The difference between an idea and an invention
The dictionary defines an invention as “a device, contrivance or process originated after study and experiment.” An idea is defined as “a formulated thought or opinion.” With these definitions, you should ask yourself how much study and experiment have you done on your idea. Is your idea a tangible solution or just the recognition of a problem that needs a solution?
How many times have you said to yourself, “It would be great if there were a product that could solve this problem?” I’ve had that same thought many times before. Unfortunately, most of time, I was not identifying a real solution but just the need for a solution. Additionally, I’ve seen many inventors make the same mistake confusing their “identification of a problem” for an actual solution, thus spending unnecessary time focusing on the problem and not the solution.
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The real challenge with inventing is not just identifying a need, but also figuring out a solution. This may seem like common sense, however, I can tell you that I’ve talked with hundreds of inventors who thought they had an invention, when in fact they had an idea without a well-defined solution.
The fearful lament: “Can I really sell my idea?”
Take heart, inventors. Yes, you can really sell your idea. But it’s important to understand what you need to have in place in order to increase your odds of success. As you move your idea through the invention and patent process, your odds of success increase as your idea becomes more tangible and real.
The notion of selling or licensing an idea without any effort or development is a misconception of many inventors. Although I believe anything is possible, it is important to be realistic about your odds of success with an idea. Many inventors believe that a company will license or buy their idea and pay a royalty, even though they have not taken the time to move the idea forward with a patent search, patent or any type of professional presentation, development or proposal. This is unlikely; to increase your likelihood of success, you should be prepared to move your idea forward beyond just a concept or thought.
Next, when it comes to royalties or payment received for licensing your idea, it’s vital that you have realistic expectations. Don’t expect to receive a 50/50 split on the profits from a company for licensing your idea. A company may end up spending hundreds of thousands of dollars developing, manufacturing and marketing your idea, so a 50/50 split would not be reasonable. Typically, an average royalty can range from 2 to 10% of net revenues received by the company for selling the product. The royalty rate is negotiable and may fluctuate based on the margin and/or sales volume potential of the product. Note that 5% is usually considered a reasonable royalty percentage.
Overall, the key to selling your invention is having a good idea to start with, and then taking some steps to protect and effectively present the invention to companies. We’ll review these “next steps” in the coming pages.
There are no guarantees…
The reality is that there are no guarantees for success. Regardless of how great your idea is, there are absolutely no guarantees that your idea will ever make money. Great ideas can fail for many reasons, such as poor marketing, lack of market or scarce financial resources. Additionally, ideas that may seem less than stellar can often make millions. For example, the Pet Rock or Chia Pet went on to make lots of money in the market and at first glance, they more than likely would not have been considered good ideas. The invention process can be exciting and rewarding; however, you’ll need to approach the process with realistic expectations and a willingness to do what it takes to succeed.
The importance of documenting your idea
The reason that inventors should document their ideas is for the legal purpose of proving their date of idea conception. If a scenario ever arises where other inventors/patent holders claim infringement, or in cases of invention theft, simultaneous inventions brought forth or other valid reasons, it will be to your advantage to have documentation of dates and details of the idea conception. By properly documenting your invention up front, you will have valuable proof that you are the true inventor, along with a date of record.
Documenting your idea the right way
The inventor can document his invention by utilizing an Inventor’s Notebook or Form. Use a bound notebook or record of invention form to record your invention by clearly describing the idea and concept and then signing and dating in ink. Also, have two other people sign and date the book or form as witness to your invention. The description should include the following: consecutively numbered pages, the purpose of the invention, a detailed explanation of the invention, drawings or sketches and a list of features and advantages.
Keep in mind that documenting your invention is not a substitute for filing a provisional or non-provisional patent application. The purpose is to establish a date of record for your invention and to provide you with the proper documentation in the event of a dispute.