The following constitutes but one of an infinite
number of paths toward achieving goals regarding the launch & patent process.
Consider it as a checklist to be modified and adapted to a particular set of
circumstances.
The global connectedness of the world economy has not
all been pleasant. Jobs shift from one continent to another, and products,
even those from relatively small manufacturers, are crossing borders
internationally as never before. While the international marketplace increases
the potential for greater sales, it also raises the stakes and costs to protect
intellectual property. A product may be protected by a patent in the
manufacturer's home country, but that alone provides no protection in other
countries.
A seller generally must go through the patent process
in each country where protection of IP rights are to be afforded. Under an
international agreement known as the Paris Convention, the patent application in
each country must be filed within a year of the filing at home (and there are
some PCT procedures that enable a delay, with costs in time and money).
So if a manufacturer applies
for a U.S. patent and a year goes by without filing for protection anywhere
else, the intellectual property will probably be protected only in the United
States. The manufacturer has effectively donated the design of the product to
the rest of the world. And that's not always good business practice in today's
global market. What if 80% of your net profits would have come from overseas
sources?
On the other hand, filing patent applications in all
the likely markets of Europe, Asia, and elsewhere is costly, especially if done
blindly in the first year, with no indication of success in those markets. Fees
for filing in all the major potential markets might easily run hundreds of
thousands of dollars. What if you were able to get others to pay for the markets
in which you license, as a precondition to your granting them a license in the
first year?
Even an inventor-manufacturer whose budget can't
handle a world-wide patenting program on their own can still make good use of
that one-year window to target potential markets, and perhaps even to enlist
help from potential distributors in pursuing foreign patents.
There are a number of critical timing issues that new
product introducers should consider as they attempt to capture intellectual
property rights and facilitate early sales. A "product," of course, could be any
kind of good or service eligible for patent protection.
Generally, the drivers for an
overall IP protection strategy for a new product are:
(1) The existence of the
one-year Paris Convention, which allows patent applicants to file in other
countries within one year of their domestic (U.S.) filing date;
(2) The potential to attract
foreign purchasers or licensees within the first one-year period after filing;
and
(3) The provision of a more rapid and, hopefully, more
efficient license or sale of the product in each country.
The operating time periods to
be considered are centered around the patent filing date, and include:
Phase I: the
period preceding the filing by greater than two months.
Phase II: the time
for a patent attorney to complete drafting a patent application.
Phase III: the 11-month
period following the patent filing (the end of which leaves one month to make
decisions about foreign related applications before the one-year deadline
expires)
There are many things that CAN be done. Even in a
global market not all of them may be practical for one inventor or related
company to carry out. Some steps will have specifics which will vary greatly
depending upon your product and service. Some may be beyond the reach of your
company's budget, and may result in loss of income you of which you will never
be aware.
The most important goal is to make contact with
marketers at home and in other countries that can help you sell your product.
During Phase I, the following
tasks should be completed:
1. Completely finish the
product. This may include developing different versions, such as economy and
luxury models, base and fully accessorized models, permanent and disposable
models, retail sales versions and imprinted give-away versions for the
promotional market, and home and foreign country versions (taking into account
possible differences between domestic and foreign environments); addressing
packaging issues, including individual and bulk sales packaging, sales display
designs, racks and shelving, free-standing cardboard displays, and the like.
Also considering type and
placement of any trademark name and other information on the product or
packaging for each foreign country, including spelling variants and the
potential for your non-descriptive mark to have an unwanted meaning in the
countries you consider important. You should also be familiar with the
structure of your distribution channels so that you can make decisions on how
your sales will start, the price charged (and profit made) for direct selling
versus distributor. This choice may not be exclusive as it is possible to
sell through distributors for one market and to sell directly for another
market.
2. Complete a comprehensive business plan, taking into
account foreign and domestic production costs; packaging; overhead (including,
at a minimum, patent insurance, corporate entity formation costs, product
liability insurance, trademark insurance and inventory financing); costs
associated with the product pipeline, including inventory cost and storage
residency; cost variations based on projected sales channels such as
distributors and distributor programs, direct Internet sales, and contract sales
to catalogs; and costs of selling or manufacturing in foreign countries,
including import/export efficiencies, tariffs, sea-container packing densities,
and foreign tax effects of direct marketing or sales-agent licensing, just to
name a few. A comprehensive and carefully detailed business plan including at
least these indicators is perhaps a prerequisite to determining the true
value of the product. Without this level of information, the value of the
product simply cannot be reliably known.
