How to license a product idea

www.npdtoys.com

Start with an idea (worth selling)

It must be originali.e. a novel or unique device, method, composition or processor an idea that is not obvious to those skilled in its field

It must work technicallyprove an idea works with a prototype/proof-of-concept model

There must be a market for itwhether it’s red ocean or blue ocean, the idea must have clearvalue to the potential customer

classic bluff but on your face!

classic bluff card play = old school

THE IDEA:

Don’t be afraid to askall friends/peers/associates might have an objective view thatimproves the idea – be open

Non Disclosure Agreement (NDA)a good NDA helps the idea progress in confidence so alwayshave your paperwork in place – be safe

Ask an agentno one knows a field better than those that survive on it; andit usually pays dividends to let it go – be wise

Validate the idea (properly)

“erm…is it supposed to look like a penis?”

add glassesSOLUTION:

Market researchspotlight competitor product and identify the top 10customers to target

Feasibilitydecide on the best end-product/price/place/promotion andthen work backwards from the shelf to achieve each one

Design and branding empathyascertain the latent customer needs in order to develop theidea in a way they can instantly relate to/desire

Make the idea fit (naturally)

TARGET/MARKET:

Customer: Spin Master USA

Price: SRP $15.99

C.O.G: ca $2.00

Box size: 267x267x60mm

DIRECTION/PITCH:

Customer: Top 10

Price: SRP $15.99

C.O.G: ca $2.00

Box size: 267x267x60mm

in Amsterdam testing/tweakingin HK prototyping

Final prototype Final production

= NