Counterintuitive strategies and real-life examples on how to safeguard your innovations
In this webinar, the following is discussed:
Non-traditional ways of protecting your product ideas
Traditional ways of protecting your product ideas
Protecting your product idea: the challenges
The business impacts of brand abuse and how to deal with them
The following is part of the transcript of the webinar, featuring a conversation between Stephen Key, Author and co-founder of InventRight, Conrado Lamas, Marketing & Communications Manager at Red Points.
Stephen Key 04:54
When you’re licensing an idea to a company, make sure that it is embracing open innovation. Meaning that they’re looking for ideas from the outside. But you have to be careful if they have a department that actually handles outside submissions. That means they have a process in place, and it should go fairly smoothly.
If the company sends you an NDA, that’s not well balanced, meaning it leans a little bit more towards them.
Avoid all companies that do not respect intellectual property. Always do a background check on anybody you’re working with. It’s very simple to do, you can Google the name of the company, complaints, or lawsuits.
One of the best ways to protect your product idea when you’re licensing it to a company, find the market leader. If you find the market leader, they’ve got relationships in place. They’ve been working with retailers for many years. And it’s going to prevent some of the copycats that come into that space.
So, because they have everything in place, they can bring your product to market very fast.
Your manufacturing costs are very important. And you can find a contract manufacturer that’s local to you and get a quote. Make sure they sign an NDA. So you can disclose some information to them.
If you know your manufacturing cost, you can make sure that it’s going to hit the correct retail price point. Also, if you design it, to where it’s very cost-effective, it’s going to help you protect your idea in the marketplace because you’ve got the lowest cost price point of the product.
Whoever you’re working with, make sure you document every conversation that you have with that participant, particular person, or company and outline what the next steps are, and detail what you talked about. So that paper trail of what has happened can be extremely important.
Companies want to work with people that have a great attitude. They want to work with people that are reasonable. You never want to give anyone a reason to work around you. A lot of times if you’re unreasonable, and you do some things that make it very difficult for them to work with you, they’ll find a way to work around you. So don’t give them that reason.
Always work with local manufacturers before you go overseas. Because once you go overseas, it’s kind of the wild west over there. Do everything local to get that price quote, know your manufacturing costs. Start local then maybe go overseas.
If you truly want to win at this game, the best protection is having the greatest customer service on the planet: have your customers love you. That’s one of the best ways non-traditional ways to protect your brand protect your product or your service.
You have to learn as much as you can about intellectual property tools. Because these tools are extremely affordable. They’re extremely powerful if they’re used correctly. So you need to know what they are, and they’re very different.
Building a patent portfolio, or IP, intellectual property portfolio, using all these different tools, it’s going to give you that perceived ownership that is extremely important. And if you’re in different parts of the world, look at your government, look at the rules and regulations of your particular area that you live in to understand how to abide by those rules.
The provisional patent application is extremely affordable, easy to do, and you can do it yourself. But you have to remember to have that perceived ownership to have the true value that companies are looking for, it has to be written. It has to be a well-written provisional patent application. It’s not hard to do, but you’re going to have to do your homework.
You can do a Google Image Search and find, see if you find your idea, you’ll find some similar ideas. And that’s a good thing because you know there’s a market for it. But know your point of difference.
Do a little bit more searching or more homework, you want to do prior arts, patent searching at the USPTO. You’re going to look at the history of what people have filed in terms of intellectual property before you because it’s going to show you the history of how your innovation or invention has evolved.
Don’t be frightened if you find your idea, but know your point a difference. It’s more important to study the marketplace. It’s more important than doing prior art searching.
When we file a provisional patent application, most of the time, we’re trying to protect our invention. But don’t try to protect the innovation. It’s a little bit broader. And by doing that, try to come up with variations. Try to steal your idea from yourself. Come up with all the variations and include those variations in your provisional patent application. And make sure you include a lot of drawings, drawings are worth 1000 words.
A non-provisional patent application is for big ideas. Not all ideas require patents. A lot of ideas can be licensed with a very well-written provisional patent application. If you have a big idea, you’re going to need a wall to have patents, and you need to build this wall to give people a second thought to work around you. So realise if you have a big idea, it’s going to take more time and money.
Trademarks can be extremely important, and they’re very affordable. So if you got a brand, you got a great name, trademark, it’s easy to do.
Copyrights are simple to do. Especially if you have a lot of designs, you can copyright a kind of portfolio for about $45 in the United States. It’s a powerful, inexpensive tool to have in your toolbox of IP protection.