Production costs may depend
upon the technical and materials advances in your production area. Overhead
could be determined by the type of facility needed and salaries to be paid, or
plans for contract manufacturing. Packaging costs can be estimated without
revealing your invention by inquiring like this: "How much for a 5-ounce sterile
pack disposable in a container less than 5 inches tall and 4 inches wide based
upon a volume of 20,000 per month?"
Patent & Trademark insurance in the U.S. is handled by
one carrier as far as I know, Intellectual Property Insurance Services in
Kentucky: http://www.patentinsurance.com/
3. Gather all information
needed to promote the product. Much of the information gathered will also be
useful in activities directed toward selling the product to consumers or selling
the product and associated intellectual property rights to another manufacturer.
Ask: What are buyers of a particular product using to guide their purchase
decision? If it is energy saving, you need to make charts showing load
factors, current energy costs, etc. If the product is a new article of
clothing, you need diagrams, figures, and an attractive model. If the item is a
baby item, you may want to show a baby using it.
4. Identify competitors,
customers, and related entities. This information can be turned up in Web
searches and in trade encyclopedias in libraries. The identity of persons and
organizations even remotely associated with the product should be recorded,
including:
(a) Product-related trade associations;
(b) Product-related
professional associations;
(c) Related government
branches, elected officials and bureaucrats, including test organizations and
standards-setting groups (local, state and federal);
(d) Related trade shows (very
important for Phase III activities after filing);
(e) All trade-related
magazines, including paid and free subscriptions, trade sales, and trade-related
product publications, especially those which may carry a news story relating to
the product after the patent is filed;
(f) All newspapers and
magazines in any way related to the applicant or product, including those
associated through geography or language, for example;
(g) A list of product
endorsers, particularly those who might endorse without compensation, and even
local elected officials, comedians, radio personalities, and other public
figures. In the case of products seen as socially beneficial, celebrities have
been known to endorse products at minimal cost for the favorable publicity.
These efforts should not be
limited to home country or home language. Where the product admits to use
anywhere, the entire world should be considered the potential market and the
information database should be expanded accordingly.
5. Integrate information
gathered in Steps (1) through (4) to determine which markets to emphasize. Using
all of the above information, make a list of why the product is better than
others currently available, comparing all versions of the product (both high-end
and basic) to the next-best alternative. This information will be used by the
patent attorney in drafting the case.
To begin Phase II, submit all
product information, especially the information outlined in Step 5 above, to the
patent attorney and allow two months for the patent to be completed (both first
draft and final version), and the final version and drawings then executed by
the inventor and then filed.
During Phase II, make no
disclosure or transmission of information before the patent is filed, but fully
prepare all media content which can possibly be used to market the product
so that it will be ready for dissemination immediately after the patent
application is filed. Preparation of every sort of media kit, including long
story and short story, color and black & white photos, drawings, diagrams,
videos. In short, prepare in advance all forms of media that are practical and
relevant that a potential publisher might want.
Your new product or invention
is only born once and you may be able to pick up free advertising if a publisher
runs the story as a news or special-interest item, rather than paid ads. This
media preparation will also useful in preparing materials for trade shows later
on.
Trade show participation should be scheduled to occur
during Phase III, only after the patent is filed, and only after you have either
bought or decided to forego patent and trademark insurance. I suggest you
try to attend trade shows in the first year and early enough so that you have
enough time in the year left over for negotiation, but not so early that the
publications won't have time to publish your news items and generate interest
before the show. The trade show will then be able to attract potential
distributors of your product, including many from foreign markets. This sequence
of actions is a very inexpensive way to focus your international efforts without
having to fly overseas, especially if the trade show is based in your country
and internationally well attended.
You should choose shows early
in the Phase III cycle to allow sufficient time to determine what foreign
distributors are interested in your product, and therefore to identify the
markets where you have the highest potential of sales success. You will
obviously expect to concentrate your foreign patent filings in those markets,
however, it is financially prudent to try to get money from licensees in advance
of filing in foreign jurisdictions during the first year after filing.
There are other reasons to file early in selected jurisdictions, such as
speeding up prosecution. It is necessary to make all the relevant foreign
filings within your deadline�one year from the home country filing date. This
includes a PCT filing in order to extend the time for filing in jurisdictions
that remain after your initial licensing, manufacturing and distribution plans
are set.
Keep in mind, too, that every truly good, new, and
non-obvious invention is a news item. Each publication that showcases the
product as editorial content may be worth a thousand dollars or more in
advertising costs. During Phase II, projected plans for Phase III should be
completed and ready for execution immediately after filing so that all time
spent post-filing can be exclusively devoted to promoting and selling the
product.
Other tasks in Phase II include:
Stop to consider personal tax
liability due to (a) state income tax, (b) state sales tax, & costs of
operation. Consider contracting the sales and operation function to help
lessen personal liability.
