The Inventor's Mind

The Role of the Knock-Off Effect in Innovation published on TechCrunch:

As the president/founder of Trident Design, LLC, I’ve been inventing and commercializing products for 18 years, and all the successful ones get knocked-off.

Even the not-so-successful ones are eventually flattered in this way. It’s pretty quick, generally. If you’re lucky, you’ll get a couple years, but if your product is on shelves and people are seeing it, they will be “inspired”. It’s not even necessarily nefarious. It’s human nature. People see a possibility they didn’t see before and it opens their mind: to something very similar to the new innovation. They become blinded by the innovation and can’t see any other possibilities. Sometimes it is ill-willed, however, and companies make intentional rip-offs. Some companies actually specialize in this. The only thing that will discourage them is the threat of patents. So the inventors’ objective is to come up with an innovation that can be reasonably protected with a patent. If the product really takes off, you can try and hold on to your market, at least for a time. However, a patent does not enforce itself and you will have to be proactive to protect your territory. This can get very expensive (over $1 million for a lawsuit), so it will typically only make business sense for big-time products, like the iPhone.

In any case, patents don’t last forever; they expire (20 years for utility patents and 14 for design patents). They exist to encourage innovation by granting inventors the right to own their creations and pursue investment without fear, or at least with recourse, from knock-offs. Market forces will eventually take over, whether or not a patent exists, and the knock-offs will appear; and so will true innovations that actually improve on the original. An “innovation” is what we call a “knock-off” that makes something better rather than just cheaper. That said, the nature of “knock-offs” is always to be cheaper. When is the last time you saw a copy BETTER than the original?

This is how the Knock-off Effect works: someone has an idea for a new product which they release after research, development and investment. Someone else copies it for less money (because that is their nature) and in a much shorter time span as the hard part has already been done. The parties may or may not fight over it in court, but regardless, the premium the innovation commands is diminished. The innovator reacts to protect their market share by going out and making something new (because that is their nature) and the cycle repeats, meanwhile the original innovation is now available to the consumer for less.

The deceptively insightful little book, Who Moved My Cheese? presents this cycle through a rat and cheese analogy: one rat goes out and finds some cheese, other rats join in and once someone moves the cheese, some rats will keep going back and complaining about where the cheese used to be but some rats will go out and find another cheese. The first one there gets the choicest bits of the cheese and the others scramble for parts. You see this scenario a lot with Intellectual Property (IP). Innovators see the new opportunities and the other companies come along to copy it. As an innovator you need to recognize when to move on, and not merely sit back and bemoan the inevitable. This doesn’t mean you shouldn’t fight when you need to (and it makes sense to) protect your invention in order to maximize your return; but you also need to keep innovating.

When really large amounts of money are involved, as in the case of Apple v. Samsung, it makes sense to fight in court. Apple came out with an innovation that was guaranteed to be imitated by other people who just hadn’t seen the possibilities before. One possibility I see is that once they had seen the iPhone, it’s not that Samsung didn’t want to innovate, but rather that they were blinded by Apple’s design. They simply couldn’t imagine anything else that was equally cool that was not remarkably similar, and so that is what they produced. This is a manifestation of the Knock-Off Effect, and now consumers can get really great smartphones without buying into Apple. The courts decided Samsung walked too close to the line, and the success of those products in question was based on how close to the line they were walking. Hopefully as a result of Apple’s win, companies will try and walk further from that line and we’ll see more product diversity which will benefit the consumers by giving them more variety in their purchase of smartphones.  Meanwhile, while Apple is snagging an extra billion dollars from an already old design and dealing a blow to a major competitor, don’t think it is not already moving on to the next innovation.

The truth is, knock-offs happen every day to every innovation. Most Inventors can only watch the value of their IP decline as the knock-offs emerge. But that is the reality of the world we live in (the same world which allows almost anyone to play in the inventing game, so don’t get too bitter). So keep inventing and let someone else pick up the crumbs. Just remember that with the Knock-Off Effect, speed is your best friend. Speed to innovation, speed to market and speed to general awareness in the public eye.

Zyliss is selling their pizza cutters and then Alibaba Factory X sees this, and they are already making pizza cutters, so they can replicate the new design easily.

There is a common perception that inventors are, and should be, paranoid about getting their ideas stolen. Stories like Robert Kearns’ battle with Ford (David and Goliath story, Flash of Genius) add to this culture of paranoia. There are lots of inventors who are so protective of their ideas they won’t even tell their spouse or friends about it, secretly nursing their idea for years.  They think they don’t know who they can trust, and that their idea is so valuable that anyone who hears it will literally be uncontrollably compelled to steal the idea and try to bring it to market. They act suspicious of everyone they do try to work with, often alienating the very partners that could help them make their idea real.

