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[javadog]

I filed a PPA and have about 5 months left before I need to submit a utility application. I've been deliberating on filing the application because it's difficult for me to determine an ROI based on not only the patent filing costs, but future development and marketing costs. It would do me no good to expend thousands of dollars on acquiring a patent, and then just sit on it expecting the world to beat a path to my door.

Can someone tell me of a good resource for doing a risk/return analysis? There is so much to consider, such as the declining window of opportunity, whether to expend time and money on a prototype, hiring an agent to find licensees, etc. I don't have all the resources needed to build a prototype, so I wonder what my chances are of licensing the IP based on just the patent alone?

Thanks,

DL

[JimIvey]

You're rather astute on this point.  Patents don't just sprout money.  All they do is give you the opportunity to prevent others from making, using, selling, or importing the thing described by the claims.  And, you can prevent anyone from doing anything by merely wishing it; you actually have to take legal action and devote the time, money, and resources that legal action requires.  Most people not familiar with patents don't realize that.

Your inquiry then is, what is the value that you can extract yourself from such a right to exclude others?  Of course, that depends on whether you intend to market your invention yourself (what some call the venture route) or to get others to pay for the right to do that (what some call the license route).  In the license route, you don't absorb much risk yourself (risk in terms of spending money that might not generate any income), but you will have a difficult time getting others to take on the risk and pay you for the right to take on the risk.  In the venture route, you will take on substantial risk but will likely be able to ensure that your invention has its day in the marketplace.

The analysis you're looking for is really a job for an MBA, not a patent attorney/agent.  It's a bit like asking someone who builds houses to help you sell your house.  It's an entirely different skill to build IP and to sell (market, evaluate, etc.) IP.  Although, knowing how to build something helps you evaluate its strenghth.  However, I'll try my best to lay out what the inquiry looks like (as far as I can tell).

Start with one product in one market.  Is your invention already there?  If so, and you have a patent, you're in luck.  Otherwise, what advantage can you give to one or more of the competitors in that market for that product?  How much is that worth?  You can think per item, or in the aggregate.  How much of that can you collect and how much do you have to let the producer/seller keep as an incentive to adopt your technology?  Think about whether you can do that for more than one competitor in the market.  Does your invention give one competitor an advantage over the others?  or does your invention represent a disruptive technology which provides an advantage for the entire market over a competing market?  If the latter, repeat the above inquiry for all players in the market for that product.

Now, repeat that for other products in the same market.  Then, repeat that for as many markets as your invention pertains to.

That's pretty much it, as I understand it.  If you're going the venture route, you should have already done that inquiry.  If you're going the license route, your potential licensees will do that inquiry, but it's to your advantage to do it too so that you can convince them that proper analysis suggests they should take a license.

I hope that gives you some idea as to the task before you and I hope it's helpful.  I don't know of any specific resources to guide you through that inquiry.

Good luck!

[javadog]

Jim,

Thanks for the valuable insight. I'll have to consider your process carefully. The main advantage of the invention is that it would expand the market for a new technology that has yet to take off. It does this by reutilizing an existing technology and allowing it to do what the new technology does at one-fourth the cost.

It's possible that somewhere, a company may already have developed a product like my invention and is waiting for the market for the new technology to reach a critical mass before releasing it. If that were the case, then all my effort and investment would be for naught. I would like to believe that I'm farsighted and that having a patent on it long before someone else thinks of a similar idea will give me an advantage. But I know the likelihood of me having an original idea may be very low. That is mainly why I would choose to wait before I risk any further investment, should I be awarded a patent for it. Then, only time will tell if I was ahead of the curve. The drawback with that approach is that over time, as the new technology continues to be developed, my cost advantage will continue to erode. So, if I could take all these variables and plot them on a graph, I would know when (or if) I could maximize my ROI.

[By the way, it almost sounds like what I really need is a business plan? Perhaps that is what you meant when you referred to the MBA...]

DL

[JimIvey]

It's possible that somewhere, a company may already have developed a product like my invention and is waiting for the market for the new technology to reach a critical mass before releasing it. If that were the case, then all my effort and investment would be for naught.

Well, not if you had a patent in hand.  Patents are wonderful things IF the marketplace adopts your invention.  

[By the way, it almost sounds like what I really need is a business plan? Perhaps that is what you meant when you referred to the MBA...]

Yes.  A patent attorney/agent can help you with the cost-side of the cost/benefit analysis and can help with some of the benefit side (likely breadth and coverage of your eventual claims).  However, you need financial/business analysis to fill in the projected value of your patent.  To the extent a business plan covers all possible uses of your invention in all possible markets, a business plan will do just fine.  However, most business plans don't go that far.

Regards.