absolutely. When I started out, I hadn't read your book One Simple Idea and learned about the 10 steps yet. One crucial thing that was missing from my first prototype was that it wasn’t manufacturable. Until coming across inventRight, my product looked and functioned differently. When I realized that it couldn't be manufactured after doing more research online and reading your books, I hired a company to reengineer it and make a second prototype. We kept working on the prototype to bring it to something that was user-friendly. Was it easy to reach out to cannabis companies? Were they open?

How did they treat you? Arkady: The y treated me great. The doors are open. The industry is growing so rapidly and there's so much investment money coming in and so many new products and so many new avenues of making money. So, yes, the doors are open, but there are so many current projects that they're working on, it's kind of hard to tell them to pause and have their team look into your product instead. I got through to a lot of companies, but most of them told me to contact them six months later because they had so many projects on their hands. They didn’t have time, but they didn't want to say no and skip out on an item. The industry is really exploding in all different directions from lighting to irrigation to smoking devices. It's really kind of an amazing opportunity for entrepreneurs. Did you file intellectual property? Arkady: Before I came across inventRight and figured out the right steps, of course I was that crazy inventor thinking everyone was out to get me. So, I jumped the gun and I filed for a non-provisional patent on the first prototype, the package that I learned later couldn't be manufactured. I filed before I had the knowledge of what it would take to commercialize this product from beginning to end. With the company I hired to re-engineer my prototype, when we came across something that was strong and good, that's when I filed another nonprovisional patent application. I secured patent protection because I knew I was onto something. The first patent, that was a waste of money. Well, that's not unusual. That happened to me as well. What was the process of licensing your idea like? Arkady: I'm humble and I'm nice to people. An engineer I worked with to make my prototype manufacturable named Jonas Matossian ended up leaving the company and going to work for a major global packaging company, where he was promoted to strategic management. He contacted me and said, “Hey, I remember that you had a great product. You were nice to us and we would love to work with you. Is it okay if I introduce your product to my company?” So, Jonas introduced it to the company for me. After they loved it, we sat down and had lunch. Ultimately, he helped me with all the steps. I don't want to call him a golden goose, but he was a person on the inside who

loved the product, understood the problems it solves and the benefits it offers, and helped me bring it to life. Once they were interested the process moved fairly quickly. Within about four weeks the deal was signed and done because Jonas was on the inside helping me move the process along. Looking back, how important was it to have that champion? Arkady: Very. Very! Because the craziest thing about inventions is that when you build something, you get so attached to it. I had to detach myself when I realized my design wasn't manufacturable and take my emotions away. What was difficult was when they re-engineered it because it looked totally different. When I got that first call, it was like, "Oh my God." I just wanted to hang up and say, "Screw this." But then I thought, “Okay, this is it. They're the engineers. They know what they're saying. If they're saying it's not going to work and be manufacturable…" I started looking at the situation differently. I needed a positive attitude and to say, "Thank you.” to sleep on it and look at what it actually was versus feeling like, "Oh, it's not what I need exactly." You have to put that aside. So yeah, it’s very important to keep a smile, keep good contacts. That's what helped me. If I hadn’t been nice to them, if I had rushed them, if I was mean, the course would have been different. He would have never called me back to work with me. Would you agree that it's really about being part of their team? It sounds like you were. Arkady: Correct. When you’re open to making changes, you actually start being able to improve your initial invention so much. My product had two utilities, yes, but what we ended up adding to it was character. It’s called the RoachPack. Roach meaning the leftover part of the pre-roll that you don't finish. The inside piece where you put your joint, cigarette, or cigar is called the roach rail. One thing led to another and we're joking like, "Hey, the roach rail is a separate piece. It could look like Santa Claus. It could look like a bunny. It could look like anything.” When you work with the team and have an open mind, things improve and progress in ways you didn't think they would.

Well, Arkady licensed in the cannabis industry. Here are the big takeaways in my opinion. You never want to file a patent too early. There’s always going to be some changes! And as you’ve learned from this story, having input and knowing how your product is going to be manufactured is critical for your patent application to truly have value. Prototypes are wonderful to show a concept and learn what works and what doesn’t work. But what’s always going to be important is that your product can be manufactured using existing technologies so that the price point is one that the public will purchase. Once again, you see how important it is to build relationships in the industry you’re submitting your ideas to. It’s truly a team effort.

JUVENILE AND BABY

DAVID CONTRACT Head of Marketing for the Betesh Group The Betesh Group is a privately held consumer products company that owns many of the most popular baby product brands in the United States. It is the number one diaper bag manufacturer and the number two baby bedding company in the United States. It’s also the number one baby appliance manufacturer under the brand name Baby Brezza, which many people have heard of and its up-and-coming sleep-and-soothing brand is named Tranquilo. Tell me a little bit about yourself. David: I work for the baby division. We’re actually a pretty big baby products company. I've been a consumer products marketer for over 20 years. I started my career at Kraft Foods working on cookies and crackers of all things and then Milk-Bone dog snacks. It’s still my favorite brand. I did that for three years and then I moved into over-the-counter marketing; for example, Dr. Scholl's and Lotrimin. And then I've been in the baby products industry for the last seven or eight years and I've been in my current position for the last two years. Do companies in the Betesh Group work with outside inventors? David: We do. Several, actually. I'll give you examples of the two different ways we work with outside inventors. The first way is actually the genesis of us acquiring the Tranquilo brand. Inventor and entrepreneur, Melissa Gerson, developed this incredible revolutionary soothing mat — the first mat of its kind that mimics the womb to help calm babies. She developed the product and launched it on Shark Tank two and a half years ago and sold her business to the Betesh Group late last year. So, that's one

way we work with inventors. They develop the product. They bring it to market and when they get to a point where they can't grow it they come to a company like us because we have the infrastructure in place to take a small brand and make it big. Right? We're selling to the majors: Walmart, Target, and Amazon. We have customer service. We have research and development (R&D). We’re a full-service consumer products company so we can approach inventors that way, that's Option A. Option B was the route that Lauren Piccirillo took. Lauren is another amazing entrepreneur and inventor who had this idea for the first ever baby massager to naturally calm babies. She spent seven or eight years noodling the idea; developing it, coming up with prototypes, validating it and ultimately, I think realized it's really hard to launch your own product. It really is; it takes a lot of money, a lot of effort, and a lot of time and most people don't have the ability to do that because they have kids and work, etc. I loved her product when it came on my radar last Spring. Why did I love it? Because I know that sleep and soothing are major challenges for new parents through our research and through my history in the baby products industry. I love that she was doing something different and it was very much on trend. Massage and natural approaches to health and wellness are absolutely on trend today particularly with moms. So, I felt like we could take her idea and then bring it to market effectively and create a whole new product category. So, we did some research to validate her idea and then we negotiated an agreement with her to acquire the worldwide rights and then we actually took her idea, her concept. We weren't starting from scratch. We were starting with what she had created. We modified it, refined it, simplified it and then we moved into the manufacturing and sales phase. I'm excited to say that we launched it on September 1st so it's on the market. There's actually a third way, which is closer to Option B. There are groups of inventors who come to us with ideas periodically; for example, we're the leading brand of food makers. That is where Baby Brezza got it’s start. Baby Brezza is the only brand that makes a food maker that

automatically steams and blends baby food meaning, here's the bowl you put fresh or frozen fruit in here. Push a button on the machine and it steams it first and then automatically blends. It’s a patented process. There was an inventor group that came to us seven or eight years ago with that concept and they had not developed the whole product but we took the concept. We developed the product behind it and then launched it. How important is a prototype when someone submits an idea to you? Do you need a drawing, a prototype, proof of concept? What do you need to evaluate whether you want to go forward? David: I think the most important thing is that there's a patent pending; that there's protection associated with it. That’s for two reasons: to protect the inventor and to protect us. So, if somebody comes to us with an idea one of the first questions we ask is, "Hey, do you have any type of patent status on it? Even patent pending?" We want to make sure that the area that they're focusing on is unique and it's not going to step on what somebody else has done. Two, that's going to help make that product more successful. Rather than trying to enter a crowded field we want to create a new space for ourselves so that's really the first question we ask. In terms of do they need to have a prototype or things like that, obviously, the more you have the better because it means that you've actually invested more in it. You've developed it more fully. You've brought it to life in some way, shape, or form so I can better, or we as a company, can better understand it but it's not a necessity. What's most important is that it's a really good idea that meets a really important and major need state that nobody else has done before. Because as a marketer and as a business person who's trying to drive incremental growth I want to do it with a product that's unique, that's differentiated, and that's going to deliver a meaningful benefit to consumers and they can't get it anywhere else. Anyone who comes to us with an idea that we have interest in we're going to do research behind that. We're going to talk to hundreds of consumers. We're going to do concept testing. We're going to do an attitude and usage study. Often a great idea falls apart when you actually tell people they have to buy it and it's not free. How long does that whole review process take?

David: We move quickly so we typically take about a month. We're a small company so we move really fast. I've worked at bigger companies that would move a lot slower but if you come in and we have a good introductory meeting and you've got what we think is a strong idea that again meets our core principles of differentiated, unique patent protection of some sorts; we'll move quickly. We'll do that research in a couple weeks. How important is it in your opinion for inventors to go to trade shows to really understand the industry? David: I think it's important to understand the industry but I don't think going to a trade show means you understand the industry. I think what's more important is that you understand the consumers who would be interested in your product. You understand their challenges, their pain points if you will, and that your product delivers on them or addresses them. I think talking to people, canvasing social media, reading, going to retail, seeing what's out there is just as important. I think going to a trade show is not bad. I mean you're not going to see everything at a trade show and frankly some of the most innovative things out of a trade show are sort of in the back or behind a cabinet door. So, I would not recommend to an inventor that the first thing they do is go to a trade show. When an inventor's going to submit an idea to your company, how important is it for them to really look at your mission statement, to look at your product line to make sure they submit an idea that really fits into your product line? Is that important or not important to you? David: Tha t's really important. Right? Because if you have an idea you want to make sure it makes sense for the company you're talking to; otherwise, it's sort of wasting your time and their time. Now, some companies might be in category X, Y, and Z and your idea is off in left field. I would say don't bother because they're really going to focus on things that are close to what they're currently doing. If your idea is close to what they're currently doing, so it's not a big leap for them, I would say go after that. For example, if you're going to go to a toy manufacturer and you give them a baby bottle that's very far field. I probably wouldn't bother but if you're going to go to, let's say, our company and come in with a backpack for kids, alright. We're big into diaper bags. The next stage is backpacks, right? That's not so crazy to think that we'd be interested. That’s maybe not

the best examples but the concept is called “adjacency”. So, if the idea is in adjacency to the company’s existing line of business; I would say to go for it. If it's not really a close end adjacency and it's very far away then I probably wouldn't bother. Great advice. Additional tips and advice for inventors? David: I think the most important tip is don't give up. If you believe in your idea go for it. You know what? There are going to probably be more no's than yes's but you know what? Don't accept the no's if you believe in it. You have to have more passion for your idea than anyone else in the world and it will show. I mean, Lauren is a woman who spent seven years of her life developing Baby Soothe. I mean, she jokes but it's really not a joke; it was her third baby. She has two real ones and then Baby Soothe. She put her heart and soul into it and I'm sure there were plenty of ups and downs in her seven years and she persevered. She found us and we found her, well actually, she found us and we loved her. And now we're working together and we launched it. So, I would tell any inventor, if you really believe in what you're doing and you believe that there's an important need that you're delivering, go for it. Don't give up but be smart about what you put into it. Be upfront with yourself with how much time and money you can afford. Go after partners. I do think a tip would be, figure out if you're going to do it yourself or if you are interested in a partnership because I think a lot of people probably are like, you know what, I'm going to try to do this myself and then realize it's really hard. So, I think one tip would be to have that conversation with yourself on the front end and not the back end. Come up with the idea. ftink about it and then really just step back, maybe talk to someone who's in the industry and say, "Can I really pull this off myself?" If you feel like you can't, then it might be smarter to find a partner sooner than later because you'll save yourself a lot of time and energy; and two, I think you're going to get to your end point more quickly. I forgot to ask. How did Lauren contact you? David: She actually connected with our Global Sales Lead who's based in Canada. I don't know how she found him but he is the one who referred Lauren to me and then I immediately reached out to her but most often

inventors will reach out to us via our customer service. So, they'll just send us an inquiry through our contact us form or call us and that's typically how we hear from people. More and more companies are opening their doors for us. Years ago, the baby and juvenile products category was not that inventor-friendly in my opinion but it’s changing! It’s very important that you take time to understand the company's product line first. This company is also willing to look at product ideas that are adjacent to its current line which is interesting and I haven’t heard that before in an interview with an open innovation company. They like inventors who are passionate and if they see something they like, they're going to move very quickly. It’s also worth noting that they recently created a brand-new category of products (sleep-and- soothing) to sell based on the strength of just two products from inventors. Don’t be discouraged if an online portal hasn’t been set up yet because many companies haven’t embraced portals yet. That doesn’t mean they’re not interested in hearing from you. Sometimes reaching out to someone in sales is the easiest path to get in because salespeople are usually very available, willing to talk and if they see something they like, they're going to send it to the right person.

