Licensing your idea to a large company is possible - but you must be prepared.
When I first started coming up with new product ideas, I was able to license several to small and midsize companies in the toy and novelty industries. But then I hit upon a “big” idea. I licensed my label innovation, called Spinformation (http://www.spinlabels.com/), to the largest manufacturer of pressure-sensitive labels in the world, CCL Label. (https://ccllabel.com/) CCL Label manufactured my innovation for use on several huge brands including Nescafé coffee in Japan and Jim Beam in the United States. Alex Trebek was hired to be a spokesperson for national television ads, showcasing Spinformation on Rexall Sundown, Inc. herbal supplements. These products were sold in places like Wal-Mart, CVS, Walgreens, and many more. Overall, products using my label sold in thousands of stores.?rel=0
I can assure you that licensing my innovation to a worldwide Fortune 500 company took monumental effort, yet it was worth every second for the volume of sales alone. My label generated revenue for close to 20 years. While I personally don’t recommend your first project be a ‘big idea’, it is certainly possible to pull it off and get larger companies interested and invested in your vision.
At inventRight I help some of my students take on big ideas. Because of my experience many are able to replicate the same success I had. When I get started with new students I like to share with them certain key components and strategies that will ensure their success with these companies.
- Protect Your Idea
- Licensing your idea to a large company requires that you have perceived ownership; they will always ask for your intellectual property. Ownership can start with a well-written Provisional Patent Application (PPA). Often, a thorough Provisional Patent Application will hold enough value for the company to sign a licensing agreement with you.
- You have two options for writing and filing a PPA. The first is to hire a patent attorney or patent agent and provide him/her with a wealth of information about your idea so that they can do a fantastic job. Please be aware that this process could take some time and be quite expensive.
- The second is to write a Provisional Patent Application yourself. Having done many over the years, this has become something I can do efficiently and affordably.
- There are several resources I have created to help people write and file a Provisional Patent Application that has value. You might start with my book, Sell Your Ideas With or Without a Patent, available here. I receive lots of email correspondence from folks who have used this book to successfully create a PPA that allowed them to license their innovation.
- Second, you should check out Smart IP from inventRight and patent attorney Gene Quinn. Gene is a law professor, and founder of IP Watchdog. Together we developed a program that walks you through the steps of writing and filing your own PPA using videos, online formatting, and even a direct link to the USPTO.
- Whichever route you choose to take, try to make your idea easy to understand and provide enough information to your patent attorney or agent to ensure your Provisional Patent Application has value.
- Sign a Non-Disclosure Agreement (NDA)
- Approaching bigger companies with your idea requires some finesse. The length of time that it will take for the company to review your idea might be awhile. It may also be some time before a company picks up your idea. Yet it is crucial that after the benefits of your product become known to a company, but before you share how it is made or any intellectual property, that both parties sign a Non-Disclosure Agreement. It is at this moment, when a potential licensee wants to know more about your idea, that it is best to ask them to sign an NDA.
- The hard part to recognize is that most companies do not want to sign a Non-Disclosure Agreement because they might be making something similar or have seen something similar before. They are scared of the liability. I recommend having a patent attorney review the NDA before you sign.
- In my experience I have learned it is best that the Non-Disclosure Agreement contain language wherein the company will not publicly disclose your idea for three years. The process by which your idea goes to market may take much longer than a Provisional Patent Application is valid. Your PPA only gives you one year to show your product to companies with a “patent pending” status. However, worry not- you can refile a PPA under certain circumstances. Signing a mutual Non-Disclosure Agreement in which there is no public disclosure ensures that you can file for a new PPA without the fear of having your idea stolen.
- Be Patient
- The path to a licensing deal may take longer than you anticipated. Patience and a good attitude are fundamental when dealing with companies and people.
- Remove Risk
- Small and mid-size companies are often willing to take an idea they see as great and move forward with it – they are looking for ways to grow their business. Larger companies tend to be more risk-averse – they have more to lose. If you can use a smaller company to demonstrate demand to a larger company you increase your chance of success. Case in point, I was able to get Rexall Sundown, a manufacturer of vitamins and health supplements based in Boca Raton, Florida excited about my label innovation. So excited that they wanted to order 50 million pieces per year – that got CCL Label’s attention right away and helped me land my licensing deal.
Licensing your idea to a Fortune 500 company requires that you put time and effort into presenting an innovative product along with a well-written Provisional Patent Application that has value. All companies love when risk is removed and it is your job to take away as much risk as possible to land the licensing deal you deserve.
*Please note I am not a patent attorney, and I am not giving legal advice.