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Patent before or after concept testing

rennerk's Avatargold

I am stuck.  What is the process in which you should take in order to protect your concept/idea when testing would be required in order to make sure it works in the real world.  For example, say you needed an engineer/design expert who specializes in meeting goverments safety regulations to create the prototype for you, as well as perform testing. How do you keep your idea protected when you're basically handing over your idea to experts. Do you just trust the NDA to protect you while they build/test your idea or do you need to get a patent? What do most inventors do to protect their idea when they get a prototype?  I doubt anyone wants to spend a fortune on a patent if testing shows its a dead concept, but then again, you'll never know if it works if you don't have it tested. Thoughts?

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kiskom's Avataree_badge

Great question Jodi. I believe that most people aren't in business to steal someone else's  invention. However, there have been incidences that inventors claim that someone stole and developed  their idea from them.  

You could patent first,  and then add an addendum to your patent. This  may cost you little more money, but an addendum maybe needed especially  if  there are any changes the engineers need to include in order to make your invention perform.  

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crystaldiane's Avatar

Im dealing with the identical issue. I tested market reception by offering an upgraded item...without the unique features and technology in my patent claim. Now i have early feedback without public disclousre. Think minimum viable  product....for the rest i use ndas. 

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chappy75's Avatargold

you can use ndas. I am not an attorney but how I understand it, Don't let anybody design anything without paying them. If you pay them they are contracted work and all work produced is owned by you. If you don't pay them, they become co-inventors and they can stake claim to your patent/invention.

People probably won't want to steal your invention but if it becomes something profitable or great they there is no reason to give anybody the ability to claim any part of it unless you agreed to that up front.

The method I took was that:

1) I designed ithe concept on white paper.

2) conceptuallized it being able t o assemble it with existing products

3) paid a product design company to hash it out to a working concept

4) Filed my PPA before the project was complete.

5) built the prototype 

6) showed the prototype at a trade show to measure demand and gather improvement data points.

7) filed utility patent

8) finished the prototype to wet test it and ftest marketed it for rent. Gather consumer interest and market data.

9) filed child patent with improvements.

Today, in the mail I received my second patent.

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sprinklerbuddy's Avatar

I have one of those, most expensive piece of paper I ever purchased! lol

Jodi
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rogerbrown's Avatargold

Jodi, you stated "I doubt anyone wants to spend a fortune on a patent if testing shows its a dead concept, but then again, you'll never know if it works if you don't have it tested." And I agree with that statement. What I have not seen you say is if you did any research into whether or not your product is unique, your competition and does your idea answer the Better Than question. Because without doing those things first you can be spending money on something that is not marketable. Many Inventors get what they think is a awesome idea and jump right into protecting it, making prototypes and spending money left and right with companies willing to make anything you want, for a price. Later they discover their idea is not as unique as they thought and not as marketable as they thought. Which is why I am asking those questions.

If you have done those other things and are satisfied with the results and wanting to move forward using an NDA is a great start. Also anyone you get to do work on it needs to sign a Work for Hire statement so they don't come back later asking for further compensation. Keep a record of all transactions, emails, receipts etc of all interactions you have with companies, individuals regarding your idea. You want a paper trail to cover you. 

Jodi
Leo Gauthier III
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gizmo's Avatar

Roger, can you explain your comment more ? There needs to be more clarification to this statement !

Example: Lets say you hire a person " Ron" to help you with a new pair of pizza scissors you came up with. Then Ron explains to you that adding a part that adds value to your scissors will be more unique than any other scissors on the market. Roger is Ron due more compensation for his added tech?  Probably not but he is a co-inventor and your NDA will not allow him to not be a co-inventor.

"Also anyone you get to do work on it needs to sign a Work for Hire statement so they don't come back later asking for further compensation."

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nyckiec's Avatar

Great information on here. 

I'm just starting out, and a bit lost in knowing how to go about protecting my idea. I only have a technical drawing, but I would like to get a prototype made. Should I still try to patent the drawings and they get the prototype made, or do them simultaneously? 

Also, does anybody have any recommendations for manufacturers?

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rogerbrown's Avatargold

Gizmo, first let me say as I always do that I am not a lawyer and this is not legal advice. If you have any questions you should consult a lawyer.

The issue is work for hire. Chappy mentioned having hired a design firm to help solve some of his design and electrical issues. That was work for hire. So does he list them as Inventors on his patent for solving problems he couldn't/didn't?

John Vilardi does excellent design work for his clients. If he decides that moving a part or changing a part adds functionality to the product does he now say they have to add him as Inventor to the patent and he wants part of the royalties?