DENTAL

MIKE PARLANTE Director of Business Development at DynaFlex DynaFlex is a manufacturing company that competes in five dental related markets including orthodontic products, orthodontic laboratory, dental sleep medicine, clear aligners, and digital office solutions. The company has been in business for over 50 years and strives to lead in innovation of new products, industry advancements in technology, as well as continue to implement improvements with its existing offerings. Mike Parlante, Director of Business Development at DynaFlex, has worked in the orthodontic industry for 18 years. He began his career in outside sales and has been involved in taking many products to market. Mike is also a successful inventor who licensed his patented orthodontic invention. Do you work with inventors, aka outside product developers? Mike: Yes. Strategic partnerships are very important to bring product ideas to market. Sometimes those can be difficult to find in our industry. You’d think everyone would want to jump on new innovations, but the industry is actually very disrupted and changing rapidly. Aligners are becoming the primary form of tooth movement. There are all these direct-to-consumer companies popping up. The biggest companies are being much more affected by the changes and disruptions taking place. Taking on a small new product idea is not going to move the needle that much for them, not in the grand scheme of things. The smaller and midsized companies are hungrier and more likely to embrace niche items. For us, these kinds of items are a win-win. We like being able to have some exclusive and proprietary. And since we have less

market share we’re hungrier, there’s less red tape, and so it’s easier to get things done and we’re more likely to jump on something new. What’s required to submit a product to you? Prototype, drawing, video? Mike: We don’t have criteria for submissions. The idea can be early on in its infancy, just a concept. There are lots of gadgets involved in making teeth move. In general, doctors have a very creative side, so we’ve had plenty of ideas thrown our way over the years. The structure of our company is well-suited to take on new concepts and bring them to market. We do some manufacturing ourselves and we have other contract manufacturing partners we’ve worked with for a long time. What makes you more likely to take action? Mike: The level of complexity and how far along the inventor is in protecting the idea. If a patent is secured, that’s a lot easier. What is challenging is when there is a piece missing that the inventor is looking for us to solve. If solving that missing piece isn’t within our strengths, that’s an issue. We need to stay in our lanes. If we don’t have the bandwidth to solve the problem, that makes taking it on more challenging. We’ll still consider it though; we appreciate at least having the opportunity to hear the idea and possibly be a part of it. We don’t drag our feet. We let the individual know whether it is something we can participate in or not. Can you explain a little bit about your review process? Mike: Since I’ve been part of the team, there’s generally three people involved. Even though we’re a larger company, the CEO is involved, myself, and our director of regulatory affairs. He knows all about what is required for developing products from a legal standpoint. He’s the one who keeps us in check. As a sales and marketing guy, I might love an idea, but I don’t get involved in the minutiae. If someone calls us, says they have an idea, wants to sign an NDA, and hop on a call – getting back to that person could take a few days to a few weeks depending on our availability and whatever else is demanding our attention. How important is intellectual property to you? Mike: It’s very important. There’s more value when the item is protected as much as it possibly can be. We assume that we’re going to be

ripped off eventually. We want to give ourselves the best chance of success by being first to market and trying to prevent that threat as much as possible. Is it important for inventors to attend trade shows? Mike: Very important. Being in the physical presence of new products and people is something unique. At a trade show, you might discover your idea is already out there, you might come up with a better way of designing it, you might be inspired to come up with many more great ideas. I think it’s also important for developing and continuing your personal relationships as inundated as we are with different forms of digital communication these days. Any tips and advice for inventors? Mike: I think the most important thing is to bounce your concept off of some trusted colleagues. If you have a level of trust or can bounce the idea off without revealing too much, that’s great. Midsized companies are hungry. He just said it! There is not as much red tape, and they can move very quickly. Midsized companies are always looking for new innovative products. I’ve said this for many, many years now. At inventRight, we have many dentists who are students. I’ve always wondered why, and thought they must have to be very creative at fixing certain problems day in and day out. Once again, this company is willing to take a look at any idea, even a concept. I’ve noticed that smaller companies will take any type of idea. Whether you send them concepts or drawings, it doesn’t matter because they’re hungry. It’s the larger companies that require prototypes and intellectual property. This makes sense because larger companies are the only ones able to defend their patent portfolios. Yes, they all love intellectual property but that doesn’t mean its required. If you’re asking them to solve a problem for you, you’re asking for too much. This is true regardless of the size of the company. I’ve observed that large and midsized companies typically stay in their lane, like he said, and it’s the genuinely small companies that are willing to look at a product outside their lane.

Respect that each company has a process when reviewing ideas. In this case, the CEO is involved in the review process. To me, this is another sign that this is a midsize company.

NOVELTY GIFT

SAM HURT Cofounder of SUCK UK, a novelty gift company SUCK UK creates what is describes as “the greatest gifts on earth.” Its novelty gifts include products across many categories such as kitchen, outdoor, party, stationery, pets, and gifts. Can you tell me how many submissions you get in a year? Is it a lot or few? Is it hundreds or thousands? Sam: Several hundred yeah. Because I mean it's barely a day that goes past without somebody sending us an idea of some kind and quite often in fact, it’s almost always a barrage of ideas. Somebody will just sort of send in 20 all at once. We seem to attract that kind of a person. I was just like that, I had loads of ideas and I just needed to tell somebody. And that's okay for them to send 10 at a time? Sam: Yeah, it's okay, like we don't mind. I would say that it's not necessarily a good way of catching someone’s attention. I guess maybe that's what they think is like, "I'll get this person's attention by sending as much as I possibly can.” and I think sometimes it's better to focus and grab somebody's attention with maybe two or three really good ideas. What's your preferred method for someone to send in an idea? Is that a prototype, a drawing, a picture, a description? Sam: What we prefer really is like a simple drawing, because the way we work (and I speak for us and not anybody else) is that we quite often like to deconstruct the idea and then put it back together with our own take on it. Quite often we will take the seed of an idea, the bones of it, the joke if you like, and we will apply design to it. The 3 D’s of design. So, we’re talking about the size, material, and color. We quite often make things in a completely different material from how the original designer envisioned.

We make things a different size or possibly for a different use. For example, someone might send us a toothbrush and we will turn it into a scrubbing brush, because it works that way, or turn it into a nail brush or some other kind of thing. It’s like a standup comic — he doesn’t go with the first draft of a routine. So, sometimes you just sit back, hold on, and wonder if maybe it would be better if we did it another way. Is protection of an idea important to you? Sam: Doesn’t matter to us. Our industry suffers badly from knockoffs from competing companies to unscrupulous people as well as retailers, it’s competitive. There’s obviously the China problem as well. It’s almost impossible to protect things, you know? Is there any category you just won’t touch? Sam: We try to avoid things that are specifically targeted at very young children. Because you know, everything’s a choking hazard and needs to be triple tested. It’s just very difficult. How many ideas do you see that you Google and in minutes you find? Sam: All the time. It happens and it’s so upsetting when you think that you’ve just had an original idea. Then you Google it and about 95 times out of 100, you find something similar. How long does it take for you guys to pull the trigger on a product submission? A week, a month? Sam: Oh, it could be minutes. Quite often it’s that quick when you see something you like. I mean, the only thing that stops us from going yes immediately is that we have to do a Google search first and see if it already exists. I probably print it off and stand up and walk around the office and go, “What do you guys think?” But otherwise, you know, we tend to have a design review meeting with new ideas every couple of weeks. SUCK UK…What a name! This is one inventor-friendly company including their submission portal. Their mission is to take practical objects and give them a novelty twist. If you look very closely at their product line,

you’ll see there’s a slight joke with each product. They receive at least several hundred submissions a year. I really love the novelty gift industry so very much. Since these ideas are fairly whimsical, it’s all fun and quick! I love that you only need a drawing, they help with the design process, and protection is not that important. I appreciate that Sam has a very realistic approach to copycats. They want to stay out in front by continuing to innovate. Make everyone aware that you are the creator, and the original. This is smart and easy to do on social media. I think it’s important to only send three or four ideas that are really good at a time. Don’t overwhelm them. I had a tendency to do that too. It’s not the best way of making an impact, of catching someone’s attention. Focus in on some really good ideas. That will be easier for them to evaluate. One big takeaway for me? In this industry, neither prototypes, sell sheets, nor videos are required. They prefer a simple drawing, because they prefer doing most of the designing themselves, including determining the color, shape, and size. What they want to see from inventors is the joke. This is very different from most companies! Both cofounders came from the design world. No doubt that makes them very comfortable with this. Again, relationships are important and it’s the inventors who keep sending in their ideas that eventually get picked up. When I asked Sam about hot categories or trends, he said there’s no such thing. You never know where you can find a great idea! And indeed, that’s what I experienced when I worked in the industry; smaller companies were always looking for their next big hit, regardless of the category.

DRTV

TRISH DOWLING Senior Vice President of Merchandising for Allstar Innovations Allstar Innovations is a performance-driven marketing company. The company does direct response marketing, which means direct to consumer. They directly contact consumers in various ways. One way is through television, also known as infomercials. Another is through Facebook and Instagram. They also sell to all the major retailers direct to consumer. Trish Dowling has been with the company for eight years now. Can you give us an overall view of what type of products you are looking for? Trish: We are in all categories. I get asked all the time, "Well, what category are you looking for?" And this is really an item business. This is not a category business. We sell pet items. We sell electric items that plug into your wall and that hold your cell phone and that you can put your USB charger into. We sell kitchen items and we sell beauty items. So, it's more about the wow factor, the excitement, the uniqueness of the item. The wow…I mean, are people going to get off their couch and get on the phone or get on the computer and order the item right away because we just wowed them and we made them feel like, I need that that. It's not about a category. It's about the emotion and impression that the product makes on the public. That’s interesting, I’ve never looked at it that way. Is that because of how shelf space at retailers is organized? It seems like the As Seen on TV products are all on this one particular shelf meaning that products that would normally be in different parts of the store are together.

Trish: Exactly. We have specific real estate in most retailers, not all, but most of the major retailers that are dedicated to As Seen on TV. And that means we actually share the retail space with our competitors. When our competitor has a hit, that promotes and keeps that retail space. And that's something totally unique. A lot of people would be like, ‘Don't you, you know, compete with your competitors?’ Yeah, we do in a way. But when they have a hit, it's good for the entire industry. When any of us have a hit, it keeps that retail space open. The other positive point about retail space for As Seen on TV products is that we get automatic placement. When we go in and see a buyer for the retailers, we say, “this is working on TV.” There's no more sale to sell there. We just automatically get it placed. Whereas if you're in an individual category and you're selling a baking item you might have to compete and try and again and again for that retail space. Let's jump ahead and discuss the submission process. Sometimes, it seems like it can take forever for a company to reply. Your review process seems pretty darn quick. Whether it’s a response of yes, no, let's take a look at it, maybe, let's test it or whatever. Why is that? Trish: We're very organized at Allstar. You know product is King, is the way we look at it. It doesn't matter what the marketing is like if the product isn’t good. So, our product sources mean everything to us and we have a very organized formulaic process internally for looking at hundreds of products weekly. We try our best to get back to everybody in a timely manner. Sometimes we do, sometimes we don't, but we try our best. And then we have internal meetings set up and we have a very strict survey to web test and TV test. We meet weekly to introduce new items and then we survey 18 items a week. this process has been in place for the last seven years; it works. It's kind of a filter. So, I would say it's our organizational process that makes us get back to people in a timely manner. But it seems to me, and correct me if I'm wrong here, it's really fast. So much faster than most companies. Trish: The evaluation of the item? Yes. Trish: We have meetings regularly and we have a very seasoned merchandising team. For example, before I worked here, I was a buyer for

