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Question about approaching multiple companies at once for licensing

mikew48's Avatar

This is my first post to Edison Nation so I want to say hi to all and thanks in advance for your help and advice.

I've got a new product that I'm working toward monetizing.  I've studied Nolo's "License Your Invention", listened to Steven Key's "One Simple Idea", and done a lot of general research but I haven't run across any advice for one specific question.

Here's my dilemma.  I'm developing an improvement to an existing component to a tool that's currently manufactured by many different tool companies. If my improvement is embraced by the customers that buy this specific tool, then all of the manufacturers are going to want to be able to have it available for their tool. I know that they would probably all want to get an exclusive license but that would severely limit my market so I'm trying to find a better balance.

These are the choices I'm considering (in no particular order).  Please add anything else you think I should consider.

1) License the idea to the largest manufacturer exclusively and let them handle everything.  I suspect that this will result in the smallest return for me but it would probably be the least time-consuming. 

2) Approach all of the manufacturers (more than 20) at once and license to all that are interested. This will likely yield lower royalties per item but the market reach could be global because nearly all of the tool companies are international.

3) Find an injection molding company that can manufacture my product to fit each of the tools that the tool manufacturers are currently selling. I would set up a contract with the injection molding company to be the supplier to all of the tool manufactures for this component. This is the way all major manufacturers (automotive, industrial, etc) get the parts for their finished product.  Ford doesn't make pistons.  Those come from Mahle Gmbh which makes pistons for virtually every auto manufacturer.  In this scenario, my only involvement would be to monitor the relationship between the tool companies and the injection molding company.  This is more involved than simply licensing and viewing from a distance but it gives me a better position in the supply chain that (I think) will give me a much better return per piece.  It makes it simple for the tool companies because they don't have to manufacture the parts and it will create much better product quality and consistency because all of them are made by the same company.

Let me know what you think of my options.  Thanks again!

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magurn's Avatar

Hi Michael!

I'll defer to our community members to advise from personal experience, but if you are interested in moving forward with Edison Nation to have your idea evaluated for potential licensing opportunities, you are certainly welcome to do so by submitting to our All Category Search.

To learn more about our process and review our standard terms and conditions before submitting your idea, a great place to get started is the Edison Nation Help Page.

We wish you the best of luck!

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countofmontecristo's Avatar

Hi Michael-

I would tread slowly on that multiple contact approach for a few reasons.

1. One of the first questions a company will ask you, if they show interest, is ' Who else has seen this and do you have a patent or application?'

2. When you engage in talks with any company, a solid NDA agreement should be in place and the above applies to that as well.  Anything pre-disclosed outside of the agreement with them is not covered by that agreement.  By showing it to multiples all at once you are diluting your chances, IMO.

3.If you have to disclose to company 'x' that you have already talked with companies 'y' and 'z' you have shown your hand. The idea is to get the companies to play off one another, make them think they have the upper hand over the others.  Think 'Tom Sawyer approach', make them paint the fence for you.

4. Have you had a real professional patent search completed yet?  Have you filed at least a PPA application before you go showing your great idea to these mega corps?

  I posted a link on here a few weeks back about a true story of the inventor of the intermittent windshield wiper who got all excited and showed it to Ford Motor Company...and watched his dream get stolen away

I'm no expert by any means and this is all just my opinion.  That and $1.55 will get you a small coffee at Dunkin Donuts.

Best of luck on your journey!

Michael Woodward
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inovate's Avataree_badge

Roger, Is there a company like TTI for protective gear? Or is it better to go to the individual companies like Honeywell, Ergodyne and MaDavid?

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gadgetmanken's Avatargold

Jjust my thoughts. Ditto what Ralph,  Roger an Charlie said. I think you should get on Steven Keys program and get their coaching on how to license it. Otherwise you are looking at major financial hurdles. Patent protection, mold making, fees, all those expenses. Molds are real expensive and time consuming to make and adapt to fit other items.  Start by making sure there aren't any competing patents, through a patent layer, protection and non-discloser is a must. With the proper license you can get those corporations to pay those things. 

Just from my personal experience with a company about 25 years ago, I submitted to them an improvement to a major cordless screwdriver mfgr, that would allow them to change a single battery pack to multiple tool heads.  They had at least three diferent tool heads for. Although they liked my idea they had just spent millions retooling a whole design of their tool to include dual batteries. I did not have protection on my idea cause I could not afford it. So if you think about it almost all your cordless tools have different tool heads with one battery pack. I don't know if they got protection without me and sub licensed it to others or not, but its now an industry standard. Non the less. You can take that as you may, but I think I may have influenced the industry. With nothing to show for it. Good luck in your adventures, and be sire to fill us in!

Ralph Machesky
Michael Woodward
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mikew48's Avatar

Ralph/Roger/Kenneth,

Thanks for your replies! You make a lot of good points that I'll keep in mind. Between the research I've done and the feedback on my options, I think it's best for me to start by approaching one company at a time. I've done a full patent search, have an executed PPA, made a prototype, done proof-of-concept testing, and created a "sell video" (& Sell Sheet) so now I'm going to start at the top of my list of potential licensors and see what happens.

Thanks again for your advice and feedback!

Best,

Mike

Ralph Machesky
Ralph Machesky
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