We have special programs available that reduce the cost of developing and validating new technologies from simple toys to complex medical devices and more. Vorelco is run by inventors and the president of the company, Jack Durban, holds over 20 patents issued and pending going back to the late 70's.
As inventors ourselves having gone through the entire patent process and every stage of the patent to market process several times over the years we can save you from the many pitfalls and common missteps from concept to patent preparation and filing.
We can help you formulate a cost effective product protection and product development strategy. We have a proven track record in taking products from inspiration to end market. We can even arrange funding if we determine that your idea is protectable and appears to be a potential hit.
We are always open to reviewing an invention at no cost to the inventor. We have Non-disclosure Agreements available or feel free to use your own. If your idea is sound we will guide you on your way to success.
However if we determine that your idea is not sound or original we will tell you that too. We leave the hype and misrepresentation to invention submission companies.
No matter what you do with your idea stay away from Invention Submission firms. Most will take your money and you'll have very little to show for it.
Here is a primer on the entire patent to product development process written by Jack Durban, Pres. of Vorelco, a Nevada LLC in good standing with a flawless business record since inception in 1984.
From concept to market, the art of invention and product development (Part one)
By: Jack Durban, inventor and product developer C 2008
As a seasoned and established inventor covering 30 years of innovation covering hundreds of designs born of thousands of hours in the lab, I will try to cover the many challenges facing the individual and institutional inventor as well as the seasoned professional, from the point of design inception to the sale.
As a very busy product developer with many years of helping over a couple hundred clients with new and existing product designs and re-designs I will attempt to save the reader a great deal of frustration that can accompany the product development process from start to finish focusing on well established proven methodologies and best practices.
This multi-part tutorial was written with the inventor and small business in mind.
The following primer is prefaced by the following heartfelt disclosure.
The real world of invention and product development is not glamorous or exciting like it is made out to be at all. In fact...
"Inventing can be like giving birth without the benefit of anesthesia"
For every successful process or product appearing on the market and in the news there are thousands more that remain undiscovered and unexploited leaving in their wake broken promises, broken dreams, and often broken bank accounts.
For some reason many inventors think that all they have to do is think of a new process or product and file for a patent. The fact is that this is just the beginning of the patent to market process.
Very, very few inventions are instant hits where the market is just waiting with open arms to receive and sell the new product. There are usually always many hurdles to clear before you can even openly promote your idea to industry.
I can't tell you how many times I heard the same story from inventors as to their frustration regarding how hard it was to convince potential buyers or investors that they really needed their invention!
If you think you have a viable invention and you are willing to put in the necessary effort and time please read the following primer, read books on inventing and selling inventions and locate a mentor that will take the time to pass on their wisdom to you.
Unlike most in this field, I do not recommend joining inventor's groups or forums. After giving lectures to many of these groups over the years and reading hundreds of posts on invention forums I have found them to be overwhelmingly negative.
I think this is due to the fact that the successful inventors are busy making history while the others dwell on their failures. You can on occasion receive useful advice once in a while in the right forums but always verify! I would recommend a mentor like an active or retired engineer or scientist. Seasoned and competent professional advice is always valuable and will save you both time and money.
The information provided herein is based on my own professional and real life experience as a long time inventor and product developer under the name Vorelco and as such others in this field may agree or disagree with my assertions and suggestions contained herein.
Any legal references made are not intended to be legal advice and you should always consult a competent attorney before entering into any new venture or any legally binding agreement.
Let's get started
O.K. so you have an idea or product concept that is so compelling that you are losing sleep over it. You have looked around at a few stores and online and it looks like no one has thought of this before you. Having been in this mode a few dozen times myself, from childhood to current day, I can relate to this rush of euphoria.
At this point you must keep a level head and make good decisions based on research and sound reasoning (Emotionally based decision making is your enemy).
Before you get too excited about what appears to be your day job exit strategy, take a little time and effort to determine with some degree of certainty that your invention is truly new, novel and patentable.
You can spend a lot of time and money on "your" invention and with plenty of services happy to take your hard earned money, without any concern for your better interests, you could end up broke in the end.
To save you a lot of time and money there are two qualifiers that must be met before you take a step further. Both can be determined with skilful and diligent research by one familiar with the technology involved. To bypass these qualifiers is to almost assure unpleasant results.