retail and also a buyer for catalog. I've gone on many trips to China. I would say, as many as 45 trips to China. I know product; I've been to thousands of trade shows around the world. So, I know when I see an item if it's a good item or not. We present anywhere from 10 to 15 items to the owners of the company a week. And from there, you know, we do over 150 web tests a year. I’ve heard that this industry believes in selling first and selling fast, and that's one reason why things move pretty quickly with your review process. Is that accurate? Trish: I would say that, yes. Yes, we have to quickly jump on things. So, what are we doing wrong as inventors? Trish: You know, just have a checklist first. Like doing your homework. For example, when we present to the owners of the company we just don't go in and say, ‘Here's an item.’ We go in with statistics, with what's at Wal- Mart that would compete against it, what's at Bed, Bath & Beyond that would compete against it, what's on Amazon. So, do your homework! What else is out there that’s like your item? What makes your item different? Not to sound mean, but we don't really care what your friends think of the item. If you’re serving 10 people in a room and everyone is your friend or family, most people are going to say they like it. And then a short video or a sell sheet. I also need a prototype. I can't work off a drawing or anything like that. And, what is the selling point of the item? What's the pitch? If you had two minutes to present in front of the president of a major company, how would you sell your item? It's kind of negative, the rejection part of this business, but that’s just its nature, the way it is. Some people get that right away and they say, ‘ftank you very much for your time. Anything I can do differently?’ And some people just don't get it. So…Get to the point. Get to the pitch. And do your homework on what else is out there. So, let's talk about the best format for a video. On your website, there are videos of how you’ve pitched previous products that you sell. They are about a minute long and the format is the problem, and then

the solution. It's really about, what are you doing for me? They videos convey that so quickly. Is that what you were talking about earlier — what are you doing for me as a consumer, and how are you making my life easier, better, faster? Is that what you’re looking for? Trish: Definitely. I would call that the deluxe version. But you can just show the function of the item, how the item works. Here's the problem, here's the solution. That kind of thing. We get the kinds of videos you’re describing, which are fantastic. But we don't even need that much. We just want to see what the product is, how it functions. Yeah. And that's about it. If there's any homework as far as cost of goods or material done, any information like that, okay, but a submission doesn't even need that. A video with a wow factor does get a product moving along faster. One of my students, Scott Baumann, liked to develop his videos and marketing material further. Trish: Oh, he did a great job. You know, when somebody brings us a product and there's not a lot of creative assets, we give it to a producer and then we do the test. So that takes longer. Whereas, with what Scott brought in, we were able to test immediately because he had already done all the work. You know, it's funny. Someone once told me, “Yeah we'll just look at a sketch on a napkin.” And I go, "No, now wait a minute." I think that if you're going to do it, do it right meaning spend a little bit of time. Make it easy for you, right? Because if you don't have to build the assets or shoot it and you can take it and show it right then and there, the entire process is just going to move faster. That's what I believe and I think that's what you just said. Trish: Yes, definitely. How important is direct marketing on social media? Is that the future of your industry? Trish: It's definitely an addition. And what's so exciting about it is that there are a lot more opportunities for a lot more items, because we can find and target consumers who might be interested more easily. For example, a cat owner and we're marketing a cat toy. We can find cat owners on Facebook and Instagram and target those people with that cat toy.

Boy, that's pretty amazing, isn't it? Trish: We think of it as a positive. And it's just exploded the last three or four years. Let's say a product comes in, you test it, and for some reason it didn't sell well. And that leaves kind of a bad taste in your mouth. When you see something similar, is that an automatic, no, we are not interested? Trish: We'd have to see how similar it is. Because for us to invest in an item to begin with…you know it could have been timing. For example, a lot of times there'll be an item that sold okay five years ago and now it's huge. ften there are items that sold well 20 years ago that we bring back and now we can't sell one. So, yes, we'll definitely take a look to see how similar it is. Maybe our pitch missed the mark. Timing is everything though. For example, another direct response marketing company is selling a lantern, and we’ve been looking at lanterns and don’t think it’s anything. Then there’s a major storm and hurricane and that particular company has their lantern on the shelf at the right time. So, the answer your question is, we evaluate everything to see how similar it is, or we would just say you know what we lost too much money on that other program and we don't think this item is different enough — we're going to pass. You know, something that I think would help inventors is if companies were clearer on their websites about what kinds of products they are looking for. But they aren’t really. It's almost like you have to read between the lines a little bit. Trish: I think there is a little bit of, we don't want our competitors to know what we're looking for. But I always say that I want to see everything for the most part. We don't want to discourage people from sending in their items. But with that being said, if they did their homework first and had their checklist and had determined what else is out there, then we would receive more qualified items. So, you’re saying there’s no point of difference in much of what you receive.

Trish: Exactly. Exactly! We get sent a lot of items that I look up on Amazon and see 50 other sellers with a similar item. Or you go to WalMart and there's a whole aisle of that product. I see that a lot. How big of a problem is that? Is that the biggest problem, in your opinion? Trish: No. Well, I think it's that and I think it's the development of an item. For our particular needs, because we don't do product development internally and because we're looking for the next best thing. So, we just run through products. We're not going to take 10 products and work on them for the next five years. We have a different model than other companies in that respect. You know, a lot of times inventors have no idea how much their product is actually going to cost. They'll be like, ‘Well, it could be $19.99.” And we're like, ‘The cost of goods is $14 dollars alone, so it has to be a $50 item! Product development and not doing your homework to see what else is out there are the two biggest things. How important is attending trade shows? Trish: Very important. That's how I learn everything. I just came back from a show in Dallas. I went to another show in New York yesterday. Trade shows are great, especially the International Home + Houseware Show in Chicago every March. You see so much great product. You can talk to the experts there who are pitching the items. You can watch people pitching their items, product demonstrations, and just see what else is out there. So that’s very, very important. What about patents and trademarks? Are those important to you? Trish: No, not to us. We will work on an item whether it has a patent or not. And if we decide to go forward, we will help that inventor get their patent and it will be a patent in the U.S. and in China because that benefits us as well. Okay, let me recap. Allstar is open, you want to see a lot of different things, and you don't want to discourage us because you never know what you're going to find. I need to make sure that I've done enough homework and searched for similar products on the internet. I need to

make sure my product has a point of difference and there's not too many similar ideas like it. And it needs a wow factor. Trish: Yes. And if I've done a little bit of homework in terms of costs, like getting a quote from a manufacturer to make sure that it can be made at the right price point, that’s helpful also. Trish: Yes. And I need a working prototype that establishes proof of concept. So, you can see it. You can see it works. Trish: Yes. And a great video. One that explains, maybe shows the problem that people identify with, but then quickly shows a clear benefit that has a large market. Am I hitting these points correctly? Trish: Yes. Definitely. Is there anything else you can think of that inventors should not do? That puts a bad taste in your mouth? Trish: Don't get discouraged. Try not to be discouraged. It might not be right for direct-response, but you may have a great item. Knowledge is power. So just study the market. Know what else is out there and how your item compares to it. That kind of thing. You really wrapped it up nicely. What’s very unique about this industry is that they sell in all categories. As Trish said, it’s an item business. And because these items have proven success on TV or in digital marketing, they get placed in a certain dedicated spot at retail. What’s also unusual about this industry is that when a competitor is successful, they all benefit, because consumers are driven to the retail spot where their products are sold too. This industry completely relies on outside product submissions. They don’t to do any internal product development. So indeed, product is King. Privately, I’ve been told that most successful products don’t come in through the portal. They come in through established relationships with professional inventors. With online portals, it’s like finding a needle in a haystack I’ve been told more than once.

I’ve also been told that employees have an obligation to bring in a minimum number of new ideas to the table each week, like 10. Please be aware, this is a very competitive industry. They don’t care where they find an idea. It could be at a state fair, from crowdfunding, or submitted by an individual who is not even the inventor. A mantra is “sell first and sell fast.” The selling cycle is fairly short; their distribution is excellent. Every once in a while, a product becomes an evergreen, but it’s not common. Intellectual property is not important because of the short selling cycle. This is also a very small industry. I’ve been told on many occasions that it’s wise not submit to multiple companies at once — it’s better to submit your idea to one company at a time. They’re very familiar with their competition. This is not an industry where you tell a company, “No,” and they don’t proceed anyway. I’d also like to point out that you can control more of how your product is pitched if you provide them with all of the necessary assets to test your product quickly. I highly recommend going a little bit further with your product for that reason. Show off the wow factor. Get to the point quickly; they’ll appreciate it. Once again, digital marketing has opened up new opportunities for inventors. They can target a specific kind of consumer — which is great news for us, because no longer does every item they agree to license have to have the potential to do huge volumes. There’s a greater range of acceptable price points as a result as well; from $59.99 and down. Basically, they’re looking at a wider range of products than they once did. As you do your homework, develop an understanding of manufacturing costs. That can be important. Remember the 5 to 1 ratio. If something costs five dollars to make it will have to be priced $25 at retail.

HOSPITALITY

DAVID MIDDLEBERG Director of Global Sourcing for Star Linen USA and Star Linen UK Star Linen USA and Star Linen UK are sister companies that service both the hospitality and healthcare industries; specifically, hotels and nursing homes. Their products are used by the full spectrum of hotel groups, from lower-end motels all the way up to five and six-star properties. What do you do? David: My job is to provide all of the products that we sell. We have offices in India, Pakistan, China, Cambodia and Bangladesh. We have associate sourcing in Portugal, Brazil, Mexico and Poland. We're constantly on the lookout for what's new and what's different. Our industry is not one that lends itself to fancy, if you will. Most of what I buy is white. White sheets, white towels, white blankets and white pillows. When we go wild and crazy, we buy some beige. But there's a constant need for products that are more efficient, more durable, and that can provide benefits to the property. Whether that’s in terms of cost savings or being environmentally sound; lower carbon footprints are becoming much, much more important. We're constantly looking for products and innovators in those areas. Simple things because it's about speed and ease. Two the things that hoteliers look for are ways to reduce their labor costs and make the workplace safer for their staff and for their guests. Here's an example that came in from a suggestion from one of our manufacturers: it was to center our product labels on our sheets. Everyone used to put their labels in the corner but if you’re making a bed and put the fitted sheet on the wrong way then you’ve got to switch it around. If the

label is in the dead center you know exactly where it is and you can put the sheet on the bed the right way the first time. Same thing with the flat sheet. When flat sheets have a label in their center, all you have to do is pull it to one side and then the other to get it even. You can center the sheet very easily. It sounds like a simple thing but imagine for a moment that you're a housekeeper and you're making hundreds of beds every day. That simple label placement reduced labor costs by 37 and a half percent! Now making a bed is that much quicker. There’s no more spinning of the fitted sheet. It’s much quicker to make a bed if the sheet is centered. There's no more spinning of a fitted sheet. Nice. So, your company is inventor-friendly. David: Oh yeah. Has your company always looked to outside inventors for innovation? David: Absolutely. I spend most of my time traveling and in factories. The truth is, with computers and all the internet technology available today, you could do this job from your office desk. But when you're in a factory and you're sitting in someone else’s office, you might see a little gadget on their desk and go, "Wait a minute, what's that?" And you can’t see that unless you're there. For example, in Pakistan about two years ago, when I went into the office of a factory owner there was another gentleman sitting there. We sat down and began talking. Turns out the guy had developed a way to make a biodegradable plastic packaging! Now, in our business, we don't do fancy packaging like you see for retail on sheets and towels. We use a simple polybag and put it in a carton and bulk pack it; there's no presentation. Someone will call me and want to order 10,000 sheets or 50,000 towels. But the volume of plastic required is huge. It’s a nightmare. This inventor had developed a product that didn’t require the same degree of sun and water to make and in a regular landfill it degrades within a year. When someone comes to you with a new innovation that saves time, which is money, how important are manufacturing costs? David: Well, we're in a commodity business. When we get a green product, the first thing the hotelier is going to ask me is, “How much is it?”

That's the first thing, because it's a tight market. Remember that people are using the internet to book hotel rooms now. Consumers can easily compare prices. The cost of a room is being pressed down constantly so these businesses need to reduce their costs too. And they want better products. They want more efficient products. At the same time they have to very careful about their expenditures. In a competitive marketplace you have to keep costs down. And that part of it I consider my job. I love working with brilliant people who create an idea out of nowhere like your student Karen. My job is to take that great idea and make it into something that can be manufactured in mass production that is economically viable. What do you need to see? Is proof of concept needed? David: Videos are cool. But people don’t have to invest to that degree. We're not in the bells and whistles business. Time is limited. I don’t really need presentation materials. I need to see the product. The hospitality industry includes restaurants as well as hotels. Most inventors are not focusing on this industry but the opportunity is huge! Time is money. If you can show these companies how to save time without increasing the price point of a product you have a hit on your hands. Be very careful here. If your product requires education, that's going to potentially be a problem. Basically, your invention needs to be simple and easily demonstrable. I’ve had three students achieve success in this particular category now. And every one of their products showed their customer, either a hotel or restaurant, how they would save time.

