Snatching Defeat From the Jaws of Victory: Cautionary Stories For Inventors

Part 3 of 3
By: Trevor Lambert, President

Moral of the Stories

As I look back at these and many other heartbreaking stories it is difficult not to get depressed and frustrated all over again.  However, my goal is not to paint all inventors as unreasonable, greedy prima donnas.  Rather, my hope is that these extreme cases of inventor mistakes will provide guidance for budding inventors on what to avoid.

When looking at these three stories, you should notice that none of the mistakes the inventors made had anything to do with the development of the product.  The patents were filed or issued, the prototype was well designed and the marketing message was on target; but still the deal did not go through.  In each case the mistake was more mental or emotional during the interaction with the licensee.

Over the years, I’ve noticed the volumes of available instruction for inventors on how to develop their invention, but very little can be found on what the inventor can expect when they engage in talks with the licensee.  In an attempt to fill that void, let me make a few observations that may provide some insight.

First and foremost, an inventor needs to realize that licensing requires a level of synergy between the company, invention and inventor.  The invention should fit in with the company’s product line and areas of distribution, and the two parties need to have a positive working relationship.  The company is considering entering into a long-term relationship to develop and market your invention and wants to be reassured that the inventor is stable.  It may be tempting for inventors to think the company is trying to steal or knock-off their invention, but resist that urge.  In all my years of pitching products I have found that the companies behind the recognized brands in any industry are usually very trustworthy.  Of course you should protect yourself by filing the patent, etc., but do not question their intentions or let suspicious thoughts cloud your judgment.

Secondly, it is critical that inventors realize that they are not negotiating a used car purchase.  The company on the other side of the table is composed of sophisticated professionals and thus any demand, term or condition should be backed with solid supporting data.  In particular, carefully consider what you are hoping for related to the royalty rate, minimum sales volumes and the advance.  Do not pull numbers out of the sky; rather perform market research so that your offer is within the range for that industry. 

Finally, remember that putting together these deals usually takes time – months not weeks.  Depending on how developed your product is, the company will be investing a large amount in tooling, engineering, packaging, marketing, inventory, etc., and they will likely want to consider the product carefully from a number of different angles.  They may ask you if they can pitch the product to some of their larger customers (or retailers) before licensing, or perform other due diligence, such as a focus group or prior art search.  This is a good sign so be patient, yet at the same time follow up and try to get the company to provide you with a timeline and benchmarks for putting the deal together.

In the end, remember the three-Ps.  Remain positive, professional and patient and you can avoid the self-inflicted heartbreaks that can happen to inventors.  If you do this the relationship with the licensee will be one of mutual-respect that will pave the way for a successful license deal.

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About Lambert & Lambert:
Lambert & Lambert is a contingency-fee based invention marketing and patent licensing firm that specializes in consumer products. Based in Minneapolis, Minnesota, Lambert & Lambert provides services to inventors, product developers and small companies throughout the world and currently has products selling in numerous retailers.
Contact:
Tim Sherman, Director of Customer Service
Tel: 651-552-0080   |   Fax: 651-552-7678
info@lambertinvent.com

Links:
Lambert & Lambert Homepage   Lambert & Lambert Invention Blog
Lambert & Lambert on Facebook   Lambert & Lambert on Twitter

Snatching Defeat From the Jaws of Victory: Cautionary Stories For Inventors

Part 2 of 3
By: Trevor Lambert, President

Story #2 – Greed

We were representing an inventor who had invested about $25,000 in his new product.  After a trade show, XYZ Company expressed keen interest in licensing and wanted to move forward.  They had an extensive product line in Home Depot, Lowes, Ace and many other retailers and invited us to visit to explore putting together a deal.  Prior to the meeting I outlined some reasonable expectations for our client and he never questioned them.  At the meeting, the CEO, VPs and others were prepared to move forward and we reached consensus on many aspects of the agreement.  For some reason though, during a break in the meeting my client tells me that he now wants an advance of $750,000!  I tell him that with only $25,000 in development and no sales history, there is absolutely no way we can reasonably ask for this without threatening the deal entirely.  In the end he would only reduce the asking advance amount to $400,000 and told me to make the presentation. 

As you might expect, XYZ Company passes without even providing a counter offer.  Just like if someone made a ridiculous offer on your house, you would simply ignore it – and if they come back with a reasonable offer you would play hardball because their initial offer was insulting.  This is exactly the environment this inventor created with the license deal.  Instead of establishing a sense of mutual collaboration wherein the two parties choose to forge ahead in teamwork, our client’s greed killed what could have been a very good opportunity.

