Foreword: Over the years I have generated numerous ideas, researched technologies and markets, and developed business plans. Some very viable and others not so viable. These matured ideas have been closely held as I watch for potential opportunities and fits. I don't see a need for a rush to market as there rarely is ever a need to rush. No perceived competitors are developing my ideas. I compete against myself unless I let out my ideas for other to develop. Nonetheless, I learned a few things along the way and would like to share them at this time.
Protecting Your Idea
‘Necessity is the mother of invention’ is an age old axiom that utterly gets it wrong because people rarely think of the invention necessary to fulfill some need. This does happen for example with the squeezable ketchup bottle which is not really an invention since the ketchup bottle and pliable materials already existed but not in combination. Instead, the squeezable bottle was an improvement, an innovation, as pliable materials were applied to a need to dispense ketchup. Inventions are something entirely new and create markets where nothing existed before. For example, the invention of the light bulb created new markets altogether. No one was asking for a light bulb as it was not in the minds of people. The light bulb was a phenomenon known as creative destruction where the new creation replaced the older creation, oil lanterns. The light bulb was also in service to humanity because it was safer than an oil lantern and was smokeless increasing possible placement options. More accurately ‘Invention is the mother of necessity’. Once introduced to the light bulb, people needed the product leading to markets for lighted signs, traffic signals, stylish lamps, ect... (Schwartz, 2004, p 13). Ideas mature into inventions and/or innovations.
Everyone has ideas which are a dime-a-dozen. In many respects, ideas are like opinions which are unsupported beliefs that people hold with a high degree of confidence and esteem. After all, they thought of the idea. An idea has no redeemable or measurable value in practice which is called utility. Therefore, an idea has nothing to protect, no utility. Utility is coupled closely with design having three elements; behavioral, sensation, and reflective. Utility in these three elements varies. Behavioral utility refers to the effectiveness of the design or the ability to perform work and is most often tangible. Sensation utility is artful invoking the senses or some sort of sensory experience. ie it is pleasing to the eye. Reflective utility centers on the story or message communicated.
When an idea is developed into a mature concept then that can be protected. A mature concept involves developing the idea into something that has economic value and is unique due to one's work, knowledge, and skills. A mature concept is said to have utility. At this point, the idea then becomes what is known as intellectual property. The challenge then becomes how does one introduce intellectual property in a public forum to a tightly held small group or to a larger constituency without losing control of the rights to the intellectual property? There are a few practical things that one can do which will be discussed.
First, realize that any business engagement should be shrouded in a legal blanket at some level based on the assessed risk. Of course, hiring an intellectual property attorney with all the associated cost and protection to oversee the entire process is ideal but not practical for the person who has limited resources while pursuing opportunity under the American dream. Each person should assess risk early and continuously. There is a process to developing then leveraging intellectual property for profit which begins with answering several questions.
- Does your product or service offer exceptional utility at an attractive price?
- Can product or service be delivered profitably within the organizational framework?
- Does the innovation/invention cause a disruptive shift?
The three questions center on the designs ability to not only produce revenue but do this in an attractive manner yielding low cost and new markets leading to profits. This is where the design must focus. Selling the design to prospects is more about mobilizing minds or convincing prospects to buy verses rejecting the design or stealing the design concept. When the design is good but the price is unattractive minds tend to think of ways to perform the same result at a lower cost. Prospects are more inclined to buy if the price, design, and effort for them are all attractive. Achieving this balance is an art in itself that begins with a process that has several steps to become organized into order to present.
1. Develop an engagement plan. Such a plan will document the objectives of the design and engagements as well as provide schedules, prospect qualities, identify controlled information, set milestones, etc… The plan will vary based on the design concept and circumstances but should wrap around the entire effort organizing thoughts. Remember though that technology will always drive the schedule. Setting milestone dates instead of milestone achievements could create an optic of being late when dates are missed because the technology was not cooperating.
2. Organize a team. Do not go at this alone. Become surrounded disciplinary experts. These experts do not have to be full time employees nor costly professional services. Services like SCORE under the Small Business Administration and small business incubators or development centers are available to nearly every city. Leverage these resources. When meeting with prospects at a minimum let them know about key team members such as CPAs and Attorneys. Arriving at the table having had CPAs and attorneys even engineers behind you can give a polished optic.
