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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. CLICK HERE TO LISTEN. (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:

  1. Are the Product and Market Viable?
  2. Can we Do It?
  3. Will the Payoff Be Worthwhile?

(This section based on excerpts from “Marketing In Emerging Companies,” by R. T. Davis and F. G. Smith)

Marketing Philosophy

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:

  1. Patent search by patent attorney
  2. Is the technological advancement, broad or very limited?
  3. Broad or narrow claim protection?
  4. Patent enforcement capabilities
  5. Marketing resources

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

  1. Business approach
  2. Improvement type invention
  3. Pioneering inventions

B. Protectability – Effect on Market Considerations

  1. Patent Issues
    1. Exclusivity
    2. Breadth of Protection – Claims
  2. Copyright Issues
  3. Trade Secret Issues
  4. 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

  1. Value to Inventor
  2. Value to Licensee
  3. Value to Organization – Fully Funded (i.e. Venture Capital Support)

E. Approaches to Determining Value

  1. Education (Seminars, Books, Government Assistance)
  2. Use of Professional Help and Their Roles ie patent lawyer, marketing pro, prototypes
  3. Danger Areas
    1. Invention Brokers
    2. Friends and Relatives Feeding Egos
    3. Analogies to Successes of Others, Particularly Large Companies
    4. A Single Magic Formula
    5. Superficial Studies Based on Supposition
  4. Sales Minus Costs Equal Profit
    1. Contingencies and Alternatives Suggest Numerous Plans
    2. 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.