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Are patents worth it?

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ParttimeHustler

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Nov 19, 2020
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Hello All,

following several weeks of drawing and prototyping, I created a first sample of a product idea by hand. I am getting to the stage where I think about filing a design patent. However I am wondering whether patents are overrated or not worth it for simple physical product designs. My product is a type of bag, so nothing revolutionary here. I have been told by a lawyer that the design itself would have a good chance of being patentable due to the specifics of the design.

I have read that 97% of patents never recoup the costs of their filing. I am new to the business of creating businesses, and although common sense tells me to spend the money to file for a patent, a part of me wonders whether they are actually that useful in real life. Maybe the way in the beginning is to just ignore the patent process and just run with the product, focus on manufacturing first, etc, to see where this goes?

Does anyone here have experience with this and can share their perspective and thoughts? I would love an exchange on this from all angles.

cheers and all the best,

PTH
 

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Lyinx

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have experience with multiple patents here, but not how you would expect :)
We manufacture goods for people, so I have people come to our company time and again with a patent, and they want to either have us make something, or want to license it through our company. I expect that in 9 out of 10 cases, if they would have said, we only want 2% of sales dollars, that they would have made a decent fortune.
However, they always want 10%, 20% or 50%.... and so we can't sell a lot.
Many times (actually, every time so far, I can remember of 6 for sure, but I think there were more cases) the people with the patent ended up without getting a lot of money back, and half of the time, if the idea is legit, the customers will figure out a way around the patent idea and make it cheaper because they don't need to pay royalties.

A customer is willing to buy a new product that is revolutionary (they can see the obvious benefits) and give a bit more money, but the good question is, how much more are they willing to pay for it?

I was told that US patents cost $10k and international cost 40k (do your own research) so you will need to figure out how many pcs that you need to sell to make it worth your time. Also, figure in how much time that it would take to go to court, and somehow quantify that.

NOTE: A patent is useless if you are unwilling to go after the offenders in court!
 

Jasper S

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NOTE: A patent is useless if you are unwilling to go after the offenders in court!
This is what I was looking for here. If you aren't going to fight to protect your patent it is effectively useless.

@ParttimeHustler, another thing to consider is down the road you may want to sell this product line, or company to another person, or company. They may (or they may not) see value in the intellectual property. I suppose this could also be true with investors. Just another angle to consider.

In one of my past jobs I worked in the R&D department of a company that patented just about every aspect they could around a product. One product in particular they had patents on in three different categories: the special material they developed and used to make the product, the machines that put the product together and the design of the product itself. They did this so all of their bases were covered in case somebody tried to copy. However, that was a bigger company with lots of cash on hand and they had a good idea the product was validated by the market.
 

ShepardHumphries

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Hello All,

following several weeks of drawing and prototyping, I created a first sample of a product idea by hand. I am getting to the stage where I think about filing a design patent. However I am wondering whether patents are overrated or not worth it for simple physical product designs. My product is a type of bag, so nothing revolutionary here. I have been told by a lawyer that the design itself would have a good chance of being patentable due to the specifics of the design.

I have read that 97% of patents never recoup the costs of their filing. I am new to the business of creating businesses, and although common sense tells me to spend the money to file for a patent, a part of me wonders whether they are actually that useful in real life. Maybe the way in the beginning is to just ignore the patent process and just run with the product, focus on manufacturing first, etc, to see where this goes?

Does anyone here have experience with this and can share their perspective and thoughts? I would love an exchange on this from all angles.

cheers and all the best,

PTH
... and from a morality standpoint, what is IP in plain English? It is when you pay someone else to use force against anyone who sees your brilliant idea and tries to make it happen in their own way. Again, this observation is just a morality check, the initiation of force or the threat of it has helped a bunch of people make a bunch of money!
 

James90

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Jul 2, 2019
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I expect that in 9 out of 10 cases, if they would have said, we only want 2% of sales dollars, that they would have made a decent fortune.
However, they always want 10%, 20% or 50%.... and so we can't sell a lot.
Just curious.. you couldn't sell a lot because you had to increase prices due to higher royalties?
 

