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[Questions]

I know this is a pretty general question and the fees differ but what are fees like on patent lawyers.  Is there a fee to just meet with them and ask if the idea is patenable.  Is it possible to work something out where they could benefit from the product if they liked the idea. (I read the FAQ and saw most lawyers rather not  do that so what are the chances they would?)

thank you

[JimIvey]

Fees vary widely.  Sorry for the vague answer, but that's the reality.  Don't go on just hourly rates.  Higher rates often (but not always) reflect greater efficencies.  For example, I spent two weeks or more working on my first Office Action (response to a rejection by the Patent Office) back in 1991.  I now do them in a day or less.  My patent applications are less expensive than they used to be despite increases in my rates over the years because they take less time than they used to.

Some charge for initial consultation.  Others don't.  Some take work on contingency (no money up front but a share of the profits).  Others don't.  

Personally, I think investing ought to be left to professional investors, but I do recognize the "Catch-22":  most investors won't sign an NDA, so you should have your patent application filed before talking with investors; but patent practitioners are recommended to get the patent application on file, so you should have some investment money to pay the patent practitioner.  It's really hard, and I'm sorry it's that way.

I suppose it's no surprise that invention submission companies are popping up all over the place, claiming to combine seed financing with IP services.  However, most of those are scams and, if there are legitimate ones, they're like most other hybrids -- instead of being good at two things, they're good at neither.  Think of combo road/dirt bikes -- not particularly good at either.  SUVs --  not great offroad and horribly bad on-road.  Amphibious aircraft -- not as good (fast/efficient) as either dedicated seaplanes or dedicated land-based planes.

I wish I had an answer for you.  I don't.  Launching a business around a new idea is hard.  For what it's worth, some people have had good luck approaching manufacturers with no more than a prototype and an NDA.  Those success stories are few and far between, but they exist.  And, not all investors refuse to sign NDAs.  

I hope that helps.

[Questions]

Maybe the answer is obvious but whats the reason most investors wont sign an NDA?

[Wiscagent]

There are many reasons why investors won't sign an NDA.

One reason is the investor’s concern that the following situation may arise.  Normally the inventor would be showing their invention to a (potential) investor already familiar with the general field of technology and business.  Indeed, the investor is typically already in the business and is likely to have development projects in a related area.

Suppose the inventor approaches the investor and the investor agrees to non-disclosure; the inventor reveals the “new invention” to the investor; the investor takes one look at the invention and immediately sees that the invention is (a) not novel over the prior art, (b) something the investor is already working on, or (c) simply not ready for commercialization.

Now the investor is in a difficult situation.  

a) Even if the invention is not novel and so the NDA should not apply, if the investor chooses to disclose the information, he or she may be (unjustly) charged with violating the NDA.

b) Similar to situation as (a), but even worse – now there may not be any published documentation.  The investor might be forced to reveal his/her proprietary information to prove that the NDA is not applicable.

C) The investor may like the basic concept, but a great deal of development is required to have a commercially successful project.  The investor's R&D team probably would have quickly come up with a similar idea ... but now the NDA obligates the investor to the outside party.  

These concerns even extend beyond NDAs.  Most corporations carefully screen unsolicited inventions.  Where I work, a researcher or engineer NOT currently working on a related project may be asked to screen the unsolicited invention.  The screener is instructed to communicate only with an attorney regarding the invention.  In that way a “Chinese Wall” is built between the screener and the persons working on the project.  If the inventor later charges the corporation with stealing the idea, the corporation is in a better position than if a project person had seen the invention.

Regardless of all that, probably the biggest reason for not wanting to sign an NDA, is that investors simply don’t think it’s worth their time and effort to have an attorney review the contract, negotiate any issues, and sit through a presentation.  The investors have big egos, they’ve already been successful, they tend to doubt that an unknown layman really has anything to offer.

That’s the way I see it.


Richard Tanzer

[JimIvey]

Just to help out people searching archives, here's my answer to the same question in  this topic:

Venture capitalists (VCs) see about 20-30 business plans a day, every day.  They see overlap in many of ideas.  In fact, some have said they've never seen a unique idea (meaning people tend to come up with the same ideas independently).  
 
Even if they fund only 1% of those business plans, that's one multi-million-dollar check each week.  I don't think they're funding that many -- maybe only .1%?  Assuming a 5-6-day workweek, they see 100-180 business plans every week, none of them unique.  Now, imagine they sign NDAs.  That means a couple hundred invitations to sue every week.  They would expect a trade secret law suit for every funded venture.  Who could do business like that?
 
Now, VCs tend to fund companies with pre-existing revenue -- later in the life cycle of a company.  Angels and wealthy individuals typically get involved at the seed stage (pre-prototype -- but not pre-business plan).  From what I understand, smaller investors at earlier stages are more likely to be willing to sign NDAs.  They see fewer business plans and less overlap.  Good ones understand the Catch-22 I described earlier and appreciate the founders having their IP situation under control.

Regards.