Originality, objectivity and feasibility
Do you truly own your invention?
Try to remain grounded when intoxicated by the adrenaline and excitement of what appears to be the next big hit that everyone else missed.
When you combine the blinding power of greed and the desire to tell your boss to take his job and shove it, even the most level headed among us can make very costly mistakes. Try to be objective in everything you do and say regarding your invention.
Many well intentioned individual inventors as well as established companies invest considerable sums of both private and publicly raised funds on intellectual property that was faulty, protected by others, or considered prior art (public domain).
A lot of hard earned money can be lost if you fail to conduct a patent search and later determine the hard way that you have no legal rights of exclusivity regarding your idea.
Many inventors, entrepreneurs, and established companies will take the caviler approach to intellectual property rights and will just outright copy or slightly modify someone else's product or process, patented or not.
Some will avoid seeking a patent search because they don't want to have official prior knowledge of potential infringement.
If your idea is worth developing it is worth protecting unless it is a simple fad item. Of course a patent is only as effective as your ability to defend it but most large publically traded companies will not risk their reputation and blatantly steal a patented product. It is far more likely that an established company will offer to buy or license your idea than take a chance on costly litigation.
Unless you are a very good researcher, pay to have a patent search conducted. This will average $250.00 to $500.00 even less with a little shopping around. If you can afford a couple hundred dollars more, pay for a basic patentability opinion too providing your concept is not very technical in nature. Highly technical patentability opinions can run into the tens of thousands of dollars.
Determining feasibility or "the moment of truth"
Before you contemplate quitting your day job over what appears to be the "invention that is going to make you rich", ask yourself the following questions...
Does the product, assuming it is a product, yield enough true utility or excitement to almost sell itself?
Is it markedly better than the well established major brand that already enjoys a long history of brand awareness, loyalty and customer satisfaction? A minor improvement of an existing product will likely never see the light of day. Consumers need a lot of convincing to choose an unknown brand over a recognized one.
Manufacturers spend millions establishing their brands and going head to head with them in the market can be a daunting challenge. Your idea must be markedly better approach.
Sometimes product excitement can trump function or intrinsic value like toys, fads, gimmicks, and of course the usual suspects like cosmetics, magic weight loss pills, and thigh masters.
Of course there are countless examples where this formula is no longer the norm especially in the P.C. and consumer electronics markets where margins are razor thin.
Although the product provides a solution to an existing problem is the perceived problem so apparent or enough of a nuisance that a consumer would purchase it right off the shelf without hesitation?
Does the product idea involve extraordinary skill in the assembly or application of the product?
Does the product sacrifice safety for utility?
Who is the target market demographic? If it is targeted at the youth market will parents think it is a good value or "a good babysitter?" Let's face it, parents often weigh a toy's value by how long it keeps the little one out of our hair like video games.
Will your product idea threaten a well established industry that employs lobbyists to protect their interests? You may find yourself expending considerable time and resources to overcome market entry obstacles.
Does your product deploy any materials or power sources that contain lead, mercury, or other recognized hazardous materials that may lead to denial of regulatory approval for use, sale or disposal?
Will your product compete against one that generates more profit for the retailer than yours?
Example: You have invented a powdered tablet that turns a gallon of tap water into fresh tasting, mineral supplemented, ph balanced water rivaling the taste and health benefits of the finest bottled mineral water on the market. If you position your price point at $2.95 for a packet that produces 10 gallons of miracle water you just may run into a little retail resistance!
And finally is your idea really yours and not a forgotten relic of the past or a currently available, overlooked off the shelf offering at any major store?
Furthermore is it already patented or a pending application? I can't count how many times I have heard, "I looked everywhere and I can't find it in any stores or online". Before investing any money in your idea have a patent search conducted or at least learn how to conduct your own.
The aforementioned questions might appear to be rather cold and paint a dire picture when you likely expected a much more upbeat motivational pep talk and visions of bags of gold, scantily clad dream dates, and the obligatory mansion with circular driveway packed with luxury cars.
Let's leave that to the invention submission companies who will paint a much more positive outlook and almost certain odds of financial success. Unfortunately that entire positive outlook soon evaporates after your check clears.