(1) Setting up a limited
liability corporation or C-corporation for marketing and selling the product;
(2) Securing a source of
product to meet sales activities;
(3) Contacting a patent
insurance carrier to begin filling out a complete insurance application forms
necessary to put protection in place (offensive and defensive insurance)
immediately after filing;
(4) Ensuring that the sales entity purchases
commercial product liability insurance;
(5) Selecting and applying for
a trademark after the filing for and identification of the sales entity is
complete (including the home country and all foreign countries where the product
is planned to appear). Trademark power is based upon the movement of product
closest to the consumer in each locale, and not upon who had the idea for the
name. Foreign trademarks can be expensive too, so if you elect to wait
until you have secured distribution in a given country (at the risk of someone
else taking the mark which may be a danger to your rights), make sure that you
(a) apply for the mark in that country at the time you set up your license or
distribution agreement; and (b) include a loyalty/fealty provision in the
licensee/distributor agreement in which they admit that your trademark belongs
exclusively to you.
Conversely, when a large marketing firm considers a
mark, the company searches all countries before introducing it. It's a
dangerous, calculated risk to start selling under a name and then later to try
to go to a country where someone may have squatted on the trademark after seeing
you at a trade show.
(6) Ensuring that the sales entity registers for an
internet URL (which may come to have some strength as a trademark) intended to
be used to promote & sell the product; and
(7) Setting up the HTML files
offline to allow the Web site to go live a day after any patents are filed. The
primary goal is total preparedness prior to filing the patent so that marketing
and selling can begin as quickly as possible after the filing without delay or
interruption.
(8) If not contracting out, ensure that worker's
compensation insurance is purchased, an employee manual with policies and
procedures are in place, and that wage withholding and payment are set up.
This includes state disability insurance.
Filing the patent is a
prerequisite for beginning Phase III; No activities in Phase III should
take place until it can be established with certainty that filing has occurred.
To do otherwise may forfeit rights in other countries. It may be preferable to
devote a few days after the patent filing to secure a postal or computer filing
receipt or other proof of filing in hand.
Once the patent filing can be
established with certainty, begin Phase III:
(1) Sell the product.
(2) Acquire a booth at any
trade shows that relate to the product;
(3) Send out the media kits
and news releases to all magazines and newspapers worldwide, making certain to
provide material in as many formats as possible to meet each publication's
requirements. In addition to article length, quantity and type of photographs
and video, consider foreign-language versions;
(4) Follow up by phone with
editors to confirm that they have received news releases and to offer further
information. Pushing your product & argue its worth to editors may be
counterproductive. They do not like hard-sell and may avoid taking or returning
your phone calls in the future. However, sending them a sample of the
product for them to try, might stimulate their interest in a way that the
written and pictorial representations of the invention may not have.
(5) If it is practical to do
so, provide promotional literature samples to publishers to further interest,
either on demand or in media packets;
(6) Contact local media people
who may feature the product;
(7) After securing trade show
space and booth number, forward media kits to likely foreign licensees, local
country distributors, and other entities who may be interested in purchasing the
product and IP rights. Follow up to schedule meetings during the show and make
sure to have sufficient personnel covering the booth so that you can get away to
attend appointments and make contact with other potential licensees at the
show;
(8) Set up a newsletter by e-mail or regular mail
announcing the product and highlighting its progress, including news about
distributors, other publications running your product's news stories, and any
other tidbits, even including a grant of patent insurance when it occurs (design
patents will likely be examined quickly; allowance and issuance may be
news-worthy announcements);
(9) Secure product endorsers
and have news conferences and events where the endorsements are formalized;
(10) Arrange to test-market
the product in selected retail stores which will allow for a display, possibly
on consignment, and carefully record the sales per unit time, and the types of
products sold;
(11) At the trade show, be certain to try to (a) get
the product in the "new products" pavilion, (b) meet with foreign licensees,
sales agents, and buyers, and plan to close deals as much within six
months after the filing of the design patents & trademarks to enable foreign
filing within the six-month design deadline; and
(12) Generally inject sales
into each and every market segment possible. The interest generated by the time
the trade show takes place will depend directly upon the market acceptances
earned, the gross numbers of products sold, and the positive publicity and
popularity surrounding the product.
The object of these critical
timing procedures is to give others a chance to pay for your intellectual
property protection rather than having the inventive entity bear the total
burden of fronting the funds. It is desirable to have each potential
licensee or buyer provide some multiple of the amount of funds to cover the
costs of drafting the license, filing both a patent and a trademark in the
licensee's or buyer's countries of operation, as well as to provide a first
yearly advance against royalty.
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