Developing and selling a patent
Many entrepreneurs who come to our company are asking, among other things, these two questions:
- Can I sell my idea?
- Why can’t I sell it as an idea or a patent and make money of it?
To answer these questions we must look at two main aspects:
1. What is a patent and what can be registered as one?
In order to describe what a patent is and what can be registered as one, let us ask ourselves how many washing or coffee machines are there. The answer, of course, is that there are many, and the reason is that a patent can be registered on technological feasibility and not an idea!!!
Because of that, when an entrepreneur asks why he can’t sell his patent or why can’t he sell his idea, the answer (in most cases, because there are exceptions) is that most of the times an idea doesn’t have any money value. Because a patent is registered on technological feasibility, we have to first develop the product or products in order to implement the patent in them, and then during the development stages to defend it in a comprehensive manner, so the defense will cover additional technological possibilities with which it is possible to implement the original idea.
A product development process integrating the patents processes during development can be seen at www.b-focus.com, under ‘processes for entrepreneurs’.
Generally speaking, in order to sell an idea or a patent we must give it money value. The answer regarding the question hoe to build money value to an idea can be found in the answer to the next question.
2. What will the ‘buyer’ or the potential investor gain from buying the project from me?
Because an idea has no money value, we can conclude that the value is built according to the product’s development process or the money the entrepreneur will save for the company (or the investor) that will buy the product from him. Here also it’s good to use an example, which applies to most cases.
Suppose we are developing a product which keeps the bath water temperature constant for the time we take the bath (so when a child takes a bath they won’t get cold). As an idea it’s worth nothing, but if we develop the idea and during the development process conclude that the product needs to have two batteries, a fan and a heating spiral, and that all these parts together can cause water to flow from one point and come out of another in the desired temperature, then the process is in progress. This progress is the value the investor will see.
Now, suppose we reached the prototype stage in our process and we are ready for production. A company for babies products that will invest in the project will take into account that all the development process has been done and that there will be no interference with the continuous activity of the company’s existing development arrangements. Additionally, if safety standards already exist in the product, there is more saving for the company, and the project gets closer to the manufacturing stage and has more value. The same is true for earlier stages in the development process – for example, advancing the project to possibility model or bringing the project closer to the destined prototype.
These costs and relevant risks will be taken into account by the potential investor when he comes to close a deal with the entrepreneur.
To conclude, the value which the entrepreneur will receive upon closing a deal with a potential investor or a company, will be built, among other things, from cost savings calculations which the entrepreneur will provide for potential investor when he enters to the project as a partner.
** This article should not be seen as counseling, guidance or advice