Often times, inventors and innovators will find a way to make a better mousetrap. Often times, they will find that others have patents on a critical component to making this best mousetrap innovation or invention. Therefore, they must come to an agreement with the company or person who owns the patent so that they can use this technology to make their invention and sell it. One way to do this is to offer them the payment of a royalty per unit for each unit manufactured or sold. And most of the smart companies that agree to this will want audit rights to verify how many items were built and / or sold by the best mousetrap manufacturer. Recently a tanker thinker and innovator asked me; “Do I need more information on the audit rights you discussed?”
Well, if you started selling them and were going to give them a stipend per unit, then they would have to make sure you tell them “ALL” the actual sales; That makes sense, right?
“Is it possible that they will offer the initial capital to build a prototype?”
Yes, if I were an executive of that company holding the patent, I would put you in touch with my engineers and I would sit at a table and listen to the meeting, then I would take notes, prepare and agree, I would think about it for a day, Discuss the options and have my lawyer work it out and do it all in two days, give him parts and do some versions.
If my company is going to finance your project with you, we would like to make sure that the product sells well, as we are fully invested with our technology and now capital in your project. And we would have to sign a deal or you might even consider putting it and keeping it on the company’s payroll.
You see either way, whether you do it for them, for yourself, or they do it for you or themselves. The company can consider several options if it has a good business and innovation plan using its technology. In fact, the best mousetrap builder should know who they will be dealing with and should learn all they can about the company before approaching them. Think about this in 2006.