I am here to tell you that it’s very hard to bring products to market, to make a business out of an idea, and the execution is far more important than the idea itself. Having an idea does not make you special, doing something about it does. For a someone not well-positioned to take advantage of an idea (like your poker buddy or bartender), stealing your idea would be taking on a HUGE project. Without the passion and commitment of the inventor, it is unlikely they will get anywhere.

Idea theft is much less common than inventions being stymied by overly paranoid inventors. When idea theft does happen, it’s from predictable places. Your friend is not likely to steal your idea. So, too, your spouse, co-workers, and other inventors (who, by nature, pursue their own ideas) are not likely to steal your idea. There are intellectual property ramifications, so I am not recommending just blabbing to everyone, but you don’t need to act like a deep-cover spy with people you normally trust.

Threat of Knock-offs

People are paranoid that their ideas will be stolen before they have been released, but the much bigger issue is knock-offs after the product is released. And it is usually by people who are in a position (in terms of both capability and inclination) to easily take advantage of the idea, who wait for the product to prove itself successful first. For example, a Chinese factory that specializes in making low cost housewares is much more likely to “borrow” a houseware idea than someone who isn’t specialized, because making one more item is easy for them. Also, they already have the customers so the risk is lower. However, by nature, these companies are not innovators. They don’t make things better, they make them lower-quality and cheaper. If they made a knock off and made it “better”, we wouldn’t call it a knock-off, we’d call it an innovation! Every product will eventually get knocked-off if it’s successful.

So when you are showing your product to a person in a position to easily knock you off, that is the appropriate time to exercise caution. However, you still shouldn’t be overly paranoid. You’ll need these industry partners to be successful.  Be appropriately cautious, get an NDA signed, and only proceed if you trust the person. If you decide to proceed, though, don’t treat the person as though they are just trying to figure out a way to screw you, because no one has time for suspicious partners.

The Bottom Line

It is hard to be a successful inventor, especially if you are overly secretive. Every obstacle you throw up to “protect” your idea can make it that much harder for you to be successful. It’s best to eliminate as many barriers as possible to increase your chance of success.

Paranoia results from a lack of understanding of the true sources of threats in the business. You don’t have to be paranoid of your friends and co-workers or other inventors and generally, you won’t have many worries until after the product is on the market. You’ll need partners to succeed, so you have to be prepared to talk to people.

Don’t be careless with your intellectual property, but don’t treat people who want to help you as potential threats. However, if you don’t trust someone, don’t trust a contract with them either. Trust your gut.

Written by,
Chris Hawker

You have to determine somewhere along the way how you are going to try and monetize your invention. There are numerous variations on how to do this, but they tend to fall in two groups: 1. Licensing or 2. Manufacturing. Licensing is when you “rent” your patent and the rights it confers to a manufacturer in exchange for a royalty. It is much less expensive and simpler to license an invention, though it is still challenging and still requires a significant investment of both money and time. Manufacturing, of course, is when you get involved in actually producing your invention and selling it with a mark-up. It involves purchasing, tooling, creating marketing materials, selling the product, purchasing inventory, marketing, etc. It is, obviously, much more costly and time-consuming. In order to decide which path best suits you and your invention, first you must conduct a detailed analysis of the financial aspects of your product. Ask a manufacturer how much the tooling (machinery required to produce the product) will cost and what units will cost at certain volumes. You can contemplate different price points and margin levels and determine how many you would need to sell to break even should you invest in production. If you ultimately decide to license the product instead on manufacturing it, these numbers will be invaluable in negotiating and selling a license. The more info you can provide to the potential licensee, the easier it is for them to make a decision. The easier you make their decision, the easier it is for them to say “yes.” I call this the “easy yes”.

Once you have this information you can decide how you want to proceed. This is also a decision about what you want in your life. You can potentially make more money from your invention if you manufacture and sell it, but then you are running a product company. Is that what you want? Can you assemble the financing? Then go for it! If not, licensing is your better option. You’ll still need a patent and can count on some legal fees. In addition, you’ll have the best opportunity to pitch at industry tradeshows (like the Consumer Electronics Show), so count on that expense. A licensing deal will have fewer risks and take less of your time, but you will have much less control over how the product is implemented and marketed, and the level of attention it is given. I’ve licensed some products to only have the licensee sit on the patent and do nothing. This is a pain of course. You have to terminate the license and then re-license it, having lost potentially years of revenue. Licensing can pay off, though, and is often the best path for most people, especially if your product is complex.