Jason Garcia, had Spencers pick up his invention. They did not want to pay a royalty and offered him a design fee, which he accepted. He no longer has ties to that product and if they decided to come back out with it and sold a million units he stills gets nothing because he accepted the design fee.

Do design firms that you can go to and bring your product to life get added to a patent to every product that comes through they tweak?

What about companies that have you sign a contract that anything you come up with they own and you get no compensation and they do not add you to the patent?

There are all sorts of examples where you are providing a service, you get compensated for that service and that is the end of your involvement.

I did a couple of children's books that paid a flat rate. I got paid and the books sold for years. I did not get further pay than the original agreement.

If you work for Disney and you come up with the next Mickey Mouse character you get nothing because they hired you to come up with ideas.

I came up with a product that saved the company I worked for 4 million dollars a year in reduced waste. The only compensation I received was for non-government sales http://infohouse.p2ric.org/ref/14/13978.htm which fortunately it went over well in the commercial market. But it was used at 17 DOE sites nationally and they did not have to pay anything for that use. 

So, it is all in the contract, what you are willing to accept and what you sign or the rights you sign away.

Jodi
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gizmo's Avatar

Roger,

Your comparing apples and oranges. If John adds technology that can add a claim to a patent application yes he should be added as co-inventor. If not and somewhere down the road the application is challenged  then it can be challenged and invalidated. 

You don't need to be an attorney to locate the info.  Do as you always say RESEARCH 

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rogerbrown's Avatargold

Gizmo, as you asked of me, can you explain your comment more ? How am I comparing apples to oranges? The examples I gave are all real issues that come into play when you do work for hire. Or are you saying no matter the case they all should have been added to the patent? I put more than one example so clarify how each one is apples to oranges.

EN has Eventys that does design work for clients. So are you saying if Chappy came to them with his paddle board saying he needed their help to solve a problem and they do solve his problem he is required to list them as Inventors on his patent even though they did the work for hire? Did Chappy do that for the design company that did the work for hire for him? Can they come back later and challenge his patent?

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gizmo's Avatar

Actually Roger that is what Im saying. By law if someone else adds technology that is tied to a "patent app claim" they should be listed as a co-inventor. It makes no difference that they were work for hire. Go look at the ideas en members submit to the searches. Once their idea moves forward in a patent app the en employees that contributed towards the idea are listed as co-inventors. I could produce hundreds of them within minutes in a search .  Search Daniel Bizzell patent application's and see how many patent apps he's tied to that en members submitted ideas on. EN is doing whats correct to keep from getting an patent invalidated in the future.

EN has Eventys that does design work for clients. So are you saying if Chappy came to them with his paddle board saying he needed their help to solve a problem and they do solve his problem he is required to list them as Inventors on his patent even though they did the work for hire? Did Chappy do that for the design company that did the work for hire for him? Can they come back later and challenge his patent?

Roger just because the design company did the work for hire does not mean they can come back or challenge Chappy's patent. Why you ask? Well because first did the design company suggest something that was already prior art? Second does the companys suggestion have availability to suppport a patent app claim. 

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rennerk's Avatargold

Thank you all for your comments. They were very helpful! You brought up several points I hadn't even thought of yet. I believe I have some new things to consider and more research to do! 

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chappy75's Avatargold

Actually, 

I hired them but they had ZERO poetic license. We agreed up front they would not be "Giving me ideas". I hand selected and purchased every part that went into it. I designated every process and dimension for it to be built. I went into their office and sat with the digital artists and determined where every curve went. 

As a client, I was a pain in the ass but that was part of the deal. I over bought parts so we could try things. They provided the electrical engineers to assemble and attach and size the wiring with the solar panel. 

Some ideas were bad but most were good. They were all mine though. As they put it... "They are the hands under my instruction..." 

And I did go to Enventsys. We didn't come to an agreement on methodology... That is the only reason we didn't work together... I am a bit of a control freak... lol

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jdowney9000's Avatar

Your summational supposition agres with my position.

Proving your concept may change what needs patenting.

James Chapman
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rogerbrown's Avatargold

Gizmo, your comment only covers a small portion of what I posted. Look at all the variety of situations where you as the co-inventor or even the Inventor can be left out of the patent.

You stated "Roger just because the design company did the work for hire does not mean they can come back or challenge Chappy's patent. Why you ask? Well because first did the design company suggest something that was already prior art? Second does the companys suggestion have availability to suppport a patent app claim."

My point is I am saying YES the design company came up with something you did not, that added value and a claim to your patent. So do you now add the design firm to the patent? In the instances I am aware of the company that did the work for hire was not included in the patent. 

 When I worked for Westinghouse at the Savannah River Site we did contract work for DOE. If I came up with an idea at home that had nothing to do with SRS or the nuclear industry I would first have to notify Westinghouse of my idea, get them to agree it was not work related, get them to file paperwork with DOE asking for their release, get a release from Westinghouse and then get another release from DOE before I could legally submit it to any company for licensing. All of this took about 22 pages of forms to complete. 

If I did not follow this protocol and a company were to license my idea Westinghouse would automatically become the owner of the idea, I would lose all rights to it and I would be fired from Westinghouse for not following policy I agreed to when hired and I could be charged criminally by DOE. 

I have the release form I had to get for the Basketball Backpack idea you see here https://www.edisonnation.com/forums/other/topics/l... it is quite obvious that product has nothing to do with the nuclear industry yet I had to get a release form from my employer and DOE in order to move forward with it. 

So as I stated above your statement does not cover all situations involving co-inventor, ownership, releasing your rights and work for hire. If it did you would be seeing a number of design firms suing for their fair share of a number of products on the market.

I am working with a Pet company now that asked do I want a royalty, a flat fee for the ideas I have been sending them. If I pick flat fee I get X amount and no longer have ties to the product if they decide to patent it. So are they doing something illegal since I am clearly the Inventor of the product and will not be named on the patent?

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chappy75's Avatargold

Jacob,

That is precisely what I used the "child patent application" for. The first application didn't protect me from somebody putting a jet propulsion system on it or they could put the electronics inside the board or the motor in the front of mid hull. 

With the speed of the first patent, it made sense to broaden the protection. All of those scenarios are covered now.

Proof of concept definitely changes what needs to be protected!

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rogerbrown's Avatargold

This enforces what I have always said, the patent is only as good as the person writing it. Many patents don't cover the product properly or are written so narrow they are ineffective and not worth the money spent. Patents are not cheap, make sure you are getting your moneys worth. Don't just accept what the Lawyer writes, make sure it covers your product and if you see any issues make sure you get it corrected before it is sent in.

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shmidster's Avatar

it is also ok to list as many co inventors as you like and then assign the patent to an LLC 

This gives the ownership and decision making to the company

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chappy75's Avatargold

If a patent protects your idea, what protects the patent?

Though not a licensed attorney I love asset structuring/protection. There are ways that real estate investors structure their assets that make them nearly impervious to lawsuits and minimize tax implications. Love him or Hate him... Donald Trump is a Genius at this. I looked into business structures and how to maximize profitability while minimizing exposure to legal opportunists. 

"A" manufacturing and distribution company actually licenses the rights to produce the Bay Glider from "B" holding company and pays a royalty on gross sales Both controlled by Me. So, technically I have licensed my first product for a 6% royalty... lol. This protects the patents as I understand it. I don't know how investors will feel about that arrangement and may have to flatten it out plus I have to figure out the tax implications on it... But that is the way we are setting it up. 

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rogerbrown's Avatargold

Interesting approach licensing your own product to yourself. So for this to work do you have to form two companies? And when you approach investors are they investing in the holding company or the manufacturing/distribution company? So the patent is under the holding company since you are licensing it to the manufacturing company. Why did you pick 6% since you are licensing it to yourself you could have picked any royalty. Also would like to understand your comment "This protects the patents as I understand it". How does it protect the patent any better than any other patent holder?

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gizmo's Avatar

Q: If a patent protects your idea, what protects the patent?

A: Litagation and MONEY "deep pockets"

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chappy75's Avatargold

Roger,

Great summation. 6% of Gross sales because:

1) That is a lot of money. I work for 6% as a realtor and I have to pay people out of that. That is my going rate and a pay raise since the holding company only has maintenance as overhead.

2) The holding company derives its income from licensing activity.

3) The holding company can create it's licensing deals independent of the manufacturing and distribution company.

4) Worst case scenario and the manufacturing company takes a header and somebody dies in the factory or a manatee is killed or a bay glider runs into a oil platform and causes a oil slick that wipes out the living of coastal entrepreneurs for 2 years. If the company goes under... the license(s) are the holding company's  property not the manufacturing and distribution.

5) 6% is normal and does not throw any red flags. If I was licensing it for say, 20% it could be said that the licensing deal requires further examination because it works to the detriment of the manufacturing company.

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There is so much more in asset protection. In order to be an effective entrepreneur there are a lot of facets of business that we need to know that go far beyond a what goes on a sell sheet. Asset Protection and GAAP is sort of the minimum. There are advanced business structures that I don't even comprehend when you start dealing in trusts, nonprofits, land trusts and so much more.This is really just the tip and one strategy. It might not even be the best... Just one that I am using.