Kid

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if they would have said, we only want 2% of sales dollars, that they would have made a decent fortune.
However, they always want 10%, 20% or 50%.... and so we can't sell a lot.
've read that 5% of retail price is max of what licensors can expect when selling via chain stores.
So 2% is also in "possible" category.

I think about filing a design patent
Design patents give very little protection.
Basically if someone changes some 1% of your design,
then they are free to go.
As far as i've read, design patents give protection only to "exact" copy.
In general terms, a "utility patent" protects the way an article is used and works (35 U.S.C. 101), while a "design patent" protects the way an article looks (35 U.S.C. 171).
(source)
So be careful about it.

Utility patent give much more protection.
While full blown patent can cost you $10k as Lyinx wrote, there is a $150 thing called provisional utility patent.
Be sure to check if your idea can covered by it first.
 

Lyinx

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Just curious.. you couldn't sell a lot because you had to increase prices due to higher royalties?
that is it in a nutshell...

items and why they didn't work
#1: a unique item, for a certain industry, which (according to the inventor) was proven to make racing horses run faster. a definite win for him and the customer. Cost of the harness went up from $400 ish to $700ish (basically, $300 more for a piece of metal that may have cost $100 at the maximum, $50 at the minimum)

#2: a unique safety device, the inventor's idea was to make it mandatory everywhere, and then sell to the people.. he spent years trying to persuade people that it was a good idea, thousands of dollars, and many man hours. price was probably triple what a regular item like it would cost (regular price $70, this one cost $180 or $210 I can't remember exact price)

#3 another unique safety device, still on-going, but not having the massive amount of sales that they thought would happen. inventor wants x amount of dollars per sale. I won't give exact details on this one, but basically, the price goes from $65 to $95 by the time we mark it up as we have to in order to sell it. cost of making this product is about the same as it was for the old models (so it doesn't cost anything, or barely anything, to make it this way, but the patent drives up the price)

#4 another item, no idea why it didn't take off, can barely remember the specifics on this one, never

#5 inventor made something, wanted $20 per item that we made. price before royalties would have been $50, but had to charge $99 to match the inventors required price. This patent fell out of service and the price dropped overnight, expecting it to make a big hit now.
The reason this one didn't take off, someone "invented" an item that did the same purpose, but in another way, and those sold fairly well (the patent was on how it was fastened, because there are already other things out there that do the same thing)

items, 1,2,3,and 5 would all have been major hits (IMO) if the inventor would have said, here is an idea, can you make it, and I'll sell them... and don't worry about a patent...

TLDR; causes of failure:
excessive pricing
no marketing/poor marketing
bad design (able to mfg something similar, but without a patent)
unwilling to change design when the item goes into production, because of sunk costs

TLDR; how to do it (the right way, IMO) in a step by step method:
1. show product to potential buyers, get feedback (you will never have the exact right thing, and they will give you straight up suggestions if you ask for it.
2. reach out to mfg'ers, tell them EXACTLY what you will be using if for, ask them if they think they would be the company for the job, if not, who would they suggest?
3. if you find a mfg interested in the job, ask them if there are any design flaws or ways to improve mfg time/set up costs without sacrificing quality
4. get a mockup made, and explain how it works, and share with potential customers, ask for email addresses to see if people are interested (or run a kickstarter)
5. get a prototype batch made, get them out to testers (maybe have people buy them, with the understanding that they are the first batch, and for a limited time, they get to try it out, make suggestions, and then they will get a finished model when done)
6. go to market!
 

ParttimeHustler

New Contributor
Nov 19, 2020
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TLDR; how to do it (the right way, IMO) in a step by step method:
1. show product to potential buyers, get feedback (you will never have the exact right thing, and they will give you straight up suggestions if you ask for it.
2. reach out to mfg'ers, tell them EXACTLY what you will be using if for, ask them if they think they would be the company for the job, if not, who would they suggest?
3. if you find a mfg interested in the job, ask them if there are any design flaws or ways to improve mfg time/set up costs without sacrificing quality
4. get a mockup made, and explain how it works, and share with potential customers, ask for email addresses to see if people are interested (or run a kickstarter)
5. get a prototype batch made, get them out to testers (maybe have people buy them, with the understanding that they are the first batch, and for a limited time, they get to try it out, make suggestions, and then they will get a finished model when done)
6. go to market!
Very interesting!
Where, if at all, would you put the patenting process?
 