When inventing a product it is important to track down the high quality feedback. Always Be open to
input all along the way, at every point in the invention process, you want to get open feedback from every member of your team. It is very easy to fall in love with your own invention (especially if you’re like me!) and fail to see something very obvious right in front of you. Make sure that you aren’t missing anything and that your reasoning stands up to scrutiny. This goes for your business plan as well as your product design and marketing materials. Track down the highest quality feedback you can find. Don’t be afraid to ask a high-powered individuals you meet at a trade show to be a part of your advisory board. I have found that people are flattered to be asked for advice, and it is a good way to gain access to other contacts. Make sure all your advisers understand the confidentiality of your invention project (and maybe sign Confidentiality Agreements). Don’t be defensive. Your goal is to win, not be “right”.
It is also important to note that when you ask people for feedback, they almost always come up with something. You are asking them to, so they feel obligated to contribute, whether or not they have a real improvement. At the end of the day, you need to take responsibility for the final reslults of your invention, so don’t let anyone talk you out of anything you feel strongly about. The invention still need to stay true to your vision. Of course, you need to be open to being wrong, as well, and willing to change in light of some quality input. It’s a fine line to walk as an inventor
Another form of feedback you’ll want to make sure you are getting is financial, both during the development stage and after you start generating revenue. Establish budgets for all of your invention activities and then compare your actual expenses (and incomes) to your projected expenses. That way you can make sure costs aren’t getting out of control and have guidelines to help you make decisions about what to spend money on and when. If you then decide to “break thebudget”, at least you know you are and have a good reason to do so.

Plugged In

From Toastpop.com

We are so plugged into things these days. We plug in phones or music players to charge and manage them. We plug in appliances to use them. We plug in extension cords to power tools at a distance. Sometimes we need to plug in extra plugs for all our things that are electronically powered. I’m sure we all own a power strip or two for that purpose. They’re rectangular plastic blocks, usually a white or cream color, with a glowing red switch on the end. You’ve seen one power strip, you’ve pretty much seen them all, right? Well, not exactly. It’s highly unlikely you have ever seen a Power Squid before.

The Power Squid is a squid-shaped plug board. Acting as the tentacles are bendable power sockets and the body possesses the breaker switch along with other functional and protective units. Some models have surge protection and power filters. The power cord of the Calamari edition-the most technologically customized and most expensive Power Squid-has a rotatable platform for flexibility in plugging into the wall. Available on powersquid.com, the products are sold a few different colors. All Squids are under lifetime warranty. The Calamari edition and the other costly cephalopods come with a $75,000 equipment insurance policy. This company strives for prompt delivery service. They do their best to ship orders received before noon (EST) on the same business day. At the most it will take about three business days to deliver.

The Power Squid is a product of Flexity LLC, a subsidiary of Trident Design LLC. They’re based out of Columbus, Ohio. Chris Hawker conceived the idea of the Power Squid in 2000 when he noticed a mess of cords underneath his stereo late at night. Hawker documents the process of bringing the Power Squid to life in a six-part blog series titled “The Song of the Power Squid: The Inside Story of the Life of an Invention”. In addition to this products history, he shares useful information surrounding the business of innovation. You can read these blogs on Trident-design.com.

You haven’t seen it all until you’ve seen the Power Squid! It has all the electrical capabilities of your typical power strip (if not more), but its sleekly designed for greater function. Get plugged into a Power Squid!

;

Don’t fall in love with your invention just yet! Do some research.

After you settle on an invention idea that you think might have potential, don’t fall in love yet! First you need to make sure that no one is already out there selling something like your invention. Just because you’ve never seen anything like it on the market doesn’t mean it isn’t out there. Until you had your idea, you likely never paid as close of attention to your potential market as you will need to now; Google it and then Google it some more. Dig deep and leave no leaf unturned. You want to know the competitive landscape of the product. Learn about what’s out there. Learn your price points and gain an understanding of the positive and negative features of the competitive products or inventions. Then do a prior art search or patent search for your invention. It is very important to gain a thorough understanding of whats been done before and what future opportunities exist for innovation. You do not want to reinvent another persons idea, for both legal reasons and also for commercialization purposes.

When we we research a invention idea or product concept for our clients or ourselves we spend many focused and dedicated hours in this phase of the process. We often determine after our research that is does not make sense for us or our clients to proceed in investing in the idea. It is better to figure this out in the early stages of the process before you have spent excess of amounts of time,energy or most importantly importantly $$$$. We charge $600.00 dollars for this a prior art search and market study and it is of incredible value for anyone considering taking the leap of investing in their invention.

