Keeping Patenting Costs Under Control
If you’re like most of my clients, you are probably having a difficult time figuring out what your initial budget should be for investing in the development and launch of your product or concept. While you have visions of it becoming very big, you are well aware that everything big must start small. And while later on you might have huge budgets to devote to things like product development, marketing - right now you need to figure out what you need to spend to get things started the right way.
Even if you already know what you are willing to spend on this project, however, before you begin spending it you should confirm if your concept/idea is patentable. This will help you see if it is even worth trying to take your product to market. To figure that out, it is necessary to see what aspects or how much of your product is patentable (if it can be patented at all). While it might not be the only factor - knowing if you can make the product yours by patenting it should play a big role in your decision-making, so no one else can attempt to sell it and profit for the life of the patent.
Naturally then, this budget should provide for legal fees to have the appropriate patent applications prepared and filed for you, as well as costs associated with business planning and manufacturing/production. Obviously these costs will differ dramatically from circumstance to circumstance, but here is a general idea of what you can expect.
The average recommended budget to allocate towards legal fees for small businesses, or for individual entrepreneurs, is anywhere from $8,000-$20,000. For these types of individuals and businesses - which are our typical clients - this is a reasonable amount to expect. Of course this will depend on your project, and what is at stake. Just like it makes sense to purchase more insurance when the property being insured is of greater value, it makes sense to budget more for protection when the overall project is going to involve larger investments and thus there is more at stake in gaining as much IP (Intellectual Property) protection as possible.
Therefore, paying a patent attorney to conduct an evaluation is an important initial investment to make. It's importance should be gauged in terms of what you have to gain if it is protectable, and also what investment of time, resources, and even credibility you stand to lose if you jump into a project without having the right information in hand. You should expect to pay anywhere from about $1000 to around $2,500 to figure this out.
After the evaluation helps you understand what your options for protection are, and of what value the available protection would have for your business plans, then you can begin putting together a budget for the project.
If you do not expect to bring the product to market initially on your own, then you intend to license your patent rights to a company interested in producing and selling it, in return for paying you royalties. In such circumstances, your budget might not be greater than the legal fees in gaining protection and minor expenses in reaching out to such companies. However, I recommend that you budget for building a prototype, or perhaps designing a more finished project. While not completely necessary, having a more polished item to demonstrate during a presentation will help such a company visualize and appreciate the product as something they want to sell. Prototypes can vary tremendously in cost. Simple items can be made at home with materials purchased at a craft or hardware store. More polished prototypes, built by a professional, can run into the thousands. But before spending money on building a prototype to potentially sell your idea, you need to understand whether the concept is as unique as you think it is. Because remember, whether a company is willing to license your project will depend heavily on the strength of the patent you have.
If you are not personally going to be responsible for the general business operation, then you might attempt to hire someone to manage the initial phases of planning, manufacturing, and then sale (and possible marketing) of the product. Typically, a budget for this can start at $10,000 upwards (depending on the project), and skyrocket depending on what they will need to do. In my experience, while certain tasks can be outsourced to others, it is not possible to delegate too much of this to another person. You need to be willing to be the main force behind your project, and remain in charge of coordinating the efforts of those involved.
If you plan to manufacture the product on a contract basis, you must add the costs of manufacturing to the initial business operation, you can assume you will have to spend anywhere from $20,000 for an initial order of an easy to manufacture product that uses off-the-shelf components. Of course, this number can be astronomical if your product is complicated, and requires custom parts to be fabricated prior to assembly.
Obviously in many cases there are alternatives on a smaller scale that would not cost anywhere near as much, but that often depends on the scale at which you would like to get started. Sometimes a limited production run can be made to produce sufficient samples to gain orders from distributors and retail outlets, at a higher per unit cost, but at a much lower overall investment.
Clearly whatever path you take, there will be a significant investment of time, money, and other resources. The value of finding out finding out accurately whether your project is viable - at an early stage - can easily be measured in the time and money you will invest (or not invest) later on, depending on what you learn about the feasibility of your project.
One thing we focus on here at our firm is offering you creative steps you can take, unique to your particular circumstances, when it comes to taking your product from patent to licensing agreement, or to market. We’ve seen every type of arrangement, and we can recommend which path will best fit your own circumstance and needs.
If you want to get direct information on what your options are, a patent evaluation with us can help you figure out what the next best steps are. It will also help you determine if patent protection is available for you idea or concept, what the scope of that protection looks like, and what value it would be for you; either in seeking a licensing idea or personally introducing your product to market.
To schedule your evaluation today, call us at 800-728-8166 to speak with a member of our team now.