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How to Deal: How to Land A Royal(ty) Flush ©
| Guest post by: Joan Lefkowitz |
Article Overview: Getting a new product licensed to a company represents the ultimate goal for many inventors. This article details how to get your product or invention licensed for a profit.
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Free Download - BUILDING A BRAND © By Joan Lefkowitz |
How to Deal: How to Land A Royal(ty) Flush ©
By Mike Drummond
Roger Brown licensed his first invention from the trunk of his car. “There we were,” Brown recalls, “three guys in business suits standing around the trunk of a car with a device that looks like a rocket launcher.”
Brown developed the Super Sleever for his employer, Westinghouse Savannah River Corp. The nuclear facility requires protective plastic sleeves on hoses used in contaminated areas. Using slipping sleeves on hoses typically took two people up to 10 hours.
Brown’s device, a metal tube housing hundreds of feet of plastic sleeve, envelopes hose as fast as it can pulled through the Super Sleever. His invention saved the company $4 million annually.
With the go-ahead from Westinghouse, Brown sought licensing opportunities with others in the nuclear industry. Bartlett Nuclear, Inc. was first. The Super Sleever has been used at more than a dozen Department of Energy nuclear facilities since.
Over the past decade, the former comic book writer-turned serial inventor has licensed at least nine products, from toys to kitchen gadgets. And he’s done so without ever filing for a patent – heresy among some seasoned professionals in the industry.
Getting a new product licensed to a company represents the ultimate goal for many inventors. A licensing deal entails far less financial risk for inventors and frees them to move on to their next great idea while collecting royalty checks – mailbox money in the language of the business.
He’s landed all his licensing deals spending less than $100 on each item – some for as little as $8. Of course, that doesn’t account for the time he takes to research. He walks store aisles. He scours the Internet. He talks to consumers. He determines how big the market is for a particular product. He figures how his invention would complement a company’s existing product line. He does his homework.
The secret to Brown’s success is the sell sheet – a single 8.5 x 11-inch sheet of paper that clearly and concisely shows what the product does and how it will benefit the targeted company and consumer. Brown advises using professional photos. “I tell inventors, ‘Would you rather read a pamphlet or a novel to grasp an idea?’ If you can’t explain it quickly, how do you expect the consumer to understand it?”
Few would argue with Brown’s position on brevity. However, his position on the need for a patent is a point of contention among some in the inventing industry.
Brown is in the don’t-need-a-patent camp. He says companies he deals with offer licensing royalties between 3% and 5%, patent or no. “I know of companies that say they won’t look at something without a patent,” he says. “I don’t deal with those. There are enough companies out there that don’t require patents.”
Joan Lefkowitz, president of Accessory Brainstorms Inc., a New York-based licensing, marketing and sales representation agency for fashion, beauty and lifestyle inventions, disagrees. She only represents inventors whose products have at least a patent pending and a working prototype.
From an independent inventor’s standpoint, the best scenario to license an invention is with an issued utility patent, Lefkowitz says. The second-best is with a patent pending. “I have found that most potential licensees are willing to consider licensing a patent-pending product, but the inventor will receive a lower royalty percentage until the patent is issued,” she says. “If during the licensing period the patent is denied, the licensee ordinarily has the right to drop the product.”
Chris Clark, vice president at commercialization company Edison Nation, a sister business of Inventors Digest, says, “Having a patent is the easiest way to benefit financially from an invention.” He notes that because “most licenses are giving the licensee permission to do something, the grant of rights in a license should be for something that the licensee could not legally do without a license.” He says that an emerging trend is creative, flexible licensing agreements. These include contracts with escalating and de-escalating royalty rates, minimum sales targets, buy-back provisions, profit sharing, and joint venture-type provisions.
Flexible licensing deals is one of Lefkowitz’s “hot button” topics. She abhors exclusive agreements.
“Exclusive licenses are for marriages,” she says.
Instead, inventors should acquire multiple licenses and/or agree to limited exclusive deals. A license can be exclusive in a particular geographic area or manufactured for a specific segment such as youth or women. Another way to segment the market and leave the invention open to multiple licenses: Allows sales to specific market sectors such as department stores or large drugstore chains.
Lefkowitz cites Bumpits, a hair-poofing or “volumizing” product. Inventor Kelly Fitzpatrick crafted a deal that gave her selling rights to beauty supply and junior chain stores, while giving infomercial sponsors exclusivity in all other markets.
Licensing Winners & Losers
Product license consultant Joan Lefkowitz on what worked and what didn’t.
Product: FANTAIL
Comment: I licensed this product to a big hair accessory company in 2006. The inventor received an advance on royalties. Fantail is still selling and the inventor is still collecting royalties. The company tooled and retooled it in a timely manner. The initial packaging was weak and they completely re-envisioned the packaging and used better photos. The line was extended to two SKUs by adding a smaller version for fine and short hair. The company built sales over time and kept adding accounts.