Patents can be very powerful if you’re protecting a certain look. I was able to do this with one of my products, I had a few copycats on Amazon and eBay, and because I had a design patent, I was able to go back and once they popped up. I could go back and I could get those products that were copycatting mine off because I had a design patent as a great tool.
Trade secrets have a lot of value. So there are some things you just don’t want to patent, some things you don’t want to discuss. And if you have trade secrets, make sure you have a very strong NDA when you do share it with someone.
There are so many different types of NDA, make sure you have a patent attorney, do not find one on the internet, and in the United States realise that it’s not federal so each state might have different laws concerning non-disclosure agreements. That’s NDAs. And make sure whoever you work with has them signed it if it’s a vendor, contractor, employee, or even your potential licensee, right. It’s it sets a tone of professionalism.
Bad licensing agreements can be signed very quickly. Good licensing agreements take time. So you need to be patient, and understand appropriate royalty rates, what’s standard or appropriate minimum guarantees. You never want to top load a deal. Give some give a reason why people do not want to take a risk on your idea. Be extremely reasonable, but find someone that’s already has done licensing agreements before hiring a licensing attorney. Don’t go down this road alone.
There are a lot of companies you’re going to license your idea to, your product idea to, and they’re going to sublicense it to somebody else. Make sure you have approval for any company they sublicense it to. And when they start to sublicense then get to know them personally, because that’s kind of what happened with the Lego situation.
Make sure you find the right patent attorney for you. Sometimes they specialise in certain fields. If you’ve got an app or software application, make sure you’ve got a patent, and you’re working with the patent attorneys that have experience in that area. Make sure whoever you’re working with a patent attorney has a good bedside manner when talking with two patent examiners, because it’s really important to find out what you need to get that patent issued.
Make sure your patent attorney knows the one big benefit of your idea, and sometimes they miss that point. If you’ve got a big idea, find a patent attorney with litigation experience, because they’re going to use some words that are so broad, it’s going to protect you.
Make sure you’re working with the licensing attorney to help you out a patent attorney, but with a contract that’s a licensing attorney, someone that specialises in that particular area, it’s going to be very helpful it’s going to speed the process up.
When you’re working with a startup, there’s a good chance that the startup is going to go out of business. So make sure that in your contract or your licensing agreement that any intellectual property, that they’re licensing from you, there’s language in there that you can get it back in case they file bankruptcy.
You need to keep your own intellectual property. You’re licensing it, and renting it to a company, but never assign it to a company. If a company is going to purchase, they will want to purchase your intellectual property, but maybe they cannot pay for it all at one time. If you do have to assign it make sure you put it into that third-party escrow account, meaning they cannot get to it until they make the final payment that could absolutely help you if you have to go to court.
If you can license it to more than one company, you’ve protected yourself in the marketplace a little bit. It’s hard to do. Most companies do want it exclusively so you might have to carve it out, give one company. Maybe a territory distribution and give another one a different territory or different distribution. But that’s a great way of protecting your product ideas.
Keep on finding the intellectual property, never stop, and always look at your competition look ahead and come up with ideas before they do. That’s the best way of protecting your product ideas.
Conrado Lamas 24:43
It’s very important that you mentioned the fact you need to license your ideas and protect so many ways. But of course, sometimes even after you do all that, you have problems there, especially if you’re successful.
Especially nowadays that we have internet ecommerce, it’s very easy to upload all your ideas everywhere, that gives you more business opportunities, but then the risks rise again. So how to protect your idea, the ones that you’ve lisenced, and that you’ve built this brick, this wall that Stephen has mentioned.
But still, people are trying to attack your ideas. With unique powerful ideas, you have another side of the coin that I was mentioning before, just greater risks. So if you’re a service, your brand that is at stake, if you’re a consumer goods, of course, the same thing can happen to you people can try to protect your brand, they can try to counterfeit your products that can happen.
That’s our expertise here and Red Points is to protect that, especially in order for you to understand the next steps that you have to follow. Once you realise that your brand is being attacked, you have to know which assets you have. And Stephen mentioned them before. So you’re pretty much talking about trademarks, your brand, design. Of course, unique designs, make that special characteristic of your brand. And we are talking about patents that you registered.
What are the types of abuses that you can find against these kinds of assets? We are talking about counterfeiting. And this is very interesting because people sometimes think that counterfeiting is exclusive or is more common in weird websites that are out there.
Nowadays, because of the way that the most important platforms work. It’s very common to find counterfeiting on Amazon or on Alibaba or other big, major platforms because they work with third parties. And they do have their policies of controlling those counterfeiters. But they’re limited. They do some effort, but they cannot take care of everything. You can go up there and try to remove them manually but it takes time you have to be third chain monitoring. And then you have to remove it, a manual way of doing it.
