I recently had the pleasure of interviewing Warren Tuttle again, a product scout for Lifetime Brands. Tuttle has an intimate knowledge of how the licensing industry works, because he himself helps find and select new products! To give you a better of idea of how to get your product to the market shelf, I asked him some critical questions.
First, how important is it to own a patent?
“Do companies care?” he asked. “Yes. I can only speak about Lifetime Brands, but it does in the housewares industry. Although first to market is important, when someone comes in from the outside with an unpatented idea, it’s hard to establish what an appropriate royalty is. It’s better to have some intellectual property protection. That doesn’t mean you couldn’t come to me prior to have a patent or a provisional patent. That’s okay. I would advise you from there if it’s worthwhile to go ahead,” said Tuttle.
I then followed with a hypothetical, but plausible, situation. Say I had an idea that was patent pending and Lifetime Brands liked it. If they began to produce it and it sold for three years but the patent was never issued, would that be a problem?
“No, not particularly. We actually consider that fact before deals are made. We do a lot of deals on products with non-provisional patents that haven’t actually been issued and we build a scenario that is comfortable for both parties. If no one else comes into the marketplace, we will pay the royalty as is. But if a big competitor comes in and disrupts the marketplace, we might reduce the royalty rate by half. We negotiate that upfront. Until it doesn’t issue, the product does have a patent pending status. We would prefer that the patent be issued, but if it never does, that scenario still works for us,” explained Tuttle.
Thirdly, is there such thing as a standard royalty rate?
“In the housewares industry, the standard rate is between 3 and 7 percent. But the question that follows is, of what? A good rate is one of 3 to 5 percent of the wholesale price. It’s difficult to go much higher, because the product gets placed out of the marketplace. If an inventor wants more than that, the company might negotiate if his or her product is great and patent-protected, but if not, they’re going to walk away from a deal that isn’t going to produce a profit margin for them.”
Tuttle also gave me a heads up about what markets are popular right now in the homewares industry: personal health and energy efficiency.
“Green products are really popular. Environmentally conscious products like personal water bottles, for example. Because people are cooking at home more, functional kitchen items are popular as well. There’s a really a buzz going on. At the Chicago housewares show several weeks ago, attendance was up 20%. I’m excited.”
And you should be too. As Tuttle said, “there’s never a bad time for innovation and new ideas.” I agree.
Stephen Key is a successful award-winning inventor who has licensed
over 20 products in the past 30 years. Along with business partner
Andrew Krauss, Stephen runs inventRight,
a company dedicated to educating inventors about selling their ideas
and the skills needed to succeed. You can listen to the weekly radio
show on inventing. Get In The News, list your invention to have media
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