SPORTS MEDICINE

DONALD BUSHBY Inventor of FasciaDerm, inventRight student, and Global Lead Electrical Engineer for Exxon Mobil FasciaDerm utilizes a combination of advanced materials and a specialized no-slip adhesive to directly support the foot and reduce damaging strain in the plantar fascia. “Say goodbye to heel pain.” What is the category your product is in and what is it called? Donald: The product is called FasciaDerm. It goes by two brand names actually, FasciaDerm and PF Tape. It's in the foot care category. Which trade shows does it fit in? Sports medicine? Medical? Donald: Sports medicine is the trade show where you would find it. It’s sold directly to sports medicine practitioners and over the counter in Walgreens and Walmart — more than 15,000 stores in total. Was it hard to license in this industry? Donald: Yes, it was a real challenge. The whole thing was a challenge. I think what helps in licensing is not just having a patent and not just even having a prototype but having a finished, manufactured product and particularly proof of sell-ability that lowers the barriers. What you're really trying to do is de-risk the venture for whoever's going to take it. Tips and advice for someone starting out? Donald: Always design for the marketplace. In other words, solve a big enough problem. Solve a big enough need in a unique enough way and have some level of confidence that the problem is big enough that someone will want to take it as a licensee. It helps in the very beginning to think as you're inventing, "What company could be a potential target for licensing this product? Is there a

company that this would fit with or a category of companies this would fit with?" Start with that in the very beginning as you're solving your problem and you're developing a product. Make sure there's a category it fits in and companies in that category would be open to that type of thing. How long did it take you to license it Donald? Donald: Well, it’s a long story. I made the error of waiting for the patents to issue. So, nine years. I fought with the Patent Office for nine years. It’s a very troubled story that I waited that long and had to fight that long to get the patents. Would you have done it differently knowing what you know now? Donald: Oh yeah, definitely. Definitely. You want to file for protection and develop that sense of perceived ownership that you talk about and then go and engage early. There are important takeaways from this interview. You can have a demanding fulltime job and still license a product. Don’t wait for your patent to issue to take action; there’s no need. In this industry having some kind of test results is an absolute must. The opportunity in sports medicine is huge when you consider the distribution.

MUSIC

JUSTIN NORVELL Executive Vice President of Product at Fender Musical Instruments Corp. Justin Norvell is a lifelong musician who has worked for Fender for a quarter century. As Executive Vice President of Product at Fender, he's tasked with a seemingly impossible challenge, which is how to keep innovating a heritage product, one that consumers strongly identify with. Fender's most famous electric guitar, the Stratocaster, debuted on the market in 1954. Today it's essentially unchanged. Norvell began working for Fender shortly after graduating from college while pursuing music professionally as a guitarist. Eventually, what he once considered a day job became his real job. He got emotional describing the unique relationship between guitars and the musicians who play them. He pointed out, "You sit behind a set of drums at a distance. You sit behind a keyboard at distance. Even a laptop or sampler but a guitar you wear, put on your body, and hold against yourself. It's a fashion decision. It's a statement of who you are. It becomes more a part of you than any other instrument... I think that's a magic thing that the guitar does." How did Fender disrupt the guitar making industry? Justin: He really looked at the guitar and thought, “I want something to work, to be easy to manufacture, and easy to fix.” He famously said, “If I have 100 bucks to make something, I'll spend $1.00 making it pretty, and $99.00 making it work.” That was his ethos and literally he kind of Henry Ford-ized the idea of the guitar-making process because until then it was much more artisanal. When guitarists saw the first Stratocaster they thought it looked like it was from space because it had that futuristic, mid-century, auto-inspired look. It was all curvy and contours and eventually it was produced in the

bright car colors of the day. To them it was such a different thing, so different from what a guitar was supposed to be. What is production like today? Justin: No matter how much technology and laser cutters are used, there's so much in guitar production that's ergonomic and feel-related. It's all hand sanding, the things that you just have to eye, and as you fit the guitar together it's such a system. Machinery helps keep things consistent. But there's probably about 150 hand processes in every guitar that we make. Guitar making is a combination of art and science. And we also are still using a lot of the machines, tools, and dyes that go back to the '50s and '60s. The average guitar takes about a month, from beginning to end, not including the time it takes to season wood. How does Fender approach innovation? Justin: We are blessed with iconic designs. So, we have to look at everything that's great about the silhouettes and all the things that people love, but then also ask, what else can we change inside of that? And as technology improves and as tolerances improve, we can continue making things better by using different materials. People use titanium on bridges and there's different materials for the nuts, and new locking keys. On our newer series, the Ultra Series, we have new noiseless pickups. Fender pickups are known for emitting a 60-cycle hum when they play. They're the best sounding pickups; however, because they're single-coil and they're not hum-canceling they hum a little bit. So, we solved for that. And a lot of what we do innovation-wise is solving for eliminating variables and tolerances. Really, we just break a guitar down into its simplest parts and we look at the whole system and see how it works together and how we can make it better. We don't change it for change's sake. It's got to matter. It's got to affect the playability. How important is player feedback? Justin: It totally helps and to go back to the Leo stories of the '50s… what kind of started him on his journey was he was a radio repair service and then people with amplifiers would come and he would repair those. A musician started hanging out at the shop. The Telecaster (the first Fender

guitar) became the Stratocaster because this guy, Bill Carson, that I had the pleasure of knowing was an artist who hung out there. And he was like, "Well, this guitar kind of digs in my ribs and I wish it had another pickup and some more options." All of those pieces of very practical feedback led to the evolution and the design. We have our main offices right on Sunset Boulevard in L.A. where we are within a couple hundred yards of probably five major studios. Bands come running over to borrow amps when they need them. We go over there and we check stuff out. People are always coming through. With the Ultra Series that we just released, we brought a couple dozen artists through and just got their natural feedback because our instruments have to work not only in the isolation of our R&D shop. It has to be studio, stage, home, for every practical usage and the artists are the Super User that gives it the most testing. The Ultra Series became a mission to take Fender into the future. We're 73 years old now and it's like, "What's the next 70 years look like?” We don't want to become a company that just drives in the rearview mirror so we're pushing the envelope forward. And what about intellectual property? Justin: I think it's super important and we continue to pursue it. When we're able to come up with something that's useful and that has not been done before and is ours, I think that that's a point of differentiation and a hallmark for the brand as a company — trying to continue to develop new ways, new sounds, new solutions. Are you open to independent inventors? Can they submit their ideas to you? Justin: People on the outside do come to R&D. There's stuff we're working on right now that's come from the outside that hasn't been released yet that we're really excited about. Over the years there have been a ton of things that we've had come through those types of channels. We've had things come from artists as well, there are times when they have an idea or part of an idea. So, yes. I think good ideas come from all kinds of different places and we're always wide open on all of them. Many people are under the impression you have to be an expert to come up with a novel innovation. In reality, that could not be further from the

truth. Non-experts are able to see and envision what experts are often too close to. For example, look no further than Fender's founding. Leo Fender did not invent the first electric guitar, nor the first solidbody electric guitar. At the time, hollow body electric guitars were favored by jazz guitarists. He was the first to modernize electric guitars, ushering guitar making into the 20th century. In other words, Fender created the idea of the mass-produced electric guitar. The fact that he was not a musician let alone a guitarist is no coincidence. A radio repairman by trade, Fender disrupted the guitar making industry by approaching everything from a serviceability standpoint, and not that of a typical luthier. He attached the neck of the guitar to the body with screws, defying conventional wisdom, and in the process solved the problem of neck warping. The result was no less than groundbreaking.

BOB KASHA President of Ahead Products Inc. and Owner of Big Bang Distribution Bob has been in the music industry since 1976. He was a drum teacher for 15 years and owned two retail music stores for another 16 years. Five years after helping to develop a drumstick for a sporting goods company, he founded his own music accessories company – Ahead Products Inc. – based on that drumstick. Today Big Bang Distribution ships about 2,000 different products (all drum related) to 1,500 stores in the United States, as well as 75 other countries. Bob is also an inventor who has half a dozen patents issued in his name. Do you work with inventors and outside product developers? Bob: Yes. We do a lot of inventing here ourselves and I have also licensed products from other outside inventors. During the year, anywhere from 20 to 30 inventors approach us with their ideas. I will sign a nondisclosure agreement (NDA) and tell them either that I’d like to help them develop the idea or to not waste their money moving forward. I want to help people make good decisions. If we want to develop the idea we sign a licensing agreement. What’s required to submit a product to you? Prototype, drawing, video? Bob: Any of those will work. When someone has a prototype – if they’ve built something that functions – that really helps, even if it’s made out of tinker toys. If we can get an idea of how it works, how it functions, and it’s something useful, we proceed. Being in retail for so many years, I know what customers want. I have a very good idea. I’ve been exhibiting at NAMM, the music industry trade show, for more than 35 years. That’s made me really familiar with the industry.

How long does your evaluation process take? Bob: We’re pretty fast at what we do. I can usually tell immediately if it’s a good fit or not. For this industry and our customers, the idea needs to be really easy to understand right away. That’s important. I try to be blunt with inventors. It takes guts to call me. If they have enough guts to do that, I have enough guts to tell them how I really feel. We have developed quite a few innovative products that have done really well. We try to be as creative as possible here by expanding our product line. Over the years, I’ve probably been approached with 200 ideas and ended up licensing seven. We’re in a niche market. Everyone in the industry sends ideas my way, including the magazines and Guitar Center. Our main focus was drum accessories when we started but now that’s evolved. Can you explain more about your review process? Bob: I’m the gatekeeper. I will sign an NDA and I won’t show the idea to anyone else here without permission from the inventor. Then I might say, “I’m very interested in doing this, can I show this to my team?” We have five full time drummers on staff. If the idea is already protected, I might send it to them for their take. How important is intellectual property to you? Bob: It really depends. You have to look at the product and the numbers. If we’re only going to make 50 cents per unit on this item and sell about a thousand of them, is it worth it to file a patent? That’s the way I look at it. I’ve been in patent infringement lawsuits. I know what they cost. No one wins except the attorneys who you’re paying $700-$800 an hour. I know how many units I’m going to sell. In our industry there aren’t products that explode overnight. So, is it worth it? Sometimes you have to draw a line. I like innovative ideas. Sometimes just one new innovative idea can bring a higher level of class to your entire product assortment. What I mean by that is, product association is powerful. That plays into my consideration when licensing an idea. ften again, some ideas I’ve come across that I thought were the dumbest thing ever, people love. You never know.

Is it important for inventors to attend trade shows? Bob: I recommend communicating with music industry magazines, going to the shows, and talking to people who have been in industry for long time, to people who have seen it all. This is a niche industry. You see the same people at the shows every year. The badges may change, but the names don’t. It’s a small community and a lot of fun. What are your tips and advice for inventors? Bob: Don’t invent to invent. Focus on needs, on fixes. A new product should enhance something, make life better, result in better sound, make it so a drummer can play faster, or their stick rebounds better. And so on. I see ideas that are copies of other things all the time. I’m not going to sell something someone else is selling. I see a lot of that. What are inventors doing wrong in your opinion? Bob: The y’re too emotionally attached to their ideas. They don’t step back and make sense out of them. They need to be more of a business person about their ideas. Looking back, I had a blast in this industry. Everyone was extremely kind. Once again, your product idea needs to be extremely easy to understand and demonstratable. If the benefit is great enough and easy to understand, a homemade prototype and even a sketch on a napkin will be enough. I like Bob’s attitude. He’s going to give you feedback which is exactly what you need. What I’ve learned is that the smaller the company the more willing they are to sign an NDA. But please realize that NDAs are not federal, meaning there are different rules governing NDAs state by state. In most situations, if you file intellectual property, I think you’re going to be okay. This is a good time to remind you that this is not legal advice, it’s business advice — I am not an attorney. Each company has its own perspective on intellectual property. Everyone believes that if you have a product idea that’s going to generate huge volumes of revenue intellectual property is probably a pretty good thing. To be on the safe side, I would always file a provisional patent application (PPA). I would also always ask at the very beginning, “How

important is intellectual property?” This should supply you with enough information to decide how to proceed. Trade shows are important. Like Richard Levy says, it’s what you know and who you know. The music industry is very small. Don’t burn any bridges. Make as many friends as you can! Always be willing to take feedback so you create products people need. Make sure to do your homework on similar products.