Story #3 – Haste

In this last instance, we were representing a new patented product in the hardware industry.  Trade shows were attended, a prototype was developed and we entered into substantive discussions with Acme Products, who had a very well-recognized brand.  They were eager to enter into the specific market segment of our client’s product, yet since they had no experience with licensing there was a bit of a learning curve required, thus creating some delays.  We were working with their attorney to craft an acceptable contract; however our client was growing impatient.

A couple months into negotiations with Acme, on a Friday our client calls me with a ridiculous demand.  He told me that Acme Products has two more weeks otherwise he is withdrawing the offer to license his patent.  I pleaded with him and cited evidence that proved Acme Products was operating in good faith and that the inertia of the deal was moving forward.  In the end he agreed to think about it over the weekend, but on Monday his opinion on the matter had not changed.  I asked if he could provide more time than two weeks and proposed many other more palatable solutions to move the deal forward, but he rejected them all.  With no other options and knowing I had to represent the wishes of our client, I was forced to make the call.

As with the past two stories, Acme Products chose to pass.  The artificial timeline was viewed as completely absurd and the president told me he did not want to enter into a contract with someone who would make irrational demands.

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About Lambert & Lambert:
Lambert & Lambert is a contingency-fee based invention marketing and patent licensing firm that specializes in consumer products. Based in Minneapolis, Minnesota, Lambert & Lambert provides services to inventors, product developers and small companies throughout the world and currently has products selling in numerous retailers.
Contact:
Tim Sherman, Director of Customer Service
Tel: 651-552-0080   |   Fax: 651-552-7678
info@lambertinvent.com

Links:
Lambert & Lambert Homepage   Lambert & Lambert Invention Blog
Lambert & Lambert on Facebook   Lambert & Lambert on Twitter

Snatching Defeat From the Jaws of Victory: Cautionary Stories For Inventors

Part 1 of 3

By Trevor Lambert, President

In the last decade I have had the great privilege to work with many independent inventors as they seek to commercialize their inventions.  Our company, Lambert & Lambert, represents technology owners seeking to license or sell their intellectual property rights by collaborating with companies well-positioned to sell the product and pay royalties to the inventor.

Over the years I’ve been able to see the inner workings of deals come to fruition, and others collapsing miserably.  No doubt we all know the path for inventors is an arduous one, paved with hurdles, set-backs and sometimes heartbreak.  However, sometimes those hurdles and set-backs are a product of the inventor’s own making.  By way of action, attitude or expectation, the inventor actually obstructs the deal from going through.  So in an effort to learn from past mistakes, let me share a few stories that may teach you what not to do.  The names, companies and products have been changed to protect the guilty.

Story #1 – Arrogance

A Fortune 500 (I’ll call ABC Corp) contacted us in search of technologies in fabric care.  Since we represent inventors, not companies in search of products, we performed a search and discovered a very unique technology developed by a small R&D firm on the east coast.  We convinced them to allow us to represent them and engaged ABC Corp to generate interest and set-up a meeting with all of their key staff and decision makers.

At the meeting our clients were asked to provide a technical overview of the product.  We prepped for the meeting extensively and so I was very comfortable with them making the presentation.  However, this is precisely when things began to unravel.  Rather than positioning their product as “highly complementary” to ABC Corp’s product line, they kept stating that their technology was “better” and went on to be outwardly negative toward ABC Corp’s technologies.  I was becoming embarrassed since the lead engineers were in attendance and visibly getting agitated by their comments.

The meeting went on for over two hours and we took a break to allow them to internally discuss what had been presented.  Not surprisingly they passed on the technology and the VP of the division mentioned to me afterward that he was surprised how arrogant they were.  They liked the technology but not the inventors.  Sadly, to this day the technology has not made it to the market.  Considering ABC Corp projected yearly sales of 250 million, the inventors are out a significant amount in royalties.

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About Lambert & Lambert:
Lambert & Lambert is a contingency-fee based invention marketing and patent licensing firm that specializes in consumer products. Based in Minneapolis, Minnesota, Lambert & Lambert provides services to inventors, product developers and small companies throughout the world and currently has products selling in numerous retailers.

Contact:
Tim Sherman, Director of Customer Service
Tel: 651-552-0080   |   Fax: 651-552-7678
info@lambertinvent.com

Links:
Lambert & Lambert Homepage   Lambert & Lambert Invention Blog
Lambert & Lambert on Facebook   Lambert & Lambert on Twitter