Licensing is a numbers game. I can’t say that often enough. It’s one thing to come up with an idea. But if you want to live the licensing lifestyle, you really have to commit to inventing and submitting many ideas to many companies. These days, I encourage my students to make a list of at least 30 companies to submit an idea to. Yes, 30! After all-all you need is one to say yes.
Speed to market is also incredibly important to your success, which is why waiting to hear back from one company before submitting the idea to another isn’t an option. Which means at some point you may find yourself in a fantastic predicament: Having two companies interested in your idea at the same time.
First, let me say that this is a great “problem” to have! Frankly, it doesn’t happen very often, so you might as well enjoy it. It’s never happened to me, but it’s increasingly common among my inventRight students. I’m not surprised. To stay competitive, more and more companies are embracing open innovation. And because inventors are becoming increasingly skilled at inventing for the marketplace, their ideas are better and better.
David Fedewa, a former inventRight student who is now an inventRight coach, has some fantastic insight to share. These are his tips for what to do when more than one company is intrigued by your sell sheet and asking you for more information.
1. Treat each company like it’s the only company that is interested. Just because a company is interested in your idea does not mean a deal is going to be worked out, unfortunately. Deals fall out all the time because both parties aren’t able to reach an agreement about important terms like minimum guarantees, or who owns the intellectual property. The reality is that more often than not, the better deal will present itself. Give it time.
2. Don’t kiss and tell. It’s not to your advantage. If the company asks you directly if you are working with anyone else, you should tell the truth. If the company asks you to name the other company, respond that you have signed a non-disclosure agreement. They will respect you for keeping things professional. It may be tempting to try and leverage one company over another, but I don’t recommend it. That only works in Hollywood. And there’s a very real chance doing so will leave a bad taste in the company’s mouth.
3. If a company asks you not to show your idea to anyone else while it is being evaluated, ask for a holding fee. Time is money! Filing a provisional patent application affords you just twelve months to shop around your idea before you have to decide whether or not you’d like to file a non-provisional patent application. Don’t waste it. I think a maximum of three months and between $1,000-$3,000 per month is about right.
4. If a company asks you to develop a more refined prototype, ask it to start discussing the fundamental aspects of your potential future agreement. If your prototype is inexpensive and you have multiple of them, you might choose to send the company it right then and there. But that’s usually not the case. You don’t want to waste your time or money. If you can’t agree to a term sheet, why bother investing in a nicer prototype?
Again, I want to stress that having two companies interested in your idea at the same is a great thing! Congratulations.
Originally published on Inc.com August 25th 2015.
