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Selling an innovation to a company

  1. Apr 24, 2014 #1

    I am wondering has anyone sold any self- innovation or patent to external company before?
    If yes, what are the problem you will face?
    And how is it being sold? A lump sum once or by percentage of your product being sold in market?
    Do you need to build a prototype to sell the idea?

  2. jcsd
  3. Apr 24, 2014 #2

    Simon Bridge

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    I have - nothing much, just a bit of electronic circuitry for regulating a milk vat.
    Your questions are very broad, so the answers are as general.

    The process is much the same as any sale.
    The details are between you and the buyer, and are covered by your local contract law (and regulations covering sales etc). When it comes to items covered by copyright or a patent, the deal is usually between your lawyers and the buyers lawyers ... best leave them to it.

    I got a lump sum in return for transferring the rights in perpetuity.
    That would be normal for someone small - no leverage and limited market.

    The issues are basically the same as with any sale too.
    The seller needs to convince the prospective buyer to buy, this includes showing that the product is actually yours to sell. i.e. do you have a unique patent on the innovation?

    Of course, having sold all or some rights, there is an issue if you ever want to use your innovation again: there will be some restrictions.

    The sales contracts can be arbitrarily complicated - which can trip people up.
    People sometimes don't realize what they have just bought/sold.

    Best advise: hire a lawyer.
  4. Apr 25, 2014 #3


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    One aspect that you have to realize is that no one knows, but you, how really great your idea is. Don't expect any immediate offer of a million bucks, which would be great, but just keep it all in perspective.
  5. Apr 25, 2014 #4
    Is it in anyway possible to sell my innovation without patenting it? The process takes 2year at least and a huge fee, i dont think its worth it, by then my product might be obsolete..
  6. Apr 25, 2014 #5


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    Absolutely. All a patent does is give the inventor the exclusive right to exploit his invention, or not, for a limited period of time. Even the rights to a patented invention may be sold or otherwise assigned by the inventor to another party. Once the patent expires, the process or invention falls into the public domain, and no further royalties are owed to the inventor.

    There are all kinds of things in commerce which are not patented. Some processes or formulas are what is known as 'trade secrets', where the details are not in the public domain, as they would be if patented. One famous example is the formula for Coca Cola. The recipe is reportedly kept under lock and key in a safe at company headquarters in Atlanta, and only a few key people are allowed to know the details.


  7. Apr 25, 2014 #6


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    Note that a pending patent can still protect you. You should talk to a lawyer.
  8. Apr 25, 2014 #7


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    If you don't have a patent, how will you protect the idea? If you reveal it to the company that you are trying to sell it to and it is not patented, they are free to use it without paying you anything. If you don't reveal the idea, how will they know if it is worth buying?
  9. Apr 25, 2014 #8


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    A patent is only one type of protection for certain forms of what is broadly known as intellectual property.


    There are several other forms of protection available, like copyrights and trademarks. If intellectual property is misappropriated, regardless of being patented, copyrighted, etc., depending on the jurisdiction, a claim may be lodged against the miscreant by the creator of said property, which claim may be a civil or criminal matter depending on the law. Instead of the maxim caveat emptor, for these cases caveat vendor might be more appropriate.
  10. Apr 25, 2014 #9


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    Several things to consider,Seth.T,
    If you aquire a patent to your invention, and someone else duplicates your patent, then consider that you will need finances to enforce, which in itself is costly and time consuming. The patent is applicable only in the jurisdiction in which it is granted. If you aquire soley a USA patent, then anywhere else in the worrld ( baring any treaties ), your idea can be duplicated and you do not have any rights angainst infingement. Remember that once patented, your idea is open for all curious investigators to peruse and then improve upon and there may then not be any violation of your rights that can be upheld.

    What usually is done is that the application for a patent is filed at the patent office. You will see a lot of "Patent Pending" marked on some products. What this means is that the date of application for a patent is recorded for legal purposes. Depending upon the outcome of the product, the application is continued for issuance, or abandoned as seen fit. This provides a warning to others that this product is protected, or will be, so beware.

    Approaching a company with your idea having a patent pending designation in your jurisdiction will then provide some protection for you. If the company likes your idea, then transfer of legal rights to the product from you to them or some other arrangement would play out.

    At the very least, some type of legal disclosure or time-line usage document might be in your interest.

    You could also take a look at something like Kickstarter, or Quirky, to see if their type of product development and capital investment suits your fancy.
  11. Apr 25, 2014 #10

    Simon Bridge

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    The term "intellectual property" can be somewhat misleading - it is an umbrella form for different areas of law that often appear together. These include: copyright, patent, trademark, and trade secrets. Each does quite different things and are intended to solve different problems.

