Thursday, November 29, 2012

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.

Click here to continued...


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.
Tim Sherman, Director of Customer Service

Tel: 651-552-0080   |   Fax: 651-552-7678

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

No comments: