The best form of protection for inventors today is licensing their product ideas to a company. In today's marketplace, "sell first" and "sell fast" are words to live and die by, and licensing is the quickest way to transform your idea into a product selling on store stores shelves at scale.
For inventors who are pursuing licensing agreements for their inventions, the companies with the best distribution and the most recognizable brands are the most sought after. Who among us hasn't dreamed of seeing their idea for a new product selling everywhere around the world?
Inventors want to partner with these companies because we believe that's what's best for our product ideas. These companies also offer the largest potential revenue.
But in reality, after making a living licensing my ideas for new products for many years, I've found that big isn't actually better. During the decades I spent pitching my ideas for licensing consideration, I reached out to the largest brands too. I've negotiated with some of the largest companies on the planet, including Coca-Cola, Pepsi, Johnson & Johnson, Pfizer, Procter & Gamble, and others. But chasing the big boys ultimately produced little success for me.
This is what I've learned.
1. Market leaders are risk-averse.
Market leaders are defined by having great distribution and brand recognition -- two strengths that are built over time. Why take on the risks associated with rolling out a brand-new product?
Typically, what market leaders prefer to do is let someone else do the hard work of cutting a new path. It's far less risky to let a startup develop a new technology or service and bring it to market first. Later, after the product is a proven success, they either buy it, reverse-engineer it, or come up with some variation. These strategies are a safer bet.
Most large companies don't actually innovate!
2. Market leaders lack agility.
The process of licensing a new product or service to a market leader is extremely time-consuming and expensive. Implementing a new innovation at scale will impact their supply chain, which is an inherently risky proposition when you consider their size. They're also much slower. You might end up waiting months for them to begin seriously considering your product idea.
Which is problematic, because for us inventors, the clock is always ticking on our intellectual property! I've watched many of my clients at inventRight patiently keep waiting and waiting for big companies to get back to them, with little to show for it. The end result is a lot of frustration. To these companies, you're just a number; one potential SKU among thousands. Your relationship is never personal.
3. They're more demanding.
Because of their size, they're going to require that your invention is patented, which is how they justify paying you. They're also going to want to see proof of concept. The risks of product development are put squarely on the inventor.
4. They use middlemen.
Large companies often outsource their product submission process, which is a red flag, because it signifies that they haven't made an internal investment into open innovation. A much better strategy is to pursue one-on-one relationships with companies that have a dedicated inventor relations department, because you need access to actual decision makers to improve and refine your initial concepts. For open innovation product developers, feedback from decision makers is essential and priceless.
To increase your chances of licensing success, find those mid-sized companies that are "hungry" for new ideas. Mid-sized companies can still be quite large and have great distribution. They'll treat you better because they need you. They'll be willing to work with you to develop your idea for the market.
Make sure to investigate whether the company has actually licensed products from independent inventors. Their track record speaks volumes.
Try to avoid online portals whenever possible. Ben Dermer, senior-vice president of creative development at Spin Master, a leading manufacturer of games and puzzles in North America, told me pointblank: "It's important to know that online portals are fine. But personal relationships matter the most."
Most products that get licensed are because of the relationship the inventor established with the company's decision makers.
Show these companies you're serious by continuing to submit new product ideas after your first ones are rejected. Study their product lines extensively to come up with new product ideas that fit within their particular offerings. Ask for feedback so you have a target to hit. Fundamentally, these companies will be more likely to invest time in you if you first invest time in them.
You'll achieve the most licensing success with companies that treat you fairly, get back to you quickly, and are truly interested in bringing your ideas to market. Most often, these are mid-sized companies.