If at all possible, go to a trade show in the relevant industry. There is no better way to learn about a market quickly. You want to be as educated as possible to contextualize all your decisions as you develop your idea.

Now do some quick napkin math. You need to look at all the upfront costs (engineering, design, tooling) as well as the variable costs (inventory, storage, sales) and calculate how many you would have to sell to break even and how much you might make if it is successful. It will take some effort to generate all this info, but you should be able to get some ballpark ideas on the development costs of your invention from industry professionals. To estimate the cost to build each unit, you can look at similarly complicated and sized products on the market and see what they cost. Your cost will likely be one-fifth to one-quarter the retail cost, adjusted based on the relative complexity. You don’t have to stick to products in the same product category; you can look at products in different industries with similar characteristics, too.

To estimate your potential sales, work forwards, not backwards; i.e., don’t decide how many units you think you can sell and then try and justify your number, but rather estimate how many stores you can realistically get into, then how many each store might sell per week, and then build into a number. But rather estimate how many stores you can realistically get into, then how many each store might sell your product or invention per week, to help you calculate a realistic number.

Get empirical. Hold it in your hands. Wow potential investors or licensees.
After your product is designed, you’ll need to make a prototype to prove out the function. The only time it makes sense to skip the prototyping stage is when a design is so simple it is very easy to understand, and therefore you can try and license with just a computer rendering and a pending patent. No matter how much time you spend thinking about and drawing your product, you can only imagine so much. At some point you need to get empirical and hold something in your hands. You’ll probably discover almost immediately that there are many things you want to change; therefore, prototype sooner rather than later. You’ll typically end up with at least three prototypes to perfect a design. Don’t be disappointed when the first one shows up and it has problems. That’s normal. You can start with very rough prototypes that you can then cobble together yourself getting closer and closer to the finished product with each step.
You never want to create tooling to manufacture something you haven’t received a good prototype for. Speculation is too often wrong. Never skip this step. Doing so is likely to cause some terrible heart ache. I have done this. Learn from my mistakes. Even so, there is always a leap of faith you have to take when you go from prototype to production. The prototype needs to demonstrate the final function of the product, but rarely will it actually function as well. The last 10 percent of the function is usually only realized in production. As I said, it takes a leap of faith. Use your judgment to decide when the factory fully understands all the details of the product.

If you are looking to license, a prototype becomes a valuable sales tool. You can show it to your potential partners so they don’t have to imagine your product based on a picture (Which may be difficult for many left-brained business people!) You want the prototype to WOW them. You want them to go “that’s Sweet! We want it!” So it is important to invest enough to have your prototype look as close to a production part as possible and, hopefully, work well, too. If you must, you can always split it into two prototypes, a breadboard model that works well, but doesn’t necessarily look nice, and an appearance model that looks good, even if it doesn’t work at all.

Modern invention is a team sport. The ideal of the lone wolf inventor is out of date. It takes many skills to develop an invention idea to the monetization point, and very few individuals will be good at all of them. As you progress, assemble experts in a variety of areas, both as core team members and advisors. Cover the following areas of expertise: product design, engineering, branding, manufacturing, finance, legal, marketing, public relations and sales. You might possess several of these skills, and someone else might be able to handle several of them. You just need to make sure they are all covered. Many of these skills can be brought into your team at no expense at first; interview some lawyers and accountants. They’ll give you some basic advice in your interview! Recruit your designer and engineer for equity.If you are manufacturing your invention  find a sales rep in your industry and sign a deal to start getting their input on strategy. You want power players for each role in the invention process. Each person should be great at what they do, so you can focus on your own strong suits.
Once you have a great team in place, it becomes easier to create the next product. With each person knowing their role, you can eliminate most of the bottle-necks in the process. After 16 years of being in the invention business, it takes me 10 percent of the effort to accomplish the same work due to the strength of my team.
Since it is inventing, one of the most important team members you need to locate is a manufacturing partner. For most items, China is the place where things are made. There are many agents that can help find reliable manufacturers. You can also use Alibaba.com (a web-based directory of Chinese factories). However, I recommend auditing any factory you plan on proceeding with past prototyping into production. Either go yourself (it’s cool in China!) or send an auditor like AsiaInspection.com. The right manufacturer won’t charge for basic engineering and will provide inexpensive prototypes as proof that they can actually produce the product.
Most of the “invention services firms” you see advertised on TV are a waste of your money. They offer to “help” you for a fee, sometimes quite large. Then they do nothing active to secure a licensee for you product, merely adding it to their catalog of inventions which they publish. It takes focused and special attention for every single product that is licensed. This kind of approach very rarely provides any useful value for what you pay. You need to work with devoted partners who are committed to your product.