The real world of converting ideas into cash is hard, very hard work. The process is arduous and painful at times. It's a lot of long days and long nights of overcoming design issues and business strategies. Fears of failure and rejection can dramatically affect your sleep patterns!
If you still think you have what it takes and you have the time, money, and an understanding household then read on and I will attempt to fast track you the mere mortal into the inner sanctum or asylum, depending on your perspective, of the invention process from A to Z.
It is imperative that you educate yourself quickly regarding the real world of innovation, invention, and reduction to practice, marketing and all points between.
If you fail to heed this advice you will almost certainly end up in a very unsatisfactory situation as you will be a target for all kinds of scams and traps along the way.
Will the service provider, the one "skilled in art", the trusted authority, possess the integrity to tell you that your idea is a big stinker if fit is?
Every once in a while we see one of these ideas that is, well, so lame that it defies all logic. Trying to convey this to someone is akin to telling them that their child is ugly but you absolutely must, as gently as possible, explain why.
Seems like every profession has its share of bottom feeders and crooks and the invention to market business is no exception.
The Invention Submission Racket
Do not, ever, without exception, take your idea or invention finished or not, patented or not, to any invention submission company, period. Most all of these firms are boiler-room operations that churn out thousands of mass mailings, spam emails and phone solicitations to snare potential victims.
I used the term "most all..." only because there just might be an honest invention submission firm out there somewhere but like pure capitalism, Bigfoot and the lock Ness Monster they have never been scientifically corroborated or objectively proven to exist.
All humor aside there might be a valid firm out there and if you know of one please contact us so we can let others know !
As a product development firm catering to clients from inventors to fortune 50 global conglomerates Vorelco used to take on any viable product development project that came along. When we were approached by IP&R in San Francisco in 2006 to help them on some projects for them we happy to oblige and for a couple to few months they appeared to be a legitimate operation and there was no reason to suspect that anything untoward was going on. We created a few promotional videos for them to air on QVC and helped them overcome some design problems on a few products.
We were well aware of invention submission scams like Davison and ISC but IP&R seemed like an exception to the rule. The company president was supposedly an inventor and an author of a book on the invention to market process.
After completing a few projects we were asked to help with a couple problem accounts directly with two clients.
One had patented a magnetic shaver and corresponding gel that was impregnated with ferric oxide and the other was a paint ball gun cleaning technology.
Once I personally reviewed both product ideas it was very apparent why these projects were in trouble and was what caused us to stop accepting work from IP&R.
Both of these projects shared one very obvious flaw. Neither were technically sound.
The Shaving product although patented was completely unfeasible. Anyone of sound mind should have known that the shaver idea was a non-starter yet it was accepted at IP&R.
The product was supposed to be able to improve shaving for men by use of a gel containing iron oxide particulate.
The theory is that if the iron particulate were able to surround the hair shaft the magnet laden razor would cause the iron oxide in front of the hair to bend the hair to a more upright position causing the razor to cut closer to the hair shaft!
When I asked the inventor why would the iron oxide would stay behind the facial hair shaft and not just take the path of least resistance which would be to simply migrate around the shaft, he just went silent.
The paintball product consisted of a foam ball the size of a conventional paintball that was to be soaked with a solvent and fired through a paintball gun to remove paint expelled from a leaky paintball. There was no consideration given to ballistics or the inherent danger of firing a ball soaked with a flammable solvent through the barrel of a paintball gun! Also the ball was a solid sphere and not vented or scalloped to reduce drag and to permit debris to be collected and removed while in flight through the barrel.
Neither of these products were viable patent to market candidates which reveals the likely reason why so many invention to market or invention submission companies fall into trouble with clients and eventually State Attorney General's offices.
It became rather obvious that IP&R was knowingly or unknowingly accepting any inventor that had a pulse, a body temperature somewhere in the 90's and ten to twenty grand or more to spend.
Perhaps this is the problem with the entire invention submission industry. They take on every client that applies and there is no consideration at all of commercial viability.
This could further explain why nearly all of these firms have a less than 1% project success rate.
To accept every project regardless of merit is just wrong and dishonest.
