The Online Inventor -- March 1999

*****************************************************************
*****************************************************************

THE ONLINE INVENTOR

(C) 1999 Market Launchers, Inc. -- March, 1999

http://www.marketlaunchers.com

Publisher: Paul Niemann

E-mail: [email protected]

*****************************************************************
*****************************************************************

In this issue:

Article # 1:    "The 3 Most Common Mistakes I See Inventors Make."

Article # 2:    "Getting Your Toy or Game Idea to Market -- Licensing & Agents," by Carol Rehtmeyer of Rehtmeyer Design & Licensing

Article # 3:    "PCT issues"

************************************************************

Article # 1:    "The 3 Most Common Mistakes That I See Inventors Make"

1.    When you were in school, how many times did your Mom have to tell you to "go do your homework?" Yet one of the most common mistakes that I see inventors make is that they often do not do their homework when it comes to doing their market research. The term, "market research" sounds like a pretty complicated term, but it really means finding out answers to such simple questions as: How do you know if there is a market for your product? How do you know what it will take for your potential customers to buy your product? Better yet, do you even know WHO your potential customers are? It doesn't make much sense to proceed at this point until you can answer these questions.

2.    This leads us to the other most common mistake that I see inventors make: Patenting a product before determining the likelihood of whether or not the product will succeed.

The most common result of these mistakes is that the inventor either goes on to obtain a patent for a product that has no market -- meaning that there aren't enough potential buyers of his product -- or the inventor does not have an effective way of bringing his product to market once he obtains a patent for it. Remember, only 2 % of all patented products ever produce a profit for the inventor, and some products don't necessarily need to be patented in order to be marketed.

So how do you go about conducting your market research without letting someone steal your idea? There are 2 ways to do this, and both give you a limited amount of legal protection against having your idea stolen.

One way is through a "confidentiality agreement," also known as a "non-disclosure agreement." The other way is by applying for a provisional patent, which can be obtained for around $225 with the help of a patent attorney. My patent attorney recommended this to me for a certain product that I was working on, since it would give me a year in which to test-market my product, before deciding whether to actually apply for a patent. Most attorneys won't recommend this, though, and I believe that the reason is because they make more money by helping you apply for a regular patent, rather than a provisional patent. Ask your patent attorney about this, because you don't want to become one of the 98 % of the people who never profit from their patents. Patents are expensive, especially if you don't profit from the invention.

3.    The other most common mistake that I see is when inventors are hesitant about giving their sales pitch to potential licensees. This is called "call reluctance" and it isn't limited to just inventors. It's common among professional salespeople as well. We're afraid that the company who we're trying to sell our idea to will tell us "no."

The obvious reason behind this is a desire to avoid hearing bad news. Nobody likes to face rejection, and we tend to take it personally when our inventions get rejected.

There's one sure way to know if an inventor has call reluctance: He continues to refine and perfect his invention, even after it's already good enough for presenting. Even when it's perfect, he continues to make it better, because this gives him an excuse to avoid making those dreaded phone calls. I know of one inventor who has been perfecting his creation for over a year now, even though the prototype was ready for presentations 6 months ago.

How does an inventor overcome call reluctance? I don't know if there's any one way in which to do so. You can set a goal of contacting, say, 5 companies each day. Or set aside a certain block of time each day to do nothing but make calls, such as between 9:00 to 10:00 a.m. each morning. Just make yourself do it - it requires discipline, so you must focus on what you want to accomplish, not on what you want to do.

If you still can't bring yourself to contacting companies, then hire someone to do it for you. There are companies, and individuals, who will take on this task for you in some cases. But they're not going to feel as passionate about your invention as you do.

************************************************************

Article #2: "Getting Your Toy or Game Idea to Market -- Licensing & Agents," by Carol Rehtmeyer of Rehtmeyer Design & Licensing

As you keep your eye on toy products that are currently available on the market, or look for classic toys or games to collect, you will likely come across products that are truly wonderful and clever, and others that make you wonder "Who made this and why?!" Have you ever said to yourself, "I could have come up with something better?" Well, maybe you can!

Toy manufacturers don't always come up with their own products. They often look to professional toy and game inventors to design, engineer and develop many of the products that you see and buy on the toy shelves. Such classics as "Upsie Baby," Toss Across," "Rock 'em Sock 'em Robots," "Hair Grow Dolly," "Micro Machines," "Nerf," "Betsy Wetsy," "Glo Worm," "Monopoly," "Trivial Pursuit," "Taboo," "Pictionary," and many others were developed by professional, independent toy designers.