Lyinx

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Very interesting!
Where, if at all, would you put the patenting process?
not in the process.
The model that I outlined can be done within a day or a week (and I've done that already, conception to market within a weeks time, actually, 2 days... ) should add step 7, modify product based on customer feedback and sell even more (new/improved models, sometimes to same customers that bought the first models)
The previous model we will call process A

and

here is the process if you want to patent it (IMO) ... as always, a good patent lawyer has better legal advice for you.
We will call this process B:
1. get patent pending status
2. show product to potential buyers to get feedback
3. get another patent pending (because the first model had flaws)
4. show improved product model to potential buyers
5. start looking for mfg
6. get feedback from mfger's about design flaws
7. get new patent pending process started for new model
8. show to potential buyers
9. hit market
10. realize that there is limited market demand, you're only going to sell 500 units in a years time
11. work off the debt that you obtained in order to pay the patent fees/lawyers/etc... for the next 5 years
12. rinse and repeat until you give up and get a 9-5 job


Process A: Quick to market, quick to change, and no big startup fees (self-funded by sales)
Process B: slow to market, problems are ignored (because you would have to start over), and large debt load (lawyers and time)



sorry/not sorry if I sound cynical about the patent process, I do believe that there are legit times where it is a good thing to have a patent, but 9/10 times it's a bust and the inventor ends up with a debt to work off.
 

Speed112

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sorry/not sorry if I sound cynical about the patent process, I do believe that there are legit times where it is a good thing to have a patent, but 9/10 times it's a bust and the inventor ends up with a debt to work off.

That's because the patent system is a tool designed for the rich corporations to bully small inventors and stifle competition. The idea that they protect the small guy and promote innovation is a scam.

Before you ask yourself if patents are worth it (they're not), you should ask yourself... are patents justified?

And you have to look just a tiny bit beyond the superficial "it's the law hurrdurr" to realize something (that should be) obvious: nothing gives you the right to tell someone else what to do with their property. Who are you to tell someone else that they can't shape their wood and steel into the form of your "invention"?

How can you justify threatening them with the full violent force of the state/law apparatus?

Can you imagine what the world would be like if humans patented the concept of a house? We'd all be homeless, in jail, or dead.

grugmakewhil.png

This is a funny snippet of what it all boils down to.

It makes no sense... ethically, theoretically, or even practically.

If you go through the process of filing a patent you have to ask yourself: will you litigate to defend it? Will the cost of litigation be recouped by the settlement? Is using violence and force to take that money for yourself (and potentially ruin someone's life in the process) something you're ethically in accordance with?

If you've answered no to any of those... they're not worth it to you.

They might be worth it to some crony big whizz psychopath with no qualms and a zero sum scarcity-driven mentality no different from Victorian era mercantilists, but any reasonable person would do well to look deeper in the issue and reconsider.

To put it very simply: patents are an infringement on liberty, and they have a significant cost (legal framework), but their benefits are marginal at best and reserved only to an elite few (and likely harm people overall). But value is subjective so...

You do the math.
 

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Kid

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It makes no sense... ethically, theoretically, or even practically.
Speed, you made that go too far.
Actually patents are there to encourage innovation.
If there were no patents Grug wouldn't invent the wheel.
He would say "if i will create better transport than legs, and everybody will copy it
for free than why should i invent anyway?".

Gosh i'm getting too cynical but there is something called public domain.
Basically if you want everyone to use your invention for free then
public domain is a place for it.

A guy who invented QR codes did exactly that.
He wanted to make sure that no corporation will
gate-keep usage of them so he made it free to everybody.

No one forces you to file a patent.
 

James90

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sorry/not sorry if I sound cynical about the patent process, I do believe that there are legit times where it is a good thing to have a patent, but 9/10 times it's a bust and the inventor ends up with a debt to work off.