There are any number of reasons why the invention submission marketplace regardless of original intent, often wind up on the case logs of State's Attorney Generals offices but all center around the broken promise of delivering a service of value.
Most Invention Submission Firms regardless of original intent become more motivated by profits than the actualization or fulfillment of their services.
Often there is little if any regard for defining the scope of work and related costs as it pertains to fulfilling the development and marketing of the client's product or introduction to industry process.
The priority shifts to the acquisition of as many new clients and cash as possible while losing focus of existing and maturing accounts. Most invention submission firms will provide their clients with impressive and some not so impressive printed materials and very simplistic web pages as little hooks that require little effort but at least look impressive to the average person.
As these tactics run out and enough time has passed the client base begins to smell a rat and the complaints and lawsuits start ramping up. Here is where the invention firm's troubles begin to grow exponentially.
They prefer to use the telephone to make their pitch and close the deal so they don't have to put everything in writing. They will try to appeal to your ego and downplay any risk in using their services.
These are well trained high pressure salespeople that you can find in any boiler room sales operation. They often understand less about the invention to market process than you do.
They often know little about wholesale or retail marketing but they do know how to rent mailing lists of industry-specific buyers that are more often than not completely unrelated to you're your product type.
They are however experts in "closing" sales using rudimentary but effective psychological tools to get you so excited about the certain wealth that awaits you that you will take a second mortgage out on your home to pay for their services.
The business model is rather predictable. They will often ask for large upfront fees and promise to put you and your product in front of industry specific buyers interested in new product ideas.
The huge upfront fees are secured to prevent you from leaving the program when you finally discover their scam. Even after the moment of truth many victims will stay in these programs and some will even continue to buy more "necessary" add-ons.
The usual resultant works will consist of a useless mass email broadcast to disinterested "buyers" and weighty boilerplate or template report that merely automatically places your name and your product's name into strategically located "auto insert" locations throughout the report.
To the uninformed, the report appears to be legitimate and gives the false impression of considerable effort on the invention submission company's part.
They may also create a basic CAD drawing and some collateral material like a quick brochure and minimalist web page showing the product or a rendition. Much of this material can be outsourced to India, China and the Balkans where labor rates are a fraction of U.S. rates.
Those who fall victim to these firms can expect to pay from $5,000.00 to $20,000.00 for little more than a couple hundred dollars worth of materials and an ego massage.
The fact is that authentic buyers of goods for commerce do not have time to wade through electronically transmitted or printed content with half baked illustrations of products without professional representation. This form of promotion is no more effective than spam or junk mail.
There's no excuse for allowing yourself to become a victim in the era of the Internet. No one can hide from their evil deeds in cyberspace.
With invaluable sites like the rip off report and several other fraud reporting sites you can see if your deal sounds too good to be true before you fork over your hard earned dollars.
Don't assume that just because the company looks and sounds too convincing to be fraudulent that it is isn't. Most of these firms hop from state to state knowing how busy the State's Attorney Generals offices are and how much time they have before the warrants are served.
They also know that many if not most victims will not go through the trouble or humiliation of legal action or reporting the crime. Unfortunately too many well intentioned people just expect to get cheated and when it happens to them it is like a self fulfilling prophecy.
Now we cover the filing of a Provisional or non-provisional patent and what you can do to protect yourself when having to disclose your idea to others before and after the filing of a patent.
Record and third party witness all developments...
The Inventor's Notebook
If you haven't already memorialized your invention or product idea do so immediately and get into the habit and recording all your design concept ideas in whole or part.
At some reasonable time interval have a trusted friend or associate preferably one skilled in the art related to your invention to acknowledge and sign off on each significant entry.
This witness must not be directly or indirectly associated with the invention or the holding company to preserve the integrity and objectivity of the witness.
In other words witness objectivity must be maintained throughout the process.
Loose lips sink ships...
Keep a lid on your invention until you're protected
Keep your invention a secret until you file some form of recognized U.S.P.T.O. "United States Patent Office" protection like a Provisional, Design, or Utility Patent.
The fallacy of mailing a sealed envelope to yourself provides absolutely no protection whatsoever and never did. I always wondered who started that myth!
Cheap temporary protection...
The Provisional Patent
The Provisional Patent is an affordable way to protect your idea (insomuch as claiming priority) while you continue to develop it.