KITCHEN

BRENDAN BAUER AND HILTON BLIEDEN Co-Founders Grand Fusion Housewares, Inc. Grand Fusion Housewares was founded by a small group of housewares industry veterans with the goal of bringing a combination of innovation, design, and quality to product categories they are passionate about. The “Our Story” section of their website reads, “Our team searches the globe to bring our customers innovative products of the highest quality at an affordable price. Our passion is finding products that will help make your life better. We also work with a talented group of product designers and we welcome innovative new ideas from inventors who are looking for a partner to help bring their products to market.” How quickly are you able to get back to inventors? Brendan: One thing that we will try to do is we try to get feedback from customers quickly. If an item, if for some reason we don't feel like it's going to get traction it's not going to work, or we can't figure out the costing we try to very quickly let the inventor know and give it back. I think the worst thing that you can do as a company is tie someone’s idea up for a long time and not really be doing anything with it. We're trying to walk a fine line right now in terms of not taking on more products than we can launch at one time because we are still a small company. As inventors, we really appreciate that. Brendan: I try to be honest with people and let them know why it's not working for us for whatever reason. Usually, it's not a surprise. Usually, they're pretty involved in the back and forth when we're trying to do the

initial vetting. We can talk about that process a little bit more as well. We've got a rhythm that we've established. We try to do a lot of vetting before we even put an agreement in place just because there's so much work involved with doing the deal. You might as well do your due diligence first and make sure that it's going to be a good marriage. Is that code for don't act like a crazy inventor? Brendan: We do often get an idea that we all as a group look at and say, "Hey, that's a really clever idea but, candidly, I don't know where to go with it." Or it's in the wrong department. Or someone says, "I don't know the buyers." Maybe it's too big, whatever. Sometimes there's just things that for whatever reason don't fit with our product line that we think are awesome ideas. They just don't work out. Hilton: Just to put it in perspective, I think sometimes these things can literally take a year to two years before it develops and it just depends on the timing of when the buyers need stuff. It can really take a long time. We could literally set up a company account this month and they may buy from us next July. Sometimes even when a buyer loves a product it may take a long time before they actually commit. That's very important to understand. It just takes time to get it out there depending on our customer. Some customers take a lot longer than others. It's just something inventors really need to understand. Brendan: Tha t also comes into play when we talk about seasonality and what we look for in an item as well. We're taking on some items from inventors that are really more spring and summer type items. Those are very challenging. They can be successful but it's always nice when you have something like a spatula. It's an everyday item. You call it evergreen. People use it year-round. They buy it year-round. When you get that item in, if it sells well, it becomes an annuity. Let me pull back the curtain. That’s literally where we’re at with a spatula we licensed from Paul Sorenson, inventRight Senior Coach and Chief Negotiator. We've got some early movers that are putting it into the stores and making commitments. Now we're waiting on the sell-through. If we get some good sell-through we start to get reorders and the buyers say,

"Hey, yeah. This item's great. It's selling." Give me another year or two and we'll have that everywhere. ftat's the process that it goes through. Then on the negative side if you get an item placed in five or six chains and everywhere it goes it doesn't sell, that's probably when we're going to make that hard phone call, come back to you and say, "Hey, look. We're doing something wrong. Either we've got the packaging wrong, the price point, or this item is just not resonating." We can try to tweak it and save it or if we think that it's just beyond repair then we'll give it back at that point. There is a misconception that you sign an agreement and you can quit your job. That's just, even with a home run, it doesn't happen that fast. Brendan: Yeah. I mean, candidly, the home runs are the ones that you really get into everywhere. That's one of the criteria that we look for when we get an item submitted to us. When you evaluate your idea think a little bit about “Can this item be sold in all these kinds of stores?” Speaking from our perspective, if the item can be sold in a bunch of different types of chains and different channels then you've got a lot of people you can go to. It's a math game. Whereas, if the item is something that can only be sold to Bed, Bath, & Beyond and a couple of other people on our account list, well, if we get one or two no’s then we're going to be out — we've already tried and failed. We know it's just not going to go. A lot of times if you sell it to Bed, Bath & Beyond then you really can't sell it to Wal-Mart because Bed, Bath & Beyond gets upset that Wal-Mart's at a lower price. You have to channel differentiate. There are all these nuances that we have to work through on our end in terms of, "Hey, if I sell this guy, I can't sell that guy because this guy's bigger and he's going to get upset." There's a lot of subtleties involved. The more people on our list that we can take an item to the better chance that we have of not only getting it tested but of turning it into a really high-velocity item. That's going to be one of the questions that we're asking when we're evaluating the item to begin with. I appreciate your approach to working with inventors. Brendan: Well, we need to appreciate what they bring us too because I can't emphasize enough how important the innovation is. To build a company that people want to do business with, one of the most important

things is to bring the buyers things that they haven't seen before, and a steady flow at that! If you keep doing that items are going to start to stick. They're going to start to sell through. You're going to get more face time and the business will grow. We're really excited about the number of ideas that we're getting sent to us. We feel really fortunate to be on the list. Sometimes you're going to get a slow response from us because we're getting busy and we're growing. But we really do welcome the ideas. There's a certain amount of trust that's involved. When someone brings us an idea, if we like it, a lot of times we'll explain to them how we work and how the royalty works and everything else. Then we'll ask them, "If you don't mind, can we take it to a factory that we trust?" Or get an NDA signed or something to take it out and get some quotes. If the tooling comes back or the unit cost comes back we do our market analysis and we just think we can't compete then that's often the situation where we just say, "Hey, look. We really like this but we're struggling. We can't make it work. We're happy to share any intel or anything else that we've developed in the process. It's just not a fit for us.” This is a seasoned team of industry experts who have started a new business and are willing to pull back the curtain on their process for all of us because they're starting out. They’re willing to look at products in many different categories. Costing once again is always important. Establishing a good relationship is critical as well. I’ve enjoyed getting to know Grand Fusion Housewares over the past couple of years. They’re very inventor-friendly and they know what they’re doing. I like that they include a photo of the inventor next to the product on their website and posts on social media. This interview clearly explains why we as inventors are very important to companies. Companies must keep innovating to stay competitive.

AUTOMOTIVE

ATUL H. PATEL Former Product Development Manager with 15 years of experience in the auto industry at Bosch, General Motors, and Daimler, three of the largest companies in the industry! Atul has 15 years of experience mostly related to the automotive industry including working at Fortune 500 companies where he was responsible for hundreds of products. First, he was a mechanical engineer; then he migrated over to marketing, sales, and product management. The Bosch Group established a regional presence in 1906 in North America and employs 35,000 associates in more than 100 locations as of 2018. According to preliminary figures in 2018, Bosch generated sales of $14.5 billion in the U.S., Canada and Mexico. General Motors, commonly referred to as GM, is an American multinational corporation headquartered in Detroit. The company is the largest American automobile manufacturer and one the world’s largest. As of 2018, General Motors is ranked number 10 on the Fortune 500 ranking of the largest US corporations by total revenue. Daimler is a German multinational automobile corporation generating about $200 billion dollars a year. What is the role of a Product Development Manager? Atul: The part of marketing no one knows about! It varies widely and can include everything from making sure a shipment has reached its destination, hounding the manufacturing team to get stuff built, doing

market research, working trade shows, pricing to advertising budgets. It's all over the place basically and it's one of the more stressful positions because responsibility for a product has to end somewhere but there's only so much you can personally do. How often did new product ideas land on your desk? How did they get there? Atul: On average I'd see something about once a month. Sometimes inventors found my email from business cards I gave out at trade shows. Product Specialists reviewed idea submissions from our online portal and brought good leads to Product Development Managers. What happened next when you liked a new product idea? Atul: If I believed in an idea, I'd run it by our salespeople, other product managers, and engineers. Their feedback would help me determine whether to pitch a project on it or not. Then I'd begin building a business case around it including prototyping and pricing. I'd also run it by some of our big customers as a sneak peek in presentations. How much of an investment we would have to make was a big consideration. If I could operate under the radar especially with testing that helped. The design process is iterative: re-design and repeat. Some prototypes can be made for hundreds of dollars by bending steel and making use of existing materials. If a new product idea required new tools to be made that could cost tens of thousands of dollars. So, the amount of engineering time needed was part of the equation. Product development managers constantly have to put out fires with production or quality issues and are often forced by management to prioritize other projects. That takes time away from inventions. How did you analyze a new product idea submission? Atul: If the invention was risky and different it was a more difficult sell. We probably wouldn't invest early. An improvement to an existing product was a no-brainer. If you're already selling 300,000 units a year of this product and the improvement could boost that number boost by 30 percent; well, that's worth spending another $50,000. Why do large companies move so slowly even when they're interested?

Atul: The re are lots of times when you're stuck waiting on someone else or some other part of the product development process. You may want to give all your attention to this great idea; but in the meantime, you don't know what to tell the inventor even an inventor you like and respect. Depending on who leaves and who is hired to replace them, reviewing and supporting outside submissions can fall by the wayside. What mistakes do inventors make when submitting their inventions in your experience? Atul: Some don't even do basic research. Nowadays, it is so easy to search for prior art. If I can find the exact same thing in a patent quickly, that doesn't show well. How can inventors help their chances of success? Atul: By being reasonable. Try to understand what it takes to develop the product you're pitching and then you'll understand more of what is going on. For example, make sure you have some basic knowledge of how to make the product and your competition. Inventors should also pay attention to costs. There are hidden costs of doing business at large companies which is one reason why they are so risk- averse. Learn more about their cost structure and cost structures in the industry at large. It could be the best product in the world but it will be cancelled if everyone involved cannot make enough money. Do a really good job of building up a case for your product. For example, an inventor I worked with supplied me with quotes and testimonials about how useful and needed his invention was. I used those in my presentation to management. Consider how the Product Development Manager will sell your invention. If you can make their job easier, that's going to make a big difference. If the inventor hadn't had such good marketing materials, I most likely would not have moved forward. Please take this interview to heart! Product Managers are the most important people for moving your product from point A to point B. They are responsible for all of it and that typically means they are extremely busy and very hard to get a hold of. If you do find a Product Manager who’s willing to champion your idea, Congratulations! You must provide them with the right tools to sell your product submission to management and that definitely includes a great sell sheet and video. Any

proof of demand can be also extremely helpful and of course costing will play a big part again. We’ve heard multiple times how important it is to have well thought out marketing materials and something that separates you from the amateurs. The goal here is to make their job as easy as you can and provide something that they can show to retail buyers, engineers, sales people etc. Most very large automotive companies are very hard to get to but in this particular case they do have an invention submission form that’s easy to find. Amazing! I’ve also been told when you’re reaching out to some of the big players one of the best ways to get in contact is not through their online portal but in person at trade shows. These large companies move extremely slowly so you need to be patient. Also, intellectual property is an absolute must with these giants.

GOLF

SIMON TOUMA Attorney and Inventor Simon Touma is an inventor and a 35-year-old attorney who owns his own practice. He currently lives outside of Phoenix, Arizona, and he started developing products a few years ago. After taking advantage of the educational resources created by inventRight, he licensed his simple improvement on the golf brush. So far, he’s successfully brought one product to market, but he intends to work on some others and bring those to market, if time permits, because it's something that he really enjoys doing. Simon has a solo law practice where he practices general law and he enjoys that challenge as well. Tell us a little bit about how you invented your first product. Simon: Really what started the process was when I read an article that you wrote and became intrigued with the product licensing field, you could say. So, I looked at some industries that I might be interested in and I looked at the different types of products, different product lines, where companies had been in the past, and where their innovation had brought them to in the present. I started off in hardware. I tried to redesign a hammer. Then I looked at some other industries like kitchen and sporting goods. I just tried to mess with various products and change them and make them better; products like toothpaste tubes, floss, dust pans, and brooms. I tried to make little changes to them. I enjoy playing golf as I mentioned. When I came across a golf brush, I thought to myself, these bristles are really sharp. The brush just hangs off of your bag. It can catch onto your clothes, tear your clothes, and scratch you. I said, “Why not have a folding golf brush? Why not hide the bristles?" I sketched out a little design where it was essentially a pocket

knife type of design and I had the head of the brush fold into the handle and that's sort of how I came up with my idea. It's called the Flip 'N' Pure Brush. Nice. Simon: I had some other names for it, but it turns out that some of those names were trademarked in other industries. I was advised that it was probably best to steer away from those; to not cause any issues. So that's what I did, I changed the name. Well, your product is very easy to find. Congratulations. Simon: Tha nk you very much. When did you license this idea and who did you license it to? Simon: I licensed it sometime in 2018 to a manufacturer based out of Wisconsin called Golf Gifts and Gallery. They were actually a company that I found by way of speaking to another potential licensee. They were a recommendation, or a referral, if you will. They were not a company that I found on my own. So, it actually worked out to my benefit to call the plethora of different companies and talk to these companies and get their opinion about things and the product and if there were other companies that might be interested if they themselves were not interested. That's how it worked out. How did companies treat you when you reached out to them? Simon: I thought they treated me pretty well, actually. For the most part, a lot of companies that liked the product or didn't like it were still willing to talk to me. There were very few companies who were, I'd say, short. Maybe they were busy. They just weren't interested. But I'd say, for the most part, companies treated me pretty well. A lot of the folks that were not interested gave me invaluable information on how to proceed. In fact, some of the companies I called gave me recommendations about how I could make the product better and they actually suggested other companies that I could contact for more insight on prototyping or design services. A lot of the companies I'd say were very helpful. That's very nice to hear. How did you find these companies? Did you go down to the golf store? Did you look on the internet? Simon: I did both of those things. I looked on the internet. I certainly went to a bunch of different golf shops. I looked at the back of packaging.