Below is a link to some of the accounting principals we were discussing last time. It has GAAP of straight line amortization and equipment costs vs. fair market value. It also shows how to record the entry and how the entry shows up on the financial reports. It shows how to amortize a patent and how to determine the cost of a patent, equipment, lease hold/land improvements. It is great real world stuff. It shows out of Canada but it is the same in US.

www.wiley.com/legacy/products/worldwide/canada/wey...

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chappy75's Avatargold

Correction... The patents belong to the holding company the licenses become a asset to the manufacturing and distribution company. It is also a safe guard against predatory lending.

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rogerbrown's Avatargold

So as the owner of both companies are you licensing the product to yourself on a non-exclusive deal if you are looking to license it out to others? Most companies want exclusive license so that will be interesting see their assessment of that arrangement.

Also would like to understand your comment "This protects the patents as I understand it". How does it protect the patent any better than any other patent holder?

And when you approach investors are they investing in the holding company or the manufacturing/distribution company?

When you say "The holding company can create it's licensing deals independent of the manufacturing and distribution company."  Isn't that incorrect since any deal you make as the holding company would involve the manufacturing company being able to fulfill that deal?

This is an interesting look into how you are structuring a new company. I'm sure many people that thought of starting a company have not even considered all the things that actually go into the infrastructure to get things going.

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chappy75's Avatargold

Roger please don't start stacking and reasking questions. I will go through it this time but that is one way to get me wrong. If I didn't answer it then I don't want to answer the question. Lets go through this... not again though. I am striking through the question to make this easier to read.

Roger asked: 

So as the owner of both companies are you licensing the product to yourself on a non-exclusive deal if you are looking to license it out to others? Most companies want exclusive license so that will be interesting see their assessment of that arrangement.

That will be a limiting factor, I am sure. My manufacturing and distribution company is basically the "Proof of concept". We offer companies to manufacture what we do. Yes, we are competition but really... Like having a Hemi in different trucks.

Also would like to understand your comment "This protects the patents as I understand it". How does it protect the patent any better than any other patent holder?

If it doesn't make sense then you should just let it be. I am not an attorney. I am not explaining things to you that you don't readily grasp for you to try and poke at when I do. 

And when you approach investors are they investing in the holding company or the manufacturing/distribution company?

This, I know, will be something that will come up. I know it is a stumbling block. I have seen it play out on shark tank and I am equipped for that conversation. The holding company is what will become my legacy.

When you say "The holding company can create it's licensing deals independent of the manufacturing and distribution company." Isn't that incorrect since any deal you make as the holding company would involve the manufacturing company being able to fulfill that deal?

The answer to this question No.

This is an interesting look into how you are structuring a new company. I'm sure many people that thought of starting a company have not even considered all the things that actually go into the infrastructure to get things going.

I am sure people consider these things. In a way, they have to when deciding to incorporate, which most of us do and are. There is not much here than is readily available to anybody. It's common sense really.

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rogerbrown's Avatargold

Chappy, when you post things like "This protects the patents as I understand it" why would you not expect someone to ask "How does it protect the patent any better than any other patent holder?" Patents are a big part of the questions Inventors ask about in the forums. So anything that would protect their product better is information to know.

So, your comment "If it doesn't make sense then you should just let it be. I am not an attorney. I am not explaining things to you that you don't readily grasp for you to try and poke at when I do." is rather demeaning. You have asked a number of questions of myself and others and pushed for an answer. Why should you be any different? 

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chappy75's Avatargold

I don't mean it as demeaning... Just that I am not explaining it. Often times, in fact almost always, business structures are proprietary information. They are almost always discussed within a private learning or confidential setting which this is neither.

You are free to google "asset protection strategies". I cannot or should not teach the topic. I know the strategy that I am using because it made sense to me. I invite you to become educated on the topic and do the same for yourself. 

If you think it is not a strategy worth using then speak your mind. Other than that we don't need to get into that topic and I don't feel comfortable explaining to you.

Because pushing for answers on topics people don't want to talk about is brash and rude. This isn't debate class.

 

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shmidster's Avatar

shouldn't be a problem if you want to license or work with another company. The structure you have now is between yourself and yourself so you can change it at anytime if you want.

Unless you are afraid that you might get sued by yourself :)

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chappy75's Avatargold

See Akiva... I don't put it beyond going to that extreme. I don't take lightly shenanigans... lol :-)

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shmidster's Avatar

Ha!

well that will make your lawyer very happy 

double fees :) 

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chappy75's Avatargold

We'd probably settle out of court...

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rogerbrown's Avatargold

Jodi, many Inventors spend money on patents quickly and later find their patent didn't cover their product and have to spend even more money to try and fix their rushed mistake. 

Patents are only a good tool if they are written to cover the product, not just to say you have a patent. And if the product doesn't have a market it is just an expensive piece of paper.

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