The Provisional Patent buys an inventor a one year period of time to develop and "reduce to practice" their invention prior to filing a non-provisional or Utility Patent.
An average Provisional application will cost around $2,000.00-$4,000.00. The Provisional patent is not without its downsides however.
Failure to file a non-provisional patent within the one year statutory filing date will preclude you from obtaining a non-provisional or "Utility Patent" on the same art.
A little hint that will save you a lot of grief...
If you decide to write your own patent always write a Provisional Patent in the format of a Non-Provisional Patent.
If you end up pushing the envelope of time like I do on occasion and file within days or hours before the one year priority filing cut-off you just might keep your sanity!
The preferred protection plan...
The non-provisional Patent
The non-provisional Patent otherwise known as a Utility Patent is the preferred and most immediate form of acquiring patent protection for your invention.
The cost to file a Utility Patent varies and depending on whether you file for protection abroad or not can set you back anywhere from $5,000.00 for a basic U.S. only application to as much as $50,000.00 or more for a more complex application with moderate foreign filings.
This is where you might consider an outside source of funding in exchange for partial ownership in your product concept.
When discussing your invention with anyone your first line of defense is the all important NDA "Non-disclosure agreement"
Before we embark on this lengthy detailed journey known as product development it is imperative that both the client and the product developer understand that the most important component in this multi-faceted endeavor is the safekeeping and recording of the intellectual property from the opening conversation to the delivery of the product design(s).
Vorelco staff will always advise a potential client to produce an NDA "Non-disclosure agreement" prior to any discussions regarding anything of a sensitive nature.
We can provide such a document and there are several available on line or from a competent attorney.
NOTE: After signing hundreds of NDA's over the years I find that most are grossly inadequate in protecting the party seeking protection.
Every Non-disclosure agreement should convey just enough generic information about your product concept to determine if there might be a potential conflict of interest insomuch as the product developer having entered into such an agreement prior to yours, covering similar technology.
Just a simple description like "an improved lawn irrigation device" reveals nothing of a sensitive nature but is enough information for the product developer to determine if they might have a conflict of interest with a current or recent project still under the protections of a prior NDA.
Without such a minimal disclosure in the title or body of an executed NDA you could inadvertently disclose information that may contribute new art or embodiments to the candidate service provider's existing project.
There is a reason why so many large companies like 3M limit or reject NDA's from inventors and others outside the confines of their organizations. The potential for conflicts of interests outweigh the potential upside.
The odds of someone coming to a company the size and history of 3M with a new and novel product idea related to their market is extremely rare.
On the other hand if you are a well known inventor with a history of innovation there is always a way to break through the usual introduction filters and traps.
We always recommend that potential clients or any inventor big or small always properly identify the composition of the item or items about to be disclosed with clear language.
This does not mean that the NDA description should disclose any proprietary details but just enough information to allow the disclosee to determine if he or she can in good faith accept the NDA.
In other words as design service providers we come across a lot of new and not so new product ideas and on occasion we will see nearly identical product ideas or concepts.
If by chance you provide an NDA to a service provider that fails to adequately identify the proprietary material inside and the service provider happens to be working on similar art the service provider may be provided with information that could unfairly benefit his or her current client. Although rare it can happen.
A little NDA fortifier we like to use and recommend is having the disclosee briefly memorialize in writing what their understanding of what was disclosed to them followed by their signature.
This can be accomplished in a designated boxed area within the NDA document body or on the back of the document. If there should ever be a misunderstanding as to the scope of what was disclosed at the time of the NDA's execution you will have a signed memorial.
Now we address prototyping, design refinement and the right type of help to get you through the rest of the product development process.
Proof of Concept or the all essential prototype
If you are technically competent in the field which your invention resides then you may not need much third party support here. There are however a few tricks of the trade that can save you a lot of time and money in the prototyping phase.
Focus on the basics first.
Identify and list the core features of the product in order of significance.
From the features list, segregate knowns from unknowns. In other words identify new and novel aspects of the design that lack technical support or research from academia, white papers, Prior Art, industry, etc.
More specifically what are the "do or die" design challenges that will make or break the entire design? Focusing on the mundane while shying away from the more challenging aspects of the design only postpones the pain and failing to disclose such challenges can ruin relationships with investors.