Some toy and game companies buy as much as 80 or 90 percent of their toy lines from professional inventors. Every year toy manufacturers refresh their toy and game lines with newer, more exciting products. This means hundreds of products may change or be removed from a toy line, and hundreds of new opportunities for professional inventors to license their new items.

The toy industry does not buy items or patents from inventors. They license working concepts. "Licensing" involves giving a toy manufacturer the exclusive right to manufacture, sell and distribute your concept in a specific region, in return for an advance, and a royalty payment (much like a writer who licenses his/her book rights to publishing house). Royalty payments are typically based on a percent of the wholesale price of the manufactured item. The average royalty that toy companies pay for an item is 5% of the wholesale selling price. Keep in mind that toy companies might not include royalty payment for returned, damaged, defective items and more. Royalties are paid for
each individual item that the toy manufacturer sells to a retailer. Sales samples and such are likely to be excluded. So, contract negotiations are very important. Basically, the royalty works like this: The more expensive the item and the more a manufacturer sells,
the greater the royalty income for the inventor.

Inventors can make a lot of money, but licensing an item is not so easy. Toy manufacturers see thousands of product submissions from professional inventors each year. Additionally, most toy companies have their own internal development staff making it more difficult to come up with new and continually exciting products.

Professional toy development houses are often turned down on many products before they get one or more licensed. Even so, professional inventors are more than two hundred times as likely to deliver a product to a toy manufacturer that has any likelihood of being marketed than the average clever amateur inventor. As a result, the majority of toy manufacturers will not work directly with the general public. They will only look at products presented to them by professionals. So how, you may wonder, can the average clever person get their product presented and licensed to a toy manufacturer? Clever inventors need to work with an agent.

An agent should be more than a middle person. They should play-test the product and assist with improvements. A good agent company keeps their inventors updated with dates that toy companies are scheduled to see products, and give "wish lists" of items that are of interest or requested by the manufacturers. A good agent should have access to
every major toy and game manufacturer in the United States as well as in Europe and Asia.

An agent typically charges a nominal fee to review a product from an unknown amateur inventor and should provide a written analysis of how your product stands against current industry standards as well as how the product was received by the focus group. A good agent will only represent those items that were deemed marketable. Some great ideas may not be suitable for licensing, but may still have strong market potential. In this case, inventors may want to consider self-production and distribution of their product.

Once an amateur inventor has established a relationship with an agent, the agent should work for that inventor free of charge. An agent should not charge for their licensing service, but will expect to receive a percent of the royalty income when and if the toy, game or juvenile product is licensed to a manufacturer. The money an agent makes from
the licensing of a product should come from the toy manufacturer and not the inventor.

An agent typically will review products that are fairly "rough" or in a crude form. When products are to be presented to a toy manufacturer, however, the toy must work well and look as much like the proposed finished product as possible. Agents should present products to the heads (decision makers) of the toy companies, and it is therefore
important that your product, as well as your agent, make an impressive presentation. An agent should be your guide and should assist you with all your questions, including protecting your idea.

# # # #

Carol Rehtmeyer is President of Rehtmeyer Design & Licensing, a product development, graphic design, packaging & manufacturing company serving the toy, game, novelty and juvenile product industry. Rehtmeyer Design & Licensing is the host and sponsor of the renown "Toy & Game Inventor's Forum (T.G.I.F.)," held annually in Las Vegas. As an agent, Ms. Rehtmeyer welcomes your questions and new talent. Please feel free to call, write, fax or e-mail your name and address for information regarding T.G.I.F., answers to your questions and for a general information packet.

Rehtmeyer Design & Licensing
1979 North Mill Street, Suite 206
Naperville, Illinois 60563

Phone: 630-717-9304
Fax: 630-717-9384
e-mail: [email protected]

************************************************************

Article # 3: "PCT issues"

A number of our subscribers are from foreign countries, and one of them asked me if I could include some info about PCT (Patent Cooperation Treaty) issues in this newsletter. So, after asking my friendly neighborhood patent attorney about the subject, he suggested that I go to the US Patent Office's web site, which is what I did. The web address is www.uspto.gov

The specific page is: http://www.uspto.gov/web/offices/pac/dapps/pct/pct.htm and it contains a ton of useful info on PCT issues -- more than I could possibly include in this newsletter and, since I don't want to get myself in trouble for plagiarizing, I decided to just direct you to their web site, rather than copying what is already there. You should check it out if you are interested in patenting an invention in more than one country.

************************************************************
************************************************************

Click here to read the February 1999 issue.