Product: HAIRDOSTICK
What it does: Keeps your hair in a bun
Comment: Hairstylist TED GIBSON made some unprecedented demands for his fully patented hairstick invention. He insisted, and we got for him, an unusually high up- front fee and his name on the packaging. A particularly entrepreneurial licensee got the manufacturing right on this in a short period of time. Packaging and publicity were well executed. A version for kids was added. Sales were strong for several years until the hairstick category downtrended.
Product: POP-UP MANICURE TRAY
What it does: Foldup nail polishing tray
Comment: Licensed to a large company specializing in personal care products. Beset by a number of roadblocks – the first mold wasn’t right. There was a big lapse of time before it was corrected. The packaging was an opaque box so you could not see the product itself. The product was illustrated on the box; there were no photos. There was little publicity. The retailers didn’t know where to place it so it went on the bottom shelf. The product, an excellent invention, withered on the vine.
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Article Tags: accessory brainstorms, beauty inventions, fashion inventions, independent inventors, invention licensed, lifestyle inventions, product licensed, royalty deal
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About the Author: Joan Lefkowitz RSS for Joan's articles - Visit Joan's website Click here to visit Joan's website   Make $ From Your Invention |
Related Forum Posts
Who inspired you to start?
- When I was a teenager I read "The Art of the Deal" by Donald Trump while on a road trip to New York City. It helped inspire me to want to start my own business and is also one of the reasons why I have created so many famous entrepreneur profiles. I believe that by modeling the success of other entrepreneurs you too can become successful.
Who was it that inspired you to start your business?
Trump and Stewart
- I really enjoyed Trump: The Art of the Deal and The Martha Rules. I think the best advice you can get is from people who have made it and not just consultants who haven't been there. Evan's site is great because of all the famous entrepreneurs and their advice directly from them.
Donald Trump and Martha Stewart are 2 great examples of successful entrepreneurs and the books are written in their own words which I find extremely valuable and motivational.
Franchise Choice
- I would go with the fruit flower arrangements (flower baskets & centerpieces made out of real fruit). Those franchises have a high success rate and have a fast ROI.
When you think about it, with a great location and heavy advertising in place you can really do well with that one. Land a few wedding planners and catering halls as clients and you can really do well. Not to mention that people are always going to be giving gifts and throwing party's and think of the holidays! I can see that being really well for valentines day, mothers day and Easter among all the other holidays.
I went to a wedding and they had them on the table rather than real flowers. Everyone was boasting about what a great idea that was and guests really enjoyed eating them! It sure seems like it could be the new craze with weddings.
Re: Obama Wants Social Security for Illegals
- [quote="Alan Mater":2puakyzo][quote="Lucy Wu":2puakyzo]I think America's biggest problem right now is clearly the recession, and that should be the main focus as of now.[/quote:2puakyzo]
I agree. Do you think President Elect Obama is doing or will do what is best in terms of beating this recession?[/quote:2puakyzo]
Unfortunately, I think Obama is going to pull another "Roosevelt." According to economists, Roosevelt's plans for the New Deal extended the Depression by 7 yeasrs...
We can already see today that nothing has "changed." Incompetent bankers, lenders, and businessmen get into trouble, the politicains vote to give them billions of dollars of *our* money to bail them out...and yet there is no oversight of how the politicians are going to spend that money! They can do anything they want with it including bailing out the auto companies.
Frankly, I sure do wish I worked for Chrysler right now. They've shut down all their plants... and yet every worker will continue to be paid their full salary...for sitting around the house doing absolutely nothing. (I wonder if they'll get Christmas Eve and Christmas Day triple time pay, too.)
Re: Obama Wants Social Security for Illegals
- [quote:21pbp7ux]Unfortunately, I think Obama is going to pull another "Roosevelt." According to economists, Roosevelt's plans for the New Deal extended the Depression by 7 yeasrs...
We can already see today that nothing has "changed." Incompetent bankers, lenders, and businessmen get into trouble, the politicains vote to give them billions of dollars of *our* money to bail them out...and yet there is no oversight of how the politicians are going to spend that money! They can do anything they want with it including bailing out the auto companies.
Frankly, I sure do wish I worked for Chrysler right now. They've shut down all their plants... and yet every worker will continue to be paid their full salary...for sitting around the house doing absolutely nothing. (I wonder if they'll get Christmas Eve and Christmas Day triple time pay, too.)[/quote:21pbp7ux]
This is what happens when the Government gets involved and puts its nose where it shouldn't. Let the market correct itself. There is no reason for the Government to bail everyone out. If the businesses, mainly banks, weren't corrupted with greed, this wouldn't have happened. They are and it did, so let them dwindle away and pay for their mistakes. That's what any small business has to do. Why should they be any different. They have gotten away with it for over 10 years! Surely they should have seen this coming.
[quote:21pbp7ux]Sad but this is exactly how I feel about it. Change is coming - but unless I'm really wrong, it is not a change this country needs. Amazing how much a good speaker with a good speech writer can do. If you paid attention to the things he said "off script" - much of it is frightening.
Chris[/quote:21pbp7ux]
It IS sad. What's more sad is the fact that Obama had the media wrapped around his finger, and still does. The media is just as corrupt as the banks.
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