Conquer the biggest challenges first.
Critical core feature testing, validation, and refinement. To adequately test and validate your design concept you must identify and replicate all functionality as well as the intended operational environment. This includes temperature, humidity, line voltage variation, user applied abuse, power cycling, immunity to R.F., and so on. To compile a list of required tests related to a particular product go to any of the regulatory compliance sites. The failure to identify and remedy failures very early in the design process will be much more costly than finding them later like a demonstration in front of a potential buyer!
Once the product's critical design challenges are addressed you can now move onto secondary and tertiary design aspects like packaging, human engineering, etc. I realize that this order of priority might upset some in the industrial design world but we have all purchased at one time or another that really cool, futuristic looking, design award winning product that didn't function nearly as well as it looked. Or regarding functions, there's the tendency to substitute traditional norms in language and symbology with hieroglyphics that only an Extra Terrestrial can decipher. Remember...Function first and window dressing second!
Finding the right help in getting your invention or product idea off the ground quickly is critical if you are going to get to market or land a licensing deal. There are a few ways to get the help you need.
You can contact your local community college or university and inquire about teachers, professors, or curriculum that provides low cost, even gratis technical help to individuals or the local business community.
The potential downside to any such program would be time availability and ability to deliver on time due to other commitments.
Product Development firms depending on their experience and their core set of competencies can help you get your product from the concept phase through prototyping and hopefully to a market ready state.
Service provider competence
When screening product developers, always inquire about their actual work history related to your type of product. This is a very important step and cannot be overlooked. Many if not most of our project rescues are born of incompetent service providers that simply did not know what they were doing.
Although many come to mind and some very well known products, I will reflect upon and provide a lesser known product example. A client came to us a couple years ago with solar charged, battery powered real estate sign lighting system "designed" by a competitor that shall remain unnamed.
The clients were a splendidly nice group of people and I took a keen interest in helping them after seeing just how badly they were conned by their service provider.
The product could not have been simpler. An overhead add-on light bar attached to a conventional 4X4 mounted real estate sign intended to provide night time illumination of the sign for passing vehicles.
Upon inspection of the prototypes and support documentation two glaring mistakes leaped out at us. The designer chose to deploy a miniature CCFL "Cold Cathode Fluorescent Lamp" as the light source and the battery pack power was far too small to power the light for just moments or any practical period of time.
Any experienced engineer or "A" level technician for that matter would have known better than to use a current hogging light source like a CCFL in such an application.
Furthermore the discharge curve of the battery pack not only failed to provide nearly enough operating time between charges but could not provide ample inrush lamp start current to perform a lamp restart after only 1 hour of operation!
An experienced service provider/engineer would have excluded the CCFL at ground zero and would have focused exclusively on low energy, solid state LED's "Light Emitting Diodes" like the Nichicon white LED in an array behind a diffuser panel to bathe the sign's planar surface in a clean uniform white light.
To save battery power I would have deployed an oncoming vehicle detector using an inexpensive commodity grade photo sensor preceded by normal incident geometry tube baffle about a half inch long made of any opaque material like PVC.
The detector's field of view would be optimized for long range detection in an effort to light the sign as early as possible minimizing driver distraction that might present a product risk management concern.
As the vehicle approached and its headlight(s) detected, the sign would illuminate for a predetermined period of time or until a secondary means of motion detection determined the absence of the vehicle or persons that may have exited the vehicle to acquire a brochure from the sign.
But all this brainstorming didn't overcome yet another problem with the product idea that was overlooked by the prior "product developer" and only occurred to us after a few hours of analysis.
The client's specification and pending Utility Patent called for the use of solar power to recharge the product's battery between hours of operation.
Question...Where is a real estate sign typically located?
In front yards usually as close to the curb as possible to be seen by vehicle traffic right?
What is often found or (hint) "growing" in front yards or sidewalks that can be very large and create vast amounts of shade over relatively long periods of time?
You guessed it! Trees!
After a brief run at the calculator, factoring mean and worst case solar panel sun exposure in various parts of the country, it was abundantly clear that the solar panel would have to be so large that just the cost of the panel exceeded the utility of the product!
How did the story end?