I looked at who the distributors were. I asked questions when I called companies. I got on the internet and I went to ftomas.net and I started looking up golf accessory manufacturers, golf manufacturers, and accessory manufacturers. I looked up contract manufacturers. I called anyone who basically came remotely close to manufacturing a brush or a plastic item. Did you file any intellectual property? Simon: I did. I ended up filing a design patent, which issued this year back in August, I believe. So yes, the golf brush is fully patented. You had mentioned you did a sketch. Did you actually build a prototype or not? Simon: I did not personally build a prototype. I had a sell sheet and I sent that sell sheet to companies. The company that I was working with built several prototypes for me. We went back and forth. Each prototype probably took anywhere between 30 and 45 days, give or take. We refined the prototype over a year’s period of time. Then, even when they had market samples ready to go, we still refined the spring on the inside of the handle. They probably sent me five or six prototypes. After that I think we refined the market samples two times. So yes, they created the mold. They pretty much did everything. We worked together to refine it. We had some issues initially with having the brush fold all the way down into the handle. We made the cavity a little deeper and shortened up the bristles, which also helped with keeping them stiff and lasting longer as opposed to bending and folding over and not getting into the groove. Just for clarification, what does the Flip 'N' Pure clean? Simon: Its main purpose is to clean the grooves on the club. I think you could probably clean the ball with the nylon or synthetic bristle side. But it's mainly for the clubs. The stiffer sides are for irons and the nylon side/synthetic side is for your fairway woods, hybrids, stuff like that. So was your experience with licensing pretty positive? Yes or no? Simon: Oh, absolutely, very positive. What a great story.

Simon: No problem, Stephen. I appreciate all the insight that you've shared with people, whether that be through your articles, your books, and your videos on YouTube, which are invaluable. These resources certainly guided my entire process. It's just a matter of really going out there and doing it, talking to people, and asking questions. You'll find that the vast majority of the time, people are more than happy to help you out. Once you start gaining some momentum, the sky's the limit. It's just a matter of doing it. I'd like to thank you for providing all the information that you've obtained over the years and sharing that with folks. Well, thank you very much. One question, did you ever attend a trade show in the golf industry? Simon: No, I did not. I’ve wanted to attend the PGA Merchandise Show that happens at the end of January actually for two years in a row now. I just haven't made it down there yet. Simon broke all the rules. No prototype, no utility patent. He didn’t even attend a trade show. He just saw a problem and came up with a very simple solution. He made a small improvement on an existing idea. With licensing, every situation is a little bit different. Every company has different requirements. This story illustrates the bare minimum to license an idea. Nice work Simon!

ED HOLDA Vice President of Sales and Marketing at Golf Gifts & Gallery Ed has nearly four decades of experience in the golf industry, mainly related to sales. The company he current works for sells an assortment of golf products including accessories, carts, travel covers, golf bags, golf sets, and golf balls. He answered my questions in an email. You work with outside inventors? Ed: On occasion. We will look at many products throughout the year. I am sorry to say that what most inventors think will sell, won’t sell. A golfer friend, local pro or someone at a golf store thought it was a good idea and right away the person thinks they have the best thing since sliced bread. We had an inventor stop by the PGA show one time and said he had the greatest idea for determining the wind direction on the golf course. He asked if we wanted to see a presentation. We had time so we asked him to show us. He took a bottle out of his pocket, dipped a wand into the solution, and proceeded to blow bubbles. He was dead serious! What is the best way to present a product to your company? Ed: Send in a sample or prototype. And how important is intellectual property, such as patents? Ed: Depends on the product. If it is a golf tee, not important. If it is very unique and has a special use, very important if actually in place. And how important is it for inventors to attend trade shows? Ed: To be honest, when we exhibit at trade shows, we want to speak to customers. So, I feel it is a waste of time. Some companies with larger staffs of product development people that are in attendance might think differently.

Why did you license the Flip-N-Pure brush? Ed: It is a unique brush, very functional and versatile.

ORGANIZATION

JEFF GAWRONSKI Founder of Dorm Company Corporation and Byourbed.com Jeff Gawronski is an inventor and the founder of Dorm Company Corporation, which is on track to do $12 million in revenue this year. He started the company in 2010 selling college dorm room supplies and has since expanded out to bedding of all sizes. Today DormCo products are sold on its own website as well as pretty much every other third-party site out there! Jeff licensed four products from Courtney Laschkewitsch, an inventRight student and Managing Director of Inventors Groups of America. Let's talk a little bit about your industry. What category are you in? What types of trade show do you go to? Jeff: You know, we really don't fit in a category. There is no trade show for college dorm supplies. There is a college bookstore trade show but we haven't attended that in a decade. A lot of college bookstores got swallowed up by big players so there aren’t a ton of independent stores left and that’s who this show was for. Beyond that, there really isn't a trade show that we've attended. We’ve been selling all direct to consumer online. We don't even do wholesale typically any more other than on minimal case by case basis. Back in the day we sold to Bed Bath & Beyond, Container Stores, and others wholesalers, but not so much anymore. It's all direct to consumer online. Do you work with inventors? Jeff: Yes. I love working with inventors. I mean, that’s how I started with one product, one idea. I was in a college dorm room and I needed a place to put my alarm clock and so I built a bedpost shelf out of wood and made extra. I sold them and got chased off campus for soliciting and the

rest is history, as they say. With that one product I ordered 10,000 units from China and had to drive around the entire country until I sold them all. I basically lived out of my car doing that. After getting my breaks and making my way to launch thousands and thousands of items, I have a very soft spot for people starting off with one niche idea or one good idea. Really all it takes is one idea to get someone to follow what they love to do and make new products that help people. Wonderful. What is the best way for someone to present an idea to you? Is it a prototype, a video, a sell sheet? What do you need to make a good evaluation? Jeff: It doesn't need to be fancy. Just an email saying what the item is and if they have rough sketches or even more. Back when I started, I had to hire an engineer and invest all this time and money. You can go that route now but it's not needed as much. The factories will do a lot of the work for you if you present an idea. I know for inventors it's hard because how do you trust the factory? And how does the factory even believe that you're going to make it? Where DormCo is now, we've been fortunate to develop relationships to the point where we can literally present a napkin sketch and have an item turned out into a sample to see if it's going to be cost effective and if consumers want it and even test a small quantity on the market, if that's where we want to go. That’s really good to hear, because sometimes a prototype is a barrier to entry for some people. Jeff: Of course. If the item is made of injection molded plastic or something else where you're going to have to invest in tooling— yes, those hurdles are there. My first item ended up being out of plastic and not wood and that ended up being a costly endeavor to start with the tooling. There are still different ways to try to get around that or see if you can test it out of a different material first. For example, your student Courtney Laschkewitsch, the inventor. One of the items she had made, which was the keyboard desk drawing, she wanted it out of plastic to start. And I said, "Well, let's see if consumers want it. Let's make it out of wood first. And then we don't have to invest all this in tooling. And if they like it, well then yeah, we can get fancy and invest in tooling."

But why would you at first if you don't have to… Don't do it. Play it safe and test, test, test! That's smart advice. Jeff: A lot of people think of the big boys, you know the big brick and mortar stores, like, "Oh, if I just get in there, they're going to take a million." And really, they don't! I mean, they're kings of testing. They make sure they're not going to put an item on the shelf until they've had the science behind it, until they know that it’s going to sell. They would want to start with a very small quantity even if they took an item. I mean… you have to be sure. You can't get in over your head. And you know, perhaps I did get in a little over my head when I started, so it's maybe strange advice because it worked for me. But there were a lot of stressful, stressful years that I wonder if I could have worked around. How important is protection to you? Patents? Are they important or not? Jeff: I believe in trademarks. I've seen a lot of businesses thrive on a name. There's no arguing if someone's using your name. Like, you're using my name or you're not, you know what I mean? But with a patent, unfortunately there's just so many ways around it and I've seen that happen and they're so expensive to obtain. Unless you really have the next home run to the masses, and not a niche item… If your item is quite niche and you get a patent — well every inventor thinks everyone's going to steal their idea. And it's fine to be paranoid but if it's a niche item? Not to say that nobody will want to steal it but you’d be better off spending that money to make the product better or on marketing or something else. When is a good time to submit to you? Jeff: The busiest time of the year for me is summer because of the college dorm season. It's intense. Even with a team of employees and everything, there's always something that needs my attention. It gets intense around Christmas holiday sales too. So, those are times I guess to avoid. During the fall season and winter, like January, February, March, and April — those are seasons when I'm excited to look at new things and see what new items we can work on or assist individuals with.

Let's talk about what happens when an idea comes to you. Do you evaluate it? Do you have a team to look at it? Jeff: If there's one thing that I really haven't outsourced, it's the creation of the products. I mean, that's solely me, either myself working on the item or maybe working with another individual if it's their product idea. It's me working with the factories and whatnot. So, I look at the item to see if it works. I’m honest with the inventor as to what level it can work and if we can make it and license it. If it's not going to work for us we're pretty honest in saying, "Hey, this doesn't work for us." I'm not evaluating whether it's a good or bad idea. It’s more so, we’re not going to be necessarily happy with the sales we'll get because it's just not quite within a channel where our customer is going to notice it, if you will. Do you just go with your gut? Will you ever put a prototype up on our website to see if there's interest? Jeff: I typically go with my gut now. Of course, we make mistakes. But the first business I started in this industry was in 2004. So, after all these years of seeing what sells you kind of make educated guesses. Like, oh wow, that type of item sold well. This item is in that same family. So, you know consumers are seeking these types of items. And then you can search, is there an item that exists already? If there is, what's the price point? If oh wow, this would fall under a lower price point than that and it's actually even a better item — okay. So yes, you can do research into whether it’s going to move besides your gut. Our relationships with our partner factories allow us to order small quantities. We have winners and losers but when we have a loser, we’re not looking at thousands of units of that item and wondering, “What were we thinking?" We might stare at a hundred and be like, okay, well hey that hundred didn't work, but others do. The factories know that some items are going to win and some are going to lose. So, they're willing at this point to work with us on that. It's tough for an inventor because if you try to get a factory to make a hundred units, they're going to give you a price that's through the roof. They're not going to give you pricing as if it were in bulk and that's the hardest part. When I started out, I had to order like 10,000 units and take a ridiculous leap.

What advice do you have for inventors? Jeff: When people are too guarded, it’s hard. I get it. I was guarded too. I was so paranoid. I really was. I get it because it's your one idea and you believe that once it gets out there it's going to blow up and do great. Maybe it will but a lot of times it's usually a gateway to your next idea which is really how things evolve. Sometimes being so guarded just blocks everything. For example, I've been in conversations that have gotten far with an inventor and I think we're going to start having the factory work on stuff. Then they want an NDA signed by me, by the factory, or something else done and it's like, "What happened?" And they say, "Well, I talked to my lawyer friend. I don't know." I've never in all my orders with every factory I've ever worked with — no matter how big the order, whether they have an order for $100,000 or $500,000, whatever it is — I've never had them sign a contract. I've never had anyone get wrapped up legally. Business isn’t fun when it's all stuck in there and I get leery of it too. It's too much too soon. "You want me to do all this? I don't even know if we're going to make the item." It’s like they want to stop doing business before it can even start. Everyone has to start with that one idea whether it's super niche or people think it's crazy. If you get yourself in the game of business you have an opportunity. I think that's the thing, a lot of people sit on their idea and overthink it. But once you get in the game a lot of different doors open. Where I am now started based on a plastic shelf! I love helping people out. It's crazy to me — this year our total revenue should hit 12 million. We're continuing to grow. It's been a great journey. I never would have fathomed! I just didn't listen to the naysayers who were like, "A plastic shelf for a bunk bed? How big is your market?" I love this interview because Jeff is one of us. He started out as an inventor and made many mistakes along the way. Because he’s one of us, he’s made it very simple for us to work with him. Patents are aren’t required. “Just show me an idea and I can test it.” I love that he has a relationship with manufacturers so he doesn’t have to produce large volumes to test the market. And because he sells online

only, he controls all of it. He also knows that it’s hard to pick the winners so you truly have to just let the public decide. He’s willing to test ideas. After all, he took a simple idea that he created and transformed that into a $12 million company!

PACKAGING

BARRY MCKILLIP Research Scientist at Multi-Color Corporation and former VP of R&D at CCL Label, two of the largest packaging firms in the world. Barry worked at CCL Label from 1987-2000 and departed as Vice President of Research and Development. CCL Label is the global supply chain leader of innovative premium packaging, promotional vehicles, and comprehensive label solutions for the world’s largest consumer, agricultural, and healthcare corporations. With 22,000 employees and 168 production facilities, CCL Label’s presence is felt all over the world. Barry has spent his entire career in the printing industry and is an inventor himself! Is the packaging industry inventor-friendly? Barry: Yes, it is. How important are prototypes, intellectual property, market demand, and costing? Barry: All four are critically important. I’ve got three products that are patent pending right now. They all solve a problem. They all need to be profitable too — and new to the industry. So, anytime I look at a project, it has to be something that is very novel. Something that has a strong market potential, very little competition, and good profitability. This is a very specialized industry. How do you find new inventions? Barry: Generally, it’s interacting with our customers. We talk with the sales group. Customers visit our facility and describe a problem they need solving. I love it when someone says, “You can’t do that.” because that just

gets me going but I also love looking for issues people have and trying to solve problems. For example, we had a technology day with the brewing company Anheuser-Busch. They told us they wanted to see all the unique things we could do, and also put together a presentation that described what they were looking for and reports from consumers. One of the biggest complaints they were getting was bottle breakage. Was there a way to stop it? If you take a beer bottle and drop it 32 inches, the likelihood is that it’s going to explode. So, I had a material engineered out of Brazil. With this material, you wrap 11% of the bottom of the wall of the bottle, and you can drop it six feet and it bounces. That’s awesome. So, you’re an in-house inventor, basically. Barry: Yes, that’s correct. I’ve been inventing and bringing products to market in the packaging industry for more than 20 years. I can tell you it’s a difficult industry. You need to understand the equipment and materials involved in order to solve problems. It’s not surprising that new innovation typically comes from inhouse designers, engineers, and inventors such as Barry. Consider the volumes! There’s no margin because these are consumable products. Costing is extremely important and the kiss of death for packaging. Without prior knowledge of how these high-speed machines work and the materials used, you’re at a very big disadvantage. It can be done but please realize that you’re going to need to consult with someone who has experience in this industry. The good news? This is one industry where the revenue potential is enormous.

PRODUCT DEVELOPMENT

LOUIS FOREMAN Founder and Chief Executive at Enventys Partners; founder of Edison Nation; creator of the TV show “Everyday Edisons” and publisher of Inventors Digest. Louis Foreman is the Founder and Chief Executive of Enventys, an integrated product design and engineering firm that has helped file more than 700 patents, launched hundreds of products, built dozens of companies from the ground up, and raised over $150 million through crowdfunding. He is also the founder of Edison Nation and Edison National Medical. Louis was the creator of the Emmy award winning PBS TV show Everyday Edisons and served as the Lead Judge. He currently serves as Chairman of the Board of Directors for the James Dyson Foundation. Louis Foreman is a prolific inventor. He is the inventor of 10 registered US patents and his firm is responsible for the development of filing well over 700 more patents. What are some of the common mistakes that you see from an everyday inventor? Louis: We obviously work with thousands of inventors, ten to thousands, if not hundreds of thousands. Many inventors fall in love with their idea way too early. It solves a problem that they may personally have, but they don't do the research to determine whether or not it's really feasible. And so, what I typically tell inventors to do is, they've got to look at the market realistically and first and foremost figure out what is it about their product that is unique because pretty much everything that we need today already exists. Our basic core needs are being met by other products and services. So, as an inventor what they have to figure out is what is it

about their product or service that is different than what's already out there and why would someone not buy something else to buy their products? Louis, how can they determine if they have a marketable idea? Possibly testing using a crowdfunding campaign? Is there anything else they can do to kind of test that idea, to see if they have that uniqueness that you're looking for? Louis: Yes. Market research is definitely critical when determining the feasibility of an idea. Crowdfunding is just another form of market research and we use crowdfunding as a way to get market validation. In the old days, you know, you and I are old enough to remember, focus groups and oneon-one intercepts and we used that to get an intent to purchase. We sat down with people or we sent out surveys and we tried to determine whether or not someone intended to purchase a product or service at a given price point. But the problem was that there was a disconnect between that level of intent and actual purchasing. Sometime a product could test really well in a focus group but then when it launched at retail it didn't perform well at all. Crowdfunding is probably the closest thing we have to real intent to purchase because the customer is literally buying something before it even is made. We use crowdfunding in some ways as an opportunity to bootstrap the idea. So, for the inventor who has limited resources, they can use crowdfunding to test a product. But more importantly, it's a way to get that market validation that customers are willing to give a credit card number today for something that won't even be delivered for months, if not a year or longer. And that's probably the truest form of market research. I know proof of concept is really important, but building prototypes, even if they are just works-like versions, can get expensive at times especially if you're generating a lot of ideas. Is there something else they can do before that, maybe a sell sheet to say, "Look, is this something that's even of interest? And if it is, I'll build a prototype." Is that something you'll even consider? Louis: Well, it depends on the product, right? Or the service for that matter. If it's an app or something like that, a prototype is great because a picture is worth a thousand words. So, if you can demonstrate how the product functions, it's a lot easier for the person that you're explaining the

product to, to comprehend it. But in many cases just renderings of a product, drawings of a product are sufficient to at least get early interest. Now obviously for crowdfunding, that's no longer an option. In the early days of crowdfunding, you could just throw in some renderings up on the screen and that was enough to crow fund a product off of. Now, Kickstarter and Indiegogo require a functional prototype, so you've got to be further along in the development process to be able to raise capital on a crowdfunding platform. But it doesn't have to be an expensive prototype. I mean, James Dyson built his first vacuum cleaner out of cereal boxes and duct tape. You just have to be able to demonstrate that the concept that you've developed actually works. How important are patents today? Louis: Well, it depends. It depends on what the product is and it depends on the industry that you're playing in. It depends on the price point of the product and it depends on kind of the long-term goal. If you've got significant investment in a product and you believe there's a long market opportunity of selling the product, then obviously a patent is going to be important because it prevents others from making, using, or selling what you've created. But today products evolve so quickly that another approach is to innovate, be first to market, sell as much as you possibly can, and then when all the imitators come in you get out and transition to the next product. I mean there are many products that the life of that product is shorter than the time it takes to examine and issue the patent. So, if you just sit on the sidelines waiting for your patent to issue or if you're determined to get a patent before you launch a product, that might not be the right approach. I would say of the products we work on, 90% of them have patent protection because we still believe that having a strong IP portfolio is the deterrent to infringement. But I think what patents do is keep honest people honest and you're always going to run the risk that there's going to be people who exhibit bad behavior and take the shortcut and copy a product versus investing the time and resources to develop it on their own. Great. Last question. What are some of the traits of a professional inventor, in your opinion?

Louis: I think a professional inventor has objectivity. What they're able to do is very quickly identify the ones that have potential to grow and the ones that they need to just kind of cut loose and give up on. And that's tough sometimes because again, people look at their inventions like their babies and they want to give it every effort to grow and mature. But sometimes you're just throwing good money after bad. So, what a professional inventor is able to do is look at it as a business and the more they do it, the more of a process it becomes and you just have to look at the numbers and if they don't add up, move on.” Louis is well-aware of the difficulties of commercializing inventions. His practical advice is based on his years of experience. His crowdfunding experience is current and valuable. In other words, his insights and experiences are absolutely priceless!

15. INCREASING YOUR CHANCES OF SUCCESS writing this book, the thought dawned on me: How did I become a W hen professional inventor? I really hadn’t given it much thought. Somehow, I had figured it out. After interviewing so many companies and talking to other professional inventors, a light went on. The information the industry provided me with I had happened to follow myself. I just didn’t really recognize it until now. You see, I’m not very creative. To land a winner, I needed companies to tell me what to do, what to create. Typically, inventors see problems and create solutions. In that way, their inventiveness is always jumping around. That’s not what motivated me to come up with products. You see, I started out creating soft sculptures that were completely whimsical. There was nothing serious or even functional about them. They were just intended to put a smile on your face. I took nylon, stuffed it with fiberfill polyester filling, and stitched on a smiling face. I took everyday objects and created characters out of them, from vegetables to stars to chocolate candy kisses. Soon afterwards, I started working for Worlds of Wonder, where I learned all about the toy industry. When I left WOW to start my own company, I went back to creating products in the novelty gift industry, because that’s what I was very comfortable with — using fabric to design whimsical products. These were easy to make, because I was using fabric and a sowing machine. I wasn’t really inventing; I was studying the

marketplace and coming up with something new or a variation on an existing idea. As my confidence grew, I started submitting toy ideas to toy companies. After all, I had developed a lot of relationships at WOW! ftose two industries have been working with independent product developers/inventors for many years. So, they welcomed me with open arms. I stayed in those two industries long enough to know who the players were and build relationships. I submitted many ideas to a company called Applause. A woman named Leslie Gross headed up product submissions there. We became good friends. She would invite me down to their facility in Southern California to learn more about their business. Because we had a relationship, she told me what they were looking for. She gave me a target to hit. And I sent her ideas weekly. It was directly because of her feedback and our relationship that I was able to license many ideas. When I look back at the experience of licensing the Michael Jordan Wall-Ball, it all makes perfect sense. I loved basketball and had been playing it all my life, so I knew the product. I was able to play some simple fun creative games to help me come up with variations, which I describe below. And sure enough, the idea to change the shape of the backboard into Michael Jordan just popped out. Working on a product that I was passionate about made it fun and easy. And as for the Spinformation rotating label? That was based on an earlier idea I had licensed for a rotating cup and canteen that were selling in Disney theme parks and stores. To turn that into a packaging innovation, I had to start from scratch in the sense that I had to learn who all the players were, build relationships, and study the label industry inside and out. Only once I understood the industry and the players was I able to license my package innovation, from which I collected royalties for many, many years. All of a sudden, it hit me like a ton of bricks! I had been following their suggestions all along. I stayed in industries long enough to get to know the players and introduce myself. I built relationships. And because of those relationships, I received the feedback I needed to improve my product submissions. I studied their product lines and knew their business inside and out. And I was always successful in industries I was genuinely passionate about. You can be too.

Every once in a while, someone will ask me, “I get the process, but how can I increase my chances of success? How can I speed this up?”

HOW TO BE A PRO: A CASE STUDY The following is a case study about what it takes to become a professional inventor featuring past inventRight student and now professional inventor Scott Baumann. Scott shared the following story about one of his inventions on an inventRight webinar that was also attended by John Hurley, a former marketing executive with Allstar Innovations. The product Scott licensed to Allstar Innovations was called Gripgo. It was amazing having them on a webinar together to discuss what happened with Gripgo. Scott explained that it all began when he watched a webinar featuring John in which John explained what DRTV companies like Allstar are looking for in terms of products. Specifically, John identified seven criteria that a product must meet for them to be interested. John called these criteria “the seven divine qualities” of a successful DRTV item. At the time, Scott had successfully licensed a few products. One of the products he had licensed was a phone mount system for your car, but it wasn’t selling very well at retail. The product had this unique gel material that held your phone in place and also allowed you to easily remove it. When Scott heard what was required for a successful DRTV product, he thought his phone mount system would be perfect for the industry. It hit all of John’s criteria! This moment of insight is extremely important. When you understand how certain businesses and industries work, it is much easier to hit a target. And that’s exactly what Scott did. He created a video that addressed the seven criteria directly. It was also very personal. At the beginning of the video, Scott says, “Hi John.” John mentioned that he loved that. Everything from volume, customer demand, and cost to solving the problem at hand — there was nothing Scott did not address in this video! To create the wow factor that he knew DRTV needed, he connected an

Apple phone to his phone mount system and then dangled it outside a car window while going 60 miles an hour! The phone stayed glued! This bit was so effective, they used it in a television commercial that was launched later. John said that Scott’s video was so good, they didn’t even have any questions for him. He had answered each and every one. Saying yes and getting straight to a licensing agreement was easy from there. It was a no brainer. Scott’s efforts made it simple for Allstar to say yes, we want this product. Next, he worked with their team to produce another video to be tested. Ultimately, 4 million Gripgo were sold! Scott made it easy for Allstar to take this product to market. He did everything a professional inventor should. He knew what this company was looking for. He knew the cost of his product aligned with what they needed to be successful. He produced strong marketing material that answered their every question. He built and maintained a close relationship all the way through, which was critical to the product’s ultimate success. This is a case study of being a pro. I said earlier that licensing is a numbers game. How do you better your chances? Well, you know the process now. Filing provisional patent applications, producing sell sheets and building prototypes is timeconsuming. In fact, it’s not very practical to go through the entire process every time if you have a lot of ideas. And I very much believe that you need a lot of ideas to be successful, so you need to find another method. For me it always comes down to math. The more doors you knock on the greater the chance one will open. Pretty simple. I learned this lesson when I was 18 years old and did door-to-door sales for a central air conditioning company for a summer. For most people this would have been very difficult. But I enjoyed it and made friends along the way. I knocked on as many doors as I could, and once in a while I got a sale. More doors, more sales. It was simply a numbers game. “The reason you are not successful is that you’re not failing fast enough. You need to step up your failure rate.” — Robert Kiyosaki, author Rich Dad Poor Dad , the best-selling personal finance book of all time.

