National Innovation Workshop Presentation *** DOWNLOAD RICK’S ENTIRE PRESENTATION ***
“Estimating the Value of Your Invention”
This important, informative presentation is available in its entirety, as audiotaped during the live presentation. The .mp3 audio file is approximately 7.3 MB in size, and should open automatically in your standard media player on a properly configured computer. NOTE: This audio presentation is now accredited for one CLE Credit.
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(If you prefer, you may order the presentation on tape. Send $10.00 (postage included) to: Patent Law Offices of Rick Martin P.C.
PO Box 1839, Longmont, CO 80502.
Below follows a brief outline of the firm’s presentation for the U.S. Dept. of Commerce National Innovation Workshop (N.I.W.) series.
Big Three Questions:
Are the Product and Market Viable?
Can we Do It?
Will the Payoff Be Worthwhile?
(This section based on excerpts from “Marketing In Emerging Companies,” by R. T. Davis and F. G. Smith)
All efforts have the single purpose to satisfy customer requirements at a profit!
Three Stereotyped Markets
One result of market compartmentalization is that we have developed stereotypes of each, some flattering, some not, depending upon our particular leaning. For example, industrial marketing is rational, technical, complex, sales-oriented, service-dependent, reliable, respectable, and honest. Consumer marketing is emotional, flaky, based on image and advertising, concerned with perceptions, distribution-oriented biased toward merchandising and ambiance, and dominated by product management. Service marketing, in its turn is fuzzy, personal, ethereal, in need of rationalization, low in productivity, hard to get your hands on, devoid of good distribution channels, one-on-one, and people-dependent.
Valuing an Idea or Concept
How do you value an idea or concept, before you bring it to market? These five steps can help you determine the value of your idea:
Patent search by patent attorney
Is the technological advancement, broad or very limited?
Broad or narrow claim protection?
Patent enforcement capabilities
Unique market capture
The first one to enter the market usually earns the highest rewards.
How long do you have a market to yourself before competition copies or improves upon your product?
How strong is your initial distribution network?
Estimating the Value of What and To Whom?
A. Nature of Idea
Improvement type invention
B. Protectability – Effect on Market Considerations
Breadth of Protection – Claims
Trade Secret Issues
Absence of Exclusivity – Reliance on Market Coverage
C. Reasons for estimating value – the timing factor – evolution from naked idea to marketable product. (Accumulation of data bearing on potential value)
D. Value – Ownership Considerations
Value to Inventor
Value to Licensee
Value to Organization – Fully Funded (i.e. Venture Capital Support)
E. Approaches to Determining Value
Education (Seminars, Books, Government Assistance)
Use of Professional Help and Their Roles ie patent lawyer, marketing pro, prototypes
Friends and Relatives Feeding Egos
Analogies to Successes of Others, Particularly Large Companies
A Single Magic Formula
Superficial Studies Based on Supposition
Sales Minus Costs Equal Profit
Contingencies and Alternatives Suggest Numerous Plans
A million sales at 1% royalty versus a thousand sales at a 10% profit
F. The Difference Between Value and Price
The fundamental purpose of a business is to create value where there was none. Value consists of such things as unique features and options, improved quality, faster service, improved warranties – value is basically a package of benefit. These benefits meet the needs of the buyers. Once the package of benefits is designed, the price must be determined.