Vorelco invested about $4,000.00 in case review, report generation and expert witness testimony via sworn affidavit that resulted in a court victory.
We never billed the client and forwarded the charges to our "good deeds" account.
Sometimes you just can't charge someone that has already been turned upside and shaken by a bad actor in this business.
In summary, try to find a service provider with prior experience at least remotely related to your product idea! Never pay someone to learn on the job.
Disclosing your invention or product idea
Once it is has been determined that your potential product development company is without conflict of interest and you feel comfortable with disclosing your product idea make sure you keep an ongoing record of all communications both written and oral.
It is always a good idea to have the candidate product developer write a brief summary of their understanding of your invention post disclosure.
This ensures that they sincerely understand the scope of the invention and in case there is a misunderstanding later as to rights of ownership they will have a difficult time claiming ignorance.
The preliminary or "ballpark" quote
To save a lot of time for both yourself and your product developer try to get a preliminary or ballpark quote summarizing estimated costs and time to deliver in writing. This approach will prepare you for what potential investment lies ahead.
The final quote and agreement
Once a final quote is agreed to and you and your service provider desire to enter into a business arrangement you should create and operate from a work for hire design and development agreement.
Either party may produce the agreement but it should be drafted by a competent attorney familiar with intellectual property law and work for hire agreements.
It is imperative that your ownership rights are protected and how far that protection goes relating to any discoveries or derivative works born of the reduction to practice efforts expended during the enforcement period of the agreement(s).
In other words if the service provider makes a discovery related to the subject matter covered in the agreement but is outside the scope of work agreed to how do you reconcile this without prior terms in an agreement.
This could be one of the most prevalent causes of issues between clients and service providers.
If you, the client lock down the agreement so tight that there is no reward for innovation your service provider might just invest as little effort as possible to just get the job done leaving potentially invaluable features out of the design. In other words you should provide some incentive
The many types of design and development agreements
There are basically 3 types of design and development agreements.
- Time and material "T&M"
- Fixed Milestone
- Not to exceed
The straight "Time and material" based arrangement like it sounds is the client agreeing to pay a known hourly rate and actual material cost. Sometimes there is a nominal handling fee for materials like 2-5%.
The Fixed milestone based arrangement is simply the exchange of payment for a verifiable completion of an agreed to definable milestone like a preliminary design due in 40 hours or one month.
The "Not to exceed" arrangement like it sounds is a fixed budget program where a predetermined investment ceiling is established and agreed to.
Downsides to all three project funding methods
Time and materials based arrangements are a blank check and have no budgetary constraints and costs could easily spiral out of control without close oversight.
Fixed milestone arrangements although the preferred of the three, can be a problem if the client lacks the technical prowess to understand the milestone benchmarks or deliverables.
The Not to exceed method is mostly used when it is difficult to specifically identify the scope of work in a project lacking clarity.
These are often scientific endeavors where much of the work is exploratory in nature and results are uncertain. At some point in time or budget the project is either rolled up or continued.
The downside here is the reality of pending project termination for the service provider regardless of progress.
The ideal arrangement is a hybrid fixed price milestone based arrangement where payment is rendered upon completion of verifiable milestones but if it is determined that unforeseen reasonable costs revealed themselves after the execution of the agreement that those costs should be covered on a contingency basis.
Discounted service fees for a "share of future proceeds"
Although this all sounds like a win-win deal for both the client and service provider, it often leads to disaster and over the years we have seen our share of these projects coming in from deals gone bad with the prior service provider.
It always starts off looking like perfect arrangement. The client gets product development services at a reduced price and the service provider can look forward to sharing in the profits from the sale of the resulting technology or product.
The problem can often arise from immediate priorities like cash flow. Although the reward of sharing in some future, almost imaginary, sale of a product is an enticement it pales to the immediate and quantifiable reward of full rate paying work.
Therefore it is advisable that in such an arrangement you and your service provider agree to a specific milestone based timetable that can be easily tracked for schedule creep.
The design agreement should provide language covering default and reasonable remedy time.
Without addressing schedule creep in a well written agreement by a real attorney, you and your product developer could be in for a very long and miserable relationship.
Never forget the carrot and stick in such agreements. Reward for compliance and dissolution for failure.