So I knew to be successful at licensing products I needed to be an idea factory. For me, coming up with ideas was not a natural talent. I had to teach myself how to be creative. Many people in creative industries have to come up with ideas every single day. That’s their job - they can’t just wait around for inspiration to strike. They have a process by which to increase their chances of success. I created my own process that would help stimulate new ideas. I have three “games” to come up with different ideas. You don’t have to reinvent the wheel. If you make a small improvement on an existing idea, the chance of getting a licensing agreement is far better compared than coming up with something completely new. These are the games I play to come up with variations and improvements on existing ideas: Mix and match - Combine two ideas together to create something new. this is very common. Example: flashlight and screwdriver. When you combine them, it’s easier to work on things in a dark area. I presented Mix and Match to a class of second grade students once and one young man immediately called out – skateboard with a headlight! How about a plate that also holds your cup for use in buffet lines? That was dreamed up by Rick Kellow, the inventor-entrepreneur behind the GreatPlate. All these “mix and match” products are on the market today! What if? - Dream the impossible. What if I could throw a frisbee the length of a football field? Sure enough, someone created a product that could do that called Aerobie. What if I could hang a picture without any tools required? There’s the Push and Hang for that, licensed by inventRight student Michael Van Horst. Solve it - Come up with solutions to problems that people have! One of my favorite examples is a product named Cocoon that one of my students named Dario created to help people organize their stuff better. He noticed his wife was always rifling through her purse, unable to find what she needed. He developed a bag insert with adjustable elastic bands that hold items in place so that they're easy to find. Cleaning hair out of your drain is a nightmare especially if you don’t want to use harsh chemicals. My friend Gene Luoma invented Zip-It Drain Cleaner – a simple piece of plastic with teeth that grabs the hair and gunk as you pull it out.

Using these techniques, you could look at a company’s product line and come up with variations on their existing products. I would exhaust all possible variations. It’s just a matter of time before someone else will come up with their own variation. You just need to come up with it before they do. The process is quite mechanical, but it does work all the time. Companies are very risk-averse. They’re going to make a small improvement on one of their existing products that’s selling well before launching something completely new. You could change the material, the shape, or the features of an existing product. I did this with the Michael Jordan Wall-Ball. Typically, indoor Nerf basketball games have a square backboard. I literally changed the shape of the backboard to be Michael Jordan (literally a picture of him cut out in the shape of his body). This product sold for over ten years and other NBA players were eventually added to the line. I used this same process for an innovation in guitar picks. I took a different material (lenticular lens) and made a guitar pick out of it – so by rotating your hand back and forth the images on the guitar pick changed and looked like they were moving. Imagine Taylor Swift playing her guitar or scenes from Pirates of the Caribbean on a guitar pick! Once again, a change of material created something fresh and new. The most successful inventors I know stick with one industry. This allows them to do two things: 1) become extremely familiar with the products on the market today including the design, cost of materials, and features and benefits, and 2) develop relationships with key players to whom they will pitch their products. By knowing what’s out there already they can figure out what’s missing. And, because of their relationship with licensees, they can pitch ideas using only a sell sheet (or even just a verbal description). The ways to be creative are endless. Remember professional toy and game inventor Sara Farber? She loves wordplay and puns and often starts with the name of a game. She stays current by watching television to see what the latest obsessions and crazes are, so she can be inspired by them. But how do you test all of your ideas? Creating sell sheets and prototypes takes a lot of time. Don’t forget the importance of provisional patent applications. More time. If you want to increase your chance of success, you can’t go through the entire process for every idea you have.

You need a testing process where you can sort through those ideas and focus on the best ones. Early in my career, I used to sell soft sculptures made of nylon and fabric at street fairs, county fairs and even state fairs. I quickly learned that if I didn’t have a design that would sell, I didn’t pay the rent or even eat. That’s when I learned that I needed to test ideas quickly. Test your ideas with a sell sheet or just a strong one-line benefit statement. Sell the benefit, don’t sell the product. If you can’t sell the benefit, why bother with the rest? And that’s exactly what I’ve been teaching others for the past 20 years. Say you have a new hammer innovation. It has a very soft handle, so it doesn’t put any strain on your grip. Also, it’s made with lightweight material. It doesn’t put any strain on your elbow or shoulder. It also has a very large head, so it hits the nail every single time. With this new hammer, you can work longer and be more productive. Basically, you can get the job done faster. You could call a company that produces hammers. Speak to someone in sales. Hi, I’m a product developer and I have a new hammer innovation. My new hammer allows anyone to be “more productive and get the job done faster.” Can I send you more information? You just pitched the benefit without telling them much about the innovation. You can determine if there’s any interest before building a prototype, producing a sell sheet, or filing any intellectual property. Basically, you can test the waters to see if you have a marketable product idea. Talk about saving time and energy! Easy enough right? Well it becomes that much easier when you stay in an industry long enough to build relationships with the relevant decision makers. Here’s how I accomplished that goal. First, I started submitting my ideas to an inventor-friendly company. I would show them quality work, so they knew I was capable of designing for them. At first, I sent them a great sell sheet and prototype. It showed my work and dedication. Of course, I got rejected. But I had a great attitude and told them I would be sending more ideas over. I produced another sell sheet and even a prototype. Things started to change. They could see that I was working for them. I was investing my time and energy creating products for them. That’s when they gave me a target to hit. “Steve, we want you to create in this particular category.”

It was at that point that I asked them if I could send them brief one- line descriptions of product ideas. If there was any interest, I would expand upon it with a sell sheet or maybe even a prototype. They agreed! I would send them ten ideas at a time. Just one or two sentences describing the product and the benefit. I just became an idea factory. I wasn’t bogged down by sell sheets or prototypes. They would respond to me very quickly with: Seen it, not interested, or maybe—this is interesting please provide more. I would then create a sell sheet, sometimes a prototype. I was selling the benefits of my product ideas way before they were products. I could just focus on being creative. It worked out extremely well for me to stay with this one company. I understood their product line and was creating products just for them. I was able to license close to 20 ideas to them over the years. I was even able to apply the same techniques in a completely different industry. Remember, it’s all about relationship building. Once you start to invest in them, they will start to invest in you. I know you’re most excited about pitching your ideas, but you have to learn to sell yourself first. People ask me often, “Aren’t you afraid they’re going to steal your ideas?” No. Like I said at the beginning of the book, companies need us to stay competitive. In most cases, they are not out to burn you. In some situations, when you do have interest in a product, you can file a provisional patent application if it makes you feel better. How do you know if and when you should file? You can always ask a company if it’s important for you to file. Companies have different opinions about this, so ask. If you’re new to the licensing game, I would highly recommend that you file, so you feel more comfortable. The very large companies tend to like intellectual property protection as it allows them to go after copycat products online. They can also contact a major retailer if a copycat makes it to the store shelves. While no one wants to get into a lawsuit, large companies have the resources to do so. Midsize and smaller companies basically understand that it’s pretty darn difficult to protect something today and definitely not economically

feasible. In my interviews, the small and midsize companies all said that patents are nice but not necessary. In either of these cases, if you have filed a PPA prior to submitting your idea, you have kept the door open for your licensee to pursue a nonprovisional patent application should they desire. You have left the options open – and that’s probably a good idea. Ultimately, I know if I’m building a relationship and we’re working well together, there’s no need to rush to file. It all depends on the industry you’re in and the relationship you have established. Full disclosure: I’m not an attorney and I’m not giving legal advice. Licensing was perfect for me because I always wanted to be my own boss. I’m thrilled to report that open innovation has been growing for decades and I see more successful licensing agreements today than ever before. It’s a fantastic model for people who, like me, want to focus on being creative, but we shouldn’t take the opportunity for granted. I wrote this book because I’ve seen too many inventors just throw up their ideas against the wall to see if one sticks. I’ve noticed that companies are getting fed up with too many product submissions that obviously don’t fit their business. I’m talking about very poor submissions—ideas that really don’t fit in to a product line, or even worse, ideas that aren’t even original and can be found within minutes online. I know I’ve talked about how licensing is a numbers game. But you shouldn’t miss the forest for the trees. For the open innovation model to succeed, independent inventors have to be assets for companies that are looking for ideas. You must go from amateur to professional. To optimize your long-term chances of success through licensing, find an industry that you’re passionate about and stay long enough to build relationships. Take every chance to meet people in person. Attend trade shows and even corporate headquarters when you can. Study the product lines within the industry so you can really tailor your ideas to your potential licensees’ needs. Cultivate the skill of producing ideas. Be reasonable, patient, and always be respectful of people’s time. Your potential licensees will recognize that you’re investing in them, so they’ll give you targets to hit. You’ll be free to be an idea factory and submit product ideas to them that are fairly rough. This is when you transition from amateur inventor to professional product developer.

In this book, I’ve tried to provide you with a roadmap of how to become a professional product inventor. It’s all about doing things the right way! Make sure your product isn’t already on the market. Create good marketing material and file a provisional patent application if warranted. Find inventor-friendly companies and study their product line. Know something about manufacturing costs and materials. Treat your potential licensee with respect and don’t be a high-maintenanceinventor. Build relationships within one industry for the long haul. I’ve been helping inventors license their ideas for the past 20 years because I truly believe in this wonderful community. By being an asset to companies that are looking for ideas, I think you can help future generations of inventors by keeping the doors of open innovation open. So, try to be an ambassador for the inventing community and leave a positive impression with every company you work with. It will help you and your fellow inventors succeed. Keep inventing!

PART EIGHT Samples

Sell Sheets View at www.inventright.com/proinventor The following sell sheets were supplied by inventRight Design Studio. For more examples of sell sheets, watch the videos on my YouTube channel inventRightTV. There is a playlist about sell sheets that includes 16 videos.

Non-Disclosure Agreements (NDAs) - View at www.inventright.com/pro-inventor There are many types of non-disclosure agreements. Included here are just a few examples. Please note: There is no such thing as a standard NDA! Please do not find and use one from the internet. Have an attorney write one for you. Sample Non-Disclosure Agreement 1 is the standard inventRight NonDisclosure Agreement we use with all of our students before we look at their inventions. Sample Non-Disclosure Agreement with Work-For-Hire Clause is supplied by Richard Bennett Salles of Foundation Patents. Thank you Richard. (925) 478-5662 (www.foundationpatents.com) Sample Non-Disclosure Agreement 2 is supplied by Stephen Key. Sample Mutual Non-Disclosure Agreement 3 is provided by patent attorney Damon Kali. Damon has provided a few notes about NDAs and a short outline of what is included in a well-balanced NDA. Thank you Damon. (408) 420-2381 (www.kali-law.com)

Sample Term Sheets

View at www.inventright.com/proinventor These sample term sheets were supplied by two of our students. Both resulted in licensing agreements.

Sample Licensing Agreement View at www.inventright.com/proinventor Over the course of my career, I’ve seen many, many different types of licensing agreements. Some have been as long as 30 pages. Others are only two pages long. There’s no such thing as a standard licensing agreement. At the end of the day, what’s really important is the company you’re signing the licensing agreement with. Never sign a licensing agreement without having a licensing attorney review it first. The first draft of the licensing agreement should come from the licensor, not you. The following licensing agreement was supplied by attorney Noah Harfouch of The Harfouch Law Firm. Mr. Harfouch has negotiated hundreds of licensing deals across the world. I have had the pleasure of knowing him for some time now! Thank you Noah. (248) 274-6529 (www.harfouchlaw.com)