Intellectual property (IP) protections are obviously an important part of being an inventor, thus, as an aspiring inventor, it is vital to learn about the different IP tools. There are many books on the subject of IP. If you are serious about your product, take the time to learn about this, because it is the source ofyour ability to practice.
First, there are non-disclosure or confidentiality agreements (NDAs). Use NDAs to protect the confidentiality of your invention while talking to potential partners, but don’t be overly paranoid. In my experience, paranoia stops way more business than it saves. You can have a lawyer draw one up or by a generic one. If you are applying for a patent, it is important to keep your product officially confidential in order to not accidentally destroy your ability to apply for a patent.
Patents serve several purposes:

1. they provide some legal powers to maintain exclusivity

2. they give you the ability to seek a licensee

3. they lend credibility to your product in the eyes of the consumer or licensee

4. they discourage casual knock-offs.

There are several types of patents: provisional, design and utility.

Provisional applications give you a one-year period of “patent pending” before you have to file a full application and cost much less to file. The provisional patent application is a powerful tool for the inventor and used properly can save lots of money and help drive better patent writing.

Design patents cover the physical appearance of a product. They provide much more protection than most inventors realize and are great for protecting products that derive their benefit primarily from their form.

which cover novel, non-obvious inventions “reduced to practice” (you can’t just patent an idea) are expensive and tricky to get, but are also potentially the most valuable as they can cover numerous applications of the same idea.

What many people misunderstand is that patents don’t actually prevent anyone from doing anything. They just give you the right to sue someone to stop them if they are infringing. You still have to sue them and win. This is very expensive. A utility patent lawsuit can easily cost more than $1 million in fees per side (Design patent lawsuits are typically much less expensive as the situation is usually clearer cut.). If you lose, then you not only lose the decision you were hoping for, you also lose all that money. Therefore, at the individual inventor level, it is unusual for a case to be prosecuted, as neither side can really afford to take the risk on a business where the money isn’t in the many millions of dollars. As a result, most patents are never truly enforced. It often comes down to a game of “chicken”– where the side with the deeper pockets usually wins. If there is doubt, the parties will usually settle and make a deal. Nevertheless, it is very difficult to license an invention without a patent, even if neither you nor the company is likely to enforce it.
You don’t have to wait until your patent is issued to get a license. I have licensed many products while the patent is still pending. Most licensees will insist on adding a clause that says if the patent never issues and the application is abandoned then the royalty they have to pay either disappears or goes way down, but I feel it is much better to get going rather than wait, which might take several years. In fact, I usually try and license my inventions under provisional applications, which give me the opportunity to work with the licensee to perfect the application before submitting it. This is to both parties’ benefit!
Trademarks can be just as important as patents to the success of your invention. Registering your trademark is a great way to add value to your invention. This can increase your payday if you license it or increase your sales if you manufacture it. As I mentioned earlier, the PowerSquid trademark was just as important to the success of that product as the design.

For turning your invention into  a winning consumer products, nothing is more important in generating success than great product design. Design is thought. A product with good design has more thought put into in it than a poorly designed one. Every point has been considered in order to perfect both the performance and appearance of the invention.

My theory for product development is what I call the Perfect Product Pyramid. I don’t mean absolutely perfect, of course. I mean relatively perfect. The perfect product is the one that gets on store shelves and sells well, not the one that is so well-featured that only a few can afford it. To be “perfect”, products need to have three areas of excellence:

1. The design,

2. The technology

3. The function.

Most “inventions” have to do with either their function (what it does that is special) or the technology (how it does it). To make the product great, it needs all three. A great functional invention with lousy design is a common mistake that inventors make. Look at the products on the shelves at the store. Everything looks great! That’s where you want to be, so your product needs to look great, too. Also, it needs to look diFFiRenT in order to stand out among competitors at the store. Good design isn’t just styling, it also impacts the user experience – providing ease-of-use, lack of annoyances, clever construction ergonomics and enjoyability. Good technology with a bad functionality is also a common mistake many inventors make when creating their products. Good ergonomics is expected by the modern consumer. And we’ve all had experience with products or inventions that look great but don’t work well. We call that “designer”. It’s art more than it’s product.

If you aren’t a product designer, you’ll need to hire or partner with one in order to turn the rough concept of your invention into a defined one that is ready to be shared with a factory or potential licensees or customers. A good designer will work with you in order to guide your decisions based on their experience in the industry. They can answer many questions about the financial repercussions of design decisions and help you come up with a realistic solution to the problem you’ve identified.