Have you ever wondered if you can sell a provisional patent application and make money from your innovative idea? While it is possible, it rarely happens. Selling a provisional patent application is akin to selling an unproven idea without market demand. It would take an incredibly innovative concept to convince potential buyers to invest before it is fully patented.
If you believe in the uniqueness of your idea and want to explore the possibility of selling it, let’s delve into the world of provisional patent applications and how you can approach potential buyers.
Understanding Provisional Patent Applications
First, let’s define what a provisional patent application (PPA) is. In simple terms, it serves as a placeholder application. It secures a filing date and provides a cost-effective way to protect your invention for up to one year without incurring significant expenses. However, filing a provisional patent application alone does not lead to the granting of a patent.
The PPA represents the initial stage of the patent process, where you describe your innovation on paper and highlight its benefits. This application does not undergo examination and remains in a queue.
Afterwards, the nonprovisional patent application (NPA) comes into play. It is the second part of the patent process, where a finalized patent application is submitted for examination.
To initiate a provisional patent application, you need to file a detailed description of your invention with the US Patent and Trademark Office. The filing fees range from $70 to $280, depending on the size of your entity. While you can file the application on your own, it is advisable to seek the assistance of a patent attorney, which can increase the costs to thousands of dollars. Once the PPA is filed, you can label your invention as “patent pending” for up to one year.
During this year, it is an excellent opportunity to assess the market and build your business. Consider these activities:
- Obtain quotes from manufacturers
- Seek the perspective of vendors
- Consult with marketing experts
- Create and test prototypes
- Conduct surveys
Priority Date: The Race to the Finish Line
When you file a provisional patent application, it secures a priority date, even if you submit the nonprovisional patent application a year later. The NPA is treated as if it were filed one year earlier. This feature becomes significant in cases where another patent application for the same invention was filed between the PPA and the NPA. By having the earlier priority date, you would be awarded the patent over any competing applications.
Imagine two people racing to the finish line. The provisional patent application becomes the deciding factor, securing a spot for one of them, even if the race is still ongoing.
In rare instances where two people file for the same invention simultaneously, the Board of Patent Appeals and Interferences may investigate the priority of the inventions, ultimately awarding judgment to one party.
Selling a Provisional Patent Application: A Challenging Endeavor
Selling a provisional patent application is considered a challenging task because it rarely occurs. Why is it difficult to sell? Buyers are often hesitant to invest in a product without proven market demand. Essentially, you are asking them to trust your word that your invention will be successful.
Attempting to sell a provisional patent application is like trying to sell an idea that has yet to be validated by the market. It requires an incredibly innovative concept to persuade buyers to take a leap of faith and invest before it is fully patented. Remember, having a provisional patent application does not guarantee that people will want to buy your invention in the real world.
If you want to sell your idea based on the description provided in the PPA and seek equity to cover manufacturing costs, it is crucial to develop a compelling presentation supported by substantial data. In particular, focus on gathering extensive evidence demonstrating why consumers will embrace your invention. You need to convince potential investors that your invention is not only great but commercially viable. The best way to achieve this is through data. You can either present data from an existing business that sells a similar invention or extrapolate sales based on similar products in the market.
When approaching potential buyers, consider emphasizing the following elements:
- High demand
- Manufacturing costs
- Material costs
- Design
- Testing results
- Return on investment (ROI) data
Ensure you provide ample data to support your claims. Surveys indicating high demand for your invention can be particularly persuasive. Investors appreciate well-documented information, especially when it includes ROI data and statistics.
Nonprovisional Patent Application: Unlocking the Path to Patent Approval
Filing a nonprovisional patent application is the next step in obtaining a patent if you have already submitted a provisional patent application. Alternatively, you can skip the PPA altogether and proceed directly to filing the NPA. By filing the PPA first, you have the opportunity to test the market and refine your invention. However, if you haven’t accomplished that yet, it’s not a problem. Even after filing the NPA, you still have another 18 months before it undergoes examination.
The NPA is the application that enters the examination queue. It represents your chance to obtain an issued patent, provided it meets all the necessary requirements. A Patent Examiner will review your application, evaluating its eligibility for patent protection, novelty, and nonobviousness. If your application passes scrutiny, it will be approved.
Once your idea has been approved by an examiner, it becomes easier to sell because it transforms into a patented idea. While it’s possible to approach potential buyers or companies during the pending period, many of them may prefer to wait until the patent is granted before considering a licensing or acquisition deal. The patent allows them to evaluate the scope of the patent rights and determine whether those rights align with their objectives. Even with a patent in hand, having market data indicating demand for your invention is highly beneficial.
Selling Ideas as Trade Secrets
Typically, selling a product becomes more feasible after securing a patent. However, if you wish to sell your idea before even filing a patent application to obtain patent pending status, an alternative option is to sell it as a trade secret. It’s important to note that trade secret law differs from patent law and should be treated as a separate concept.
Selling an idea as a trade secret involves approaching potential buyers under a nondisclosure agreement (NDA). This agreement ensures that if they attempt to commercialize your idea, you can take legal action against them for breaching the confidentiality agreement.
Since you don’t have a PPA or NPA filed, convincing buyers to sign an NDA before revealing the secret can be challenging. To overcome this hurdle, perfect your presentation skills by practicing without disclosing the actual secret.
Here is a suggested approach if you decide to sell your idea as a trade secret:
- Define the trade secret: Document your idea thoroughly.
- Identify potential buyers/companies: Create a list of individuals or organizations that may be interested in your invention.
- Prepare a trade secret license: Draft a license agreement that outlines the terms and conditions.
- Present the trade secret: Pitch your idea to potential buyers, highlighting its unique features and advantages.
- Negotiate terms: If they express interest, engage in negotiations regarding royalties and licensing rights.
- Maintain confidentiality: Establish and uphold a nondisclosure agreement (NDA) to safeguard the secrecy of your idea.
Nondisclosure Agreement: Safeguarding Your Secrets
A nondisclosure agreement (NDA) is a legal contract that ensures the information shared remains confidential. When selling trade secrets, having an NDA in place is essential. It prioritizes confidentiality and prevents others from revealing your secrets to the public.
A classic example is Coca-Cola, a company famous for its secret formula. The NDA prevents anyone from disclosing this invaluable information. Even if a buyer were to acquire the secret formula, the previous owners would still be bound by the confidentiality agreement and prohibited from divulging any details.
In conclusion, the most effective way to sell an idea is to present compelling data that highlights market demand. Conduct surveys, gather extensive market research, and ideally, establish a profitable business based on your invention. Selling a provisional patent application is an arduous task, but with the right approach and solid evidence, you can increase your chances of success. Remember, Garrity Traina is here to help guide you through the patent process and provide the support you need.
Garrity Traina: Empowering Inventors, Igniting Innovation.
