Patent Royalties

[Scott-Copywriter]

Hello,

I have a potential idea for a new product in the Fragrance market, can't say what it is yet until I get around to applying for a Patent.

Now I have two options if the Patent gets accepted:

1). Find Investment, buy a premises, get my own manufacturing machinery built and manufacture the Product myself as a Business. This would require £200,000+ and a lot of time.

2). Approach Aftershave and Perfume manufacturing companies and sell them a license using the Patent to manufacture and sell the Product themselves, giving me a royalty Percentage of the profits.

Personally I'd like to go with option 2, if it did work out.

I know it is unrealistic but say if they did want to negotiate a deal, what Percentage of the Product's profits should I be aiming to negotiate for just giving them the right to production without any further input? Basically I'm asking what would be a reasonable offer, does it depend on Financial forecasts or other figures?

Also if anyone has any tips or advice for what I should do next please let me know.

Thanks.

PS: I am only 16 years of age, the only real hope I have is to find free advice and guidance since I cannot possibly afford personal or professional help.

 

[RapidBI]

Hi
contact your local innovation centre (via business link) an innovation advisor will be able to give you specific help.

If you have not already done so find a non-disclosure document - again BL should be able to help you there.

For funding you should consider the princes trust - you will need to share your idea & move very quickley if it is patentable. Just remember the non-disclosure agreement.

Also as a matter of copyright write down your ideas & sent them to yourself in a recorded delivery envelope & DO NOT OPEN.

this will provide you with a date stamped proof that the idea is yours should a court case arise.

good luck

 

[bwglaw]

Also as a matter of copyright write down your ideas & sent them to yourself in a recorded delivery envelope & DO NOT OPEN.

A myth.

Register the innovation as a patent is the best legal route

Jonathan

 

[dagr]

There is a big gap in expectations of what an "idea" is worth to its inventor and what a company will actually pay for. I may be wrong, but I seem to remember that for the exclusive rights to a patent, the patent holder can expect a % varying from 0.5 to around 5 of profits, with the average being nearer to 1 or 2%. Be careful too, as a company will tend to minimise the profits through creative accounting, so best to ask for % share of turnover, although a lot of companies wont go for this.

The actual % accorded varies a lot on the state of the "idea". A pure, patented idea is rarely worth a lot. At the opposite end of the spectrum however, companies will be very interested in small initial sales generated by a small start-up, even loss-making, where they takeover the proven patent and its cash generating operation.

Also, be very wary. I know two people who work for large multinationals, and whose main job is to analyse recently registered patents to see if there's any value potential, but also to see if it's worth "breaking" it (i.e. ignoring or circumventing the patent protection and be willing to fight it in the courts if necessary. Quite depressing really).

Another option is to sell the patent outright for a lump sum, but that's very tricky to judge correctly, for both parties.

 

My partner is an IPR lawyer for a multinational and he says licensing is the future of patents. He should know - he does licensing deals on almost a daily basis, inward and outward. His company files patents all the time on all sorts of stuff - about 90% get licensed to others. He gave a speech on this earlier this year at an international IPR conference.

 

[Scott-Copywriter]

Thanks for the advice. I guess I'll just have to play it safe until I can find the money for a Patent, although I have heard you can apply for a basic Patent which doesn't offer any legal protection but it does stop others from registering the Patent before you. However I only saw that in the US Patent scheme, don't know about the UK.

 

[bwglaw]

Have a look at http://www.patent.gov.uk

 

[Scott-Copywriter]

I've had a look and done my research. Since I have limited knowledge in the field I'll almost definately have to get a Patent Agent. The problem is I can imagine that costs upwards of £2,000+. Does anyone have any other ideas besides the Princes Trust as to where I could get that kind of money? Maybe small scale Venture Investors or Grant schemes?

 

[Scott-Copywriter]

I'm starting to think if it would be better to start off small and maybe turn it into a miniture Business of my own.

It's more risky and much more difficult but to be honest this is the only serious Business idea I have and I'd rather develop and grow it myself to become my own long term Business instead of selling Patent rights and getting maybe £50,000-£100,000 which I couldn't really use since I don't have any other Business ideas yet and the amount itself is too small to really do anything major with.

Granted it's a lot of money but it's only really short-term and I'd rather have 100% of the Profits instead of less then 5%. Even if it does mean years of financial backing and work, it's just what I want to do in life.

 

[robertt]

100% of £0 is 0 remember.

5% of £lots is still £decent

 

[RapidBI]

A myth.

Register the innovation as a patent is the best legal route

Jonathan

Jonathan I agree that a patient is THE way forward - however as secondary 'backup' & to prove dates this was a recommended method.

This info was given to me at a BL event by a lawyer - please explain why this is wrong - there are a lot of people doing this for copyright protection.

 

Copyright is not the same as a patent though. What I'm writing here is copyrighted to me, and no one else may type exactly the same words in the same order and say they wrote it. But they could rewrite it so the meaning is similar. It might plagiarise, which is another legal matter entirely, but either way the words cannot be patented. Copyright applies to creative ideas.

Patent, though, applies to protecting an invention, and I agree that Jonathan's advice is correct.

Most patent agents will give a free initial consultation about how to get the invention patented.

 

[bwglaw]

By posting to yourself the details of the invention is only prima facie evidence of ownership of that invention. If someone else has the patent then your invention is not worth the paper it is written on. As you rightly said it is a 'secondary method' and by only doing this you will be second to any rights unless you hold the patent.

Copyright is exactly what it says "copy" "right", that is any written/graphic material created by you remains your copyright until you assign it in writing under s.1 of the Copyrights, Design and Patent Act 1988

Jonathan