In your experience, how effective are NDA's with mfg'ers?

It's my first time contacting mfg'ers to develop a product. It's a technical product, so it's
time-consuming vaguely describing the product to receive accurate feedback.

Because the majority of mfg'ers that I've communicated thus far don't pursue an NDA until much later on. Even then, I'm not 100% how effective they are especially from a foreign country....

BTW, Thanks Lyinx for all the gems you laid out! Exactly what I needed to hear at this moment.
 

Lyinx

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In your experience, how effective are NDA's with mfg'ers?

It's my first time contacting mfg'ers to develop a product. It's a technical product, so it's
time-consuming vaguely describing the product to receive accurate feedback.

Because the majority of mfg'ers that I've communicated thus far don't pursue an NDA until much later on. Even then, I'm not 100% how effective they are especially from a foreign country....

BTW, Thanks Lyinx for all the gems you laid out! Exactly what I needed to hear at this moment.
I've never given out an NDA.
I've only once been asked to sign one.
So, not a lot of experience.. but I (IMO) would be able to share baxis details without an NDA. If it's super secret, then you should be making it in house anyway, as the technical know-how will still be in the supplier business information, even if they aren't allowed to discuss it.

They could duplicate without disclosing where they got the ideas...
 

Kid

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I'm not 100% how effective they are especially from a foreign country....
It depends on country - if European, you might get some mileage, but if its China then from what i've read you get nothing.
 

Lyinx

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@James90 asked for my thoughts in private message, sharing some tidbits on here regarding patents:

My basic thought on how to do business: may the best person win... the person inventing things will always be out ahead of those that copy...

my neighbor created a new product... basically a portable meeting house that can hold 300+ people, can be set up in under 5 hours with a few people's help, have a huge wedding/meeting/etc... the following day, and then be torn down the next day and moved to another location or back into storage...
within two years, other people copied his idea, but he doesn't care, he still rents out his building to people that want it (he now owns two of them, and one of his sons owns one)

in the meantime, he has invented/modifed a horse tie rail that was on the market, you could rent a few of them and they would take it to your horse event to tie the horses up.... he invented and built a canopy/built in tent system to put over the horses.
18 years ago, you would pay $600 to put up a tent for horses, and provide your own tie-up system. now you can rent a setup from him for $480 for a similar setup, and he sets it all up and takes it back down.

3 years from now, someone else will have copied his idea, he will still be renting out his original 2 meeting houses, plus multiple units of horse tieups with canopies, AND he will have invented other things and be renting them out as well...

If he would have put a patent on the first one (meeting houses) he would still only own two meeting houses, and he would be in court every other month defending his "title/patent", and he would have a reputation as a "cranky old geezer who is hard to get along with"
 

Lyinx

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@James90 had asked if I would suggest patenting his ideas (I won't share his exact words, but here is most of the response)

Here are some of the cost equations that you need to do:

1. are you willing to devote dollars to chasing anyone that goes against the patents?

if you are not willing to sue anyone that goes against the patents, then your patent is worthless. If you have a good idea that makes their patent worthless, then a large company will start-up production, and then let you sue them, but they'll fight it so much that you will become bankrupt before you can even get close to settling. when you become bankrupt then they can go ahead and make it without fear of any attack from your side.

If you are willing to spend time and money chasing down big companies (or whomever holds the utility patent that may or may not be covering your idea) then move on to step 2

2. what does it cost to do a patent? (from my limited knowledge, $10,000 for US, $50,000 for international, when you include your time) can you afford to lose that amount of money if/when the product goes flop? if you can't afford it, then you will be paying that off for a very long time. If you can afford it, then you can consider going forward...

3. what is the chance that you will never make any money if you do the patent?
There is always a chance that your idea will never come into mass sales, are you willing to throw away the money that you spent on patent fees?

4. what is the cost if you do not do a patent?
cost for molding dies?
cost for advertising?
etc...
all of these costs would also apply if you do a patent, but at least do us both a favor and get basic numbers before starting. double the cost for "learning experiences" if you have not done something very similar before.
 

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