    You cannot (usually) get legal protection for something as vague as an "innovation".
    It is the expression or realization of the innovation that gets covered by law.
    Similarly, companies are unlikely to buy an idea - though they may be prepared to finance the development of some realization or expression of that idea.

    Most people in the innovation-exploiting business are honest - it's usually cheaper to have the inventor/author working for them than to have that worthy on the outside generating negative publicity and law suits.

    You do not have to have a patent to sell an invention - though it can help.
    The new owner is likely to want to patent the invention if they think it is worth money.
    There is always the risk they will see your invention, realize how to make one themselves without paying you a cent and say, "Thank you, goodbye". So your initial protection would have to be in the form of a trade secret... which restricts your market.

    The lone inventor will usually want to partner with some larger business since the costs of defending their invention, as well as development and marketing, are usually too high for one person to bear. But there are lots of ways to start a new business based on an innovation these days... there are new startups all the time.

    Disclosure is usually better than keeping it a secret - i.e. if someone steals your invention, it is easier to claim that it is really yours if your association with it is a matter of public record. It is also easier to get good advise about what to do next if the people giving the advise know what you are talking about. It is also easier for people to decide to pay you for what you are doing.

    This is why the best advice you'll get concerning vague "innovation"s is the advice to hire a lawyer.
    Once paid, the lawyer is usually bound to keep your secrets - and is professionally obliged to represent your best interests.

    Most of the time when I field a question like this, and the inventor is being coy about what has been invented, dosn't have a prototype, worried about protection, no lawyer, seeking free advise online, it turns out to be some variation on free-energy generators.

    You, I'm giving the benefit of the doubt.

    Good luck.
    Last edited: Apr 25, 2014
  12. Apr 26, 2014 #11


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    Without a patent to protect one's rights to an invention (an innovative product or process), one would need to execute an non-disclosure and proprietary information agreement in which one would disclose the details provided that the party to whom discloses said IP will not copy or otherwise develop or put into practice said IP, and will not disclose the IP to a third party. In addition, the PIA contains an agreement that one retains all rights, titles and interests to the IP.

    Individuals and small companies receive lower fees for patents.

    In the patent, one must present prior art, as well as a description of the idea, and then establish the claims. The claims are what is protected in a patent.

    One should look at examples of patents in the class(es) to which the innovation applies in order to establish prior art.

    A patented idea must be new, useful and non-obvious.

    These days, one my have to patent in the US, EU and other countries to fully secure one's invention.
  13. Apr 27, 2014 #12
    Here are the facts from the School of Hard Knocks...

    A patent gives you the right and the power to sure someone. It DOES NOT pay for you to have a better legal team.

    If you are going to buy anything costing more than $50 from China and certainly a big purchase, you need an agent on site to get you the "chinese price" and to insure you don't get ripped off...constantly!! People will switch to cheaper components on you at the drop of a hat. Hint/trivia quiz; Finish this movie title, the first half is the name of a company; "Ali Baba" and the...

    When the big American corps go to rip you off, they will sign your "non-disclosure/non-compete" form and then steal your idea by giving it to a friend of a friend of a friend... sucker!

    It doesn't matter wo thought of it, it matters who did it first. Therefore...

    D.I.Y. or DIE!

    One thing that you have today that we old-timers never had was crowdfunding. That money is more loose since you are only asking for small amounts from each person.

    Use your local maker/hackerspace and D.I.Y. prototype.

    Once you have put it out there and people are buying up your short run inventory, then you can come to the BigGuys with a smile on your face rather than your hat in your hand.

    Expect to fall down face first multiple times before you hit your homerun... Good Luck! You are going to need it!
  14. Apr 27, 2014 #13
    No, Simon, it is actually an innovation to self sustaining arc reactor.. Just kidding. Thanks all for the reply.. I think i will just go with non disclosure agreement.

    Seems like nowadays innovation are being strangled to death by hefty fees and capitalism.
  15. Apr 27, 2014 #14

    In engineering innovation, sadly you cant do trade secrets like coca-cola where only you know the concoction, and buyers just need to taste it with their tongue. So much easier!
    The art of reverse engineering is a blessing and a curse.. :d
  16. Apr 27, 2014 #15
    if you can, build sales channels as best you can, if possible, before you actually roll it out to the public.

    that way when the product is ready to ship you can hit the ground running. and, reverse engineer crowd won't get to see it before you are making money with it.
  17. Apr 27, 2014 #16


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    What?! Capitalism?! You're trying to make money from your idea, are you not? If all you cared about was the idea itself, you'd just publish it here for anyone to utilize!
  18. Apr 27, 2014 #17
    no, not for money, for recognition and contribution. :smile:
  19. Apr 27, 2014 #18
    so, then you can do all the more open-sourcing, i guess...
  20. Apr 27, 2014 #19


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    Well great - then post the idea! Everyone will know it was posted here, by you.
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