It’s possible but it takes a lot of time and resources. There are other kinds of brand abuses that we find often are fake apps, when people are trying to upload those apps. They’re not from your company to Google Play or to the Apple Store, or impersonations of fake profiles in social media. They trying to look like your BIM and they’re not really yours. And that’s a big risk as well, or cybersquatting, which is sometimes less obvious. But people create these Web domains, they’re very similar to yours. And they might think they are on your website, but they’re willing, really somewhere else that we don’t even know about.
Now when you know what your assets are, and what the risks are, where to look for them. And that’s the really difficult part nowadays, it’s like I was mentioning before today, you can sell your products everywhere. And that’s great. But in terms of brand abuse, the risks are exponential as well.
So you have to be monitoring, if you want to take care of your brand and products online, you have to be constantly monitoring those marketplaces that I mentioned before, apps, websites, classified ads. And like I said, if you’re doing it manually, you’re going to need a big team, you’re going to need to dedicate many, many hours and in the Internet era, that’s not the way to do it. I added this slide here to remind people that what ecommerce did with medium and small brands give a bigger business opportunity to them.
So this is a problem that is not only of big brands anymore. All kinds of businesses and brands are suffering from it so that we have all to take measures and of course, we can wait for governments and for policy to update but that’s we know that’s going to take time, we should take the problems in our hands and we should try with the resources that we have. If we want to take care of our minds who are better than ourselves to take care of our brands.
Conrado Lamas 29:09
What kind of impacts are we talking about you if you have if you face those problems? You have the most obvious ones which are profit loss in the end. A counterfeiter or someone who’s trying to use your brand somehow is trying to get your traffic is trying to get the sales that you would make. So you have a fall in sales indirectly in your business.
And the last obvious effect is the partnerships that you have with other brands, which is interesting because when you have a partnership with a brand, you’re actually selling to your partner that exclusivity deal, that exclusive deal that we have with them. Once you have someone who is imitating your products that is very similar to yours, that exclusivity is broken, so it doesn’t work well anymore.
And of course, we have more direct risks of health risks. And of course, depending on the product, the low quality of illegal copies does that distorts the perception of your users of your consumers, especially for example, if you have some type of luxury brand.
Here at Red Points, we have many of them. And I can even give you a couple of examples of MVMT and David Trubridge. They are good examples because they are kind of two types of clients a bigger and a smaller one.
So for MVMT, we found over 25,000 Counterfeit listings, they had a huge problem. Before hiring Red Points, they were able manually to find around 1000 Counterfeit listings, but because our technology can scan so well the internet, we were able to do it much more effectively and efficiently. And they are knockoffs were being for being sold for $5 to $15. That’s a big difference from the original ones, which are usually sold between $95 to $160.
It’s a little different from the case of David Trubridge. They had fewer counterfeit listings. But being a smaller company, that was a big problem for them as well. And most interestingly, they were distributing many more platforms, there were over 300 platforms infringing their intellectual property. And also, curiously enough, the knockoffs were being sold by a prize that was very similar to the original one. So people were actually being fooled here. Their consumers who are buying their counterfeits think that was the original product, and that’s a ripoff.
So what do you do? In those cases of brand abuse? Like I mentioned to you before, you have manual solutions, if you browse online, you’re gonna see many ways of doing that, for example, in Amazon, eBay, you have to fill up forms, and you have to do it many times in order to try to mitigate that problem. Of course, and monitoring the web is a big work too because you have to be constantly looking for those platforms. Because constantly googling your products and your brands and your variations, once counterfeiters realise that you’re keeping an eye on them, they change strategy. So you have to do variations of your own brand. That’s difficult.
Here at Red Points, we have technology built for that. And we are able to be much more effective and much more efficient than the work that would be done online. We were founded with it, that preoccupation with enforcing intellectual property online. We have a number of analysts and both in the legal area, and also they’re experts in the brand. And we invite you to take a look at our website later and maybe ask for a demo at www.redpoints.com.
Conrado Lamas 33:10
Stephen before we end our presentation today, I want to ask you about the NDAs that I thought it was interesting. Why you should use an NDA as the tone of pressure professionality is that even more important than the legal side itself?
Stephen Key 35:41
There are certain rules and regulations that you have to be aware of. If you make improvements to your patent, you can refile that again, and you can do it yourself. That will give you another year. Again, if you’ve disclosed it publicly, you can lose those rights. And of course, you can lose rights overseas, if you do not file a non-provisional patent application after that one year. So if you need legal advice, find a patent attorney or patent agent that can navigate those waters for you.
Author and co-founder of InventRight
Marketing & Communications Manager at Red Points