The Value of Invention

This is the first of a two part article regarding the value of inventions, the determination of their commercial potential and licensing IP basics. When thinking about this subject I realized much of my thoughts originated after reading quotes by Thomas Edison and have included some relevant quotes.

The Idea Creation:

It should come as no surprise that the value of your invention is going to be directly tied to its commercial potential. Perhaps the following quotes by Thomas Edison can state this more succinctly: 

“Anything that won’t sell, I don’t want to invent. Its sale is proof of utility, and utility is success”

“The value of an idea lies in the using of it”

Where does the value of your invention begin? It does not matter whether you are working on your own, at an University, or for a corporation, the following is important to understand because the initial value is created soon after conception. The question becomes how much value? 

For the sake of discussion let us say your idea can meet the criteria for a patent. The criteria for a patent are that your idea must be:

  • Novel – (New)
  • Useful – (has utility)
  • Non-Obvious (to someone skilled in the art)
  • Enabling (someone else can make it work) 

Note: The Entrepreneur’s Advisor strongly recommends that you seek the services of a professional Patent Attorney if the decision is made to file for a patent. The Entrepreneur’s Advisor also vehemently encourages the inventor(s) be part of the process to understand what “Claims” their idea is making. Attorneys should be by referral only and always have references. 

One should not be in a rush to file for a patent as filing is expensive and once you have filed for a patent it is no longer a secret. In addition, having a patent does not necessarily make you the owner of the invention. This is especially true in University or Corporate settings. You must be familiar with their technology transfer policies. 

The Process: The decision to file for a patent can best be described by following the decision process of a technology transfer center. The objective is to establish the maximum commercial potential (value).   

“Hell, there are no rules here – we’re trying to accomplish something” Thomas A Edison

  1. Determine the technical merit – it is not about the scientific importance or the quality of the idea, it is about creating value thru commercialization

  • Is there is a prototype?
  • Is it a core or stand alone technology?
  • Is it a “Hot” area of research?
  • Does your idea require  a lengthy FDA or other approval process (Drugs and Medical Devices)?
  • Does it work? 

“I have not failed. I’ve just found 10,000 ways that won’t work.” Thomas A Edison 

   2. Determine “Protectability” if a patent is being considered

  • What claims are you making (what does your invention do that is unique?)
  • How difficult is it to reverse engineer?
  • Estimate ability to detect infringement
    • Can your technology be embedded into something else making infringement difficult to detect?
    • Will the market be international (need to file for international patents protection).
    • Ability to withstand litigation.
    • How much “Prior Art” was actually done and who did it? 

  3. What are additional applications for your product? Too often  technology transfer centers, innovators and entrepreneurs fail to consider additional applications.  For example: “Viagra” was originally developed as a heart medicine under the name of Sildenafil, or the adhesive developed by 3M that made history and profit as Post-It Notes.  Discovering additional applications is an art. The Entrepreneur’s Advisor are experts at uncovering additional applications. 

“We don’t know a millionth of one percent about anything.” Thomas A Edison 

“There is always another application for an idea – you just have to find it” – Stuart Smith 

Determining Commercial Potential to 1) Patent, Keep and Develop, 2) License, 3) Shelf idea or 4) any combination of 1 & 2. 

  • What is the market size?
  • What is the market potential of the additional applications?
  • Would the costs to pursue a patent infringement case be worth the potential revenues? (Patent infringement suits can costs millions of dollars)
  • Are there enough commercial advantages or costs savings for other companies to be interested in a licensing arrangement (Licensing = royalties = $)?
  • What are the competing technologies?
  • Who can be first to the market?
  • Is a “Public Good” being fulfilled?
  • What is the stage of development of the idea? Prototype? Milestones? Or perhaps 12 years of FDA approval etc.?
  • How long until the product is ready for market sales?
  • Are their established industry connections?
  • What are the inventor’s capabilities to bring the product to market? Do you have a business sense?
  • What need does the product fulfill?
  • Who owns the patent? 

Decision time: 

Based upon all the factors and information above a decision will be made by the inventor, owner or technology transfer organization. If the decision is made not to go forward – do not be discouraged. 

“Nearly every man who develops an idea works at it up to the point where it looks impossible, and then gets discouraged. That’s not the place to become discouraged.” Thomas A Edison 

“Many of life’s failures are men who did not realize how close they were to success when they gave up.” Thomas A. Edison 

But for those ideas that have commercial potential the next step is to file for the patent or license the technology. Part II of this article will discuss the factors and issues to be considered for licensing your invention. 

The Entrepreneur’s Advisor™ is unique in their ability to assist new ventures. Our understanding of the emotional rollercoaster, the details of starting a business, the experiences of running a business, change management  and a passion for what we do separates us from others because “We have been there and done that”. Our innovative Pay-As-You-Go” program is designed to be a sounding board for start-ups. Talk to us – “We love getting our hands dirty.”

Website: http://www.theentrepreneursadvisor.com

Previous articles can be found at:  http://blog.theentrepreneursadvisor.com/

Contact us at info@theentrepreneursadvisor.com

Comments

  1. bill k. says

    i have an invention that is currently “patent pending” and have been attempting to market the invention to sell to a major company for the last 6 months..last week, i received an inquiry from a very large major company that has an interest and is wanting more info on my invention…without putting the cart before the horse” i would like to be somewhat prepared in the event an offer is made to buy the patent rights or usage of it…is there a resource to help determine the value of one’s invention? how do i know if the offer that is made(if it is made) is fair? 
    help?