3. Do the due diligence and study prospects. Study the prospects closely and learn their capabilities, capacities, and strategies. Understand the industry and business. Couple everything to the prospect’s direction, strategies, and operations highlighting advantage and earnings. Likewise, if a prospect turns out to be not a good fit then do not pursue them. Have standard evaluation criteria and seek performance measurements.
4. Create a Buzz. After becoming established and setting the necessary legal protections. Leverage social media and other media channels to create a buzz about the design concept. Have the market back pressure suppliers for the concept. Look for reflected messages and chatter. This can be a greater selling point than any face-to-face presentation as market demand drives demand for the concept.
5. Prepare preliminary documents and presentations. Carefully craft the presentation as there can be legal repercussions. Documents like prospectus, forecast, pro-forma financial statements, ect… can be misinterpreted if ambiguous or if there is perceived innuendo. In preparing the documents use a rating system to classify information by paragraph. Such a rating system should include public, private, and closely held information. Avoid using any jargon or language that could be confused with the federal government’s classification system.
6. Meet with prospects. Face-to-face meetings are extremely important. A well designed and rehearsed presentation that does not go too deep but tickles their hot buttons should not exceed 30 minutes. Public and private information should be released after there are proper legal controls in place. Avoid releasing anything closely held until more advanced meetings and stronger legal protections.
7. Negotiate wisely. Negotiations are always a challenge. The current mantra in most negotiations is Win-Win and empowerment. Win-Win is about putting everything on the table then finding the winning solution for both parties. Search out high value/low cost concessions. Find options to expand the pie for mutual gain. Know the best alternatives to a negotiated agreement. Empowerment is allowing the other person to have optimal control of their circumstance. This is a key in negotiations as a person convinced against their will remains unconvinced. Do not yield to pressure but work amicably, exploring all options. All negotiations are performed in good faith based on common objectives.
8. Get a signed formal agreement then maintain the agreement. Getting prospects to sign an agreement, contract, an engagement letter, a non-compete, a non-disclosure etc… is a difficult challenge. There needs to be some sort of formal understanding that is drafted by competent legal services and signed by the parties before a major dispute arises. A common strategy or tactic of many professionals in business is to enter into a relationship and then find a problem to exploit in order to strengthen their position. These situations need to be locked down but not in a manner that incites a negative response from the prospect. Once signed, the agreement should be properly filed. Follow up is necessary to ensure that payments are being made in a timely manner with accurate amounts; are milestone being met, and is there any sort of assistance necessary. Showing involvement and interest opens up new opportunities.
Protecting intellectual property requires much more than just a legal document written and oversaw by an attorney. Protecting intellectual property centers on relationship management and requires a well thought out plan, presentations, and controls. The controls need to be properly timed as walking in with documents that need to be immediately signed is often met with hesitation. The relationship needs to be developed without releasing or distributing critical information. This often involves sitting in on meetings, discussing the business, and socializing one’s self before presenting any intellectual property. Each prospect is different and requires a keen eye. In the end, you will need to make judgment calls balancing risk and progress. The goal is to work in a manner where everyone succeeds and everyone is comfortable.
References:
Bryan, L., & Joyce, C. (2007). Mobilizing Minds: Creating Wealth from Talent in the 21st Century. USA: McGraw-Hill.
Christensen, C., & Raynor, M. (2003). The Innovator's Solution: Creating and Sustaining Successful Growth. USA: Harvard Business School Publishing Corporation.
Kim, C. W., & Mauborgne, R. (2001). Knowing a Winning Business Idea When You See One. Harvard Business Review on Innovation, 77-102.
Neumeyer, C. (2014). 10 Tips For Successful OutBound Technology Licensing. Retrieved from Avvo: http://www.avvo.com/legal-guides/ugc/ten-tips-for-successful-outbound-technology-licensing
Schwartz, E. I. (2004). Juice: The Creative Fuel that Drives World-Class Inventors. Boston: Harvard Business School Press.
Sullivan, P. H. (1998). Profiting from Intellectual Capital: Extracting value from innovation. USA: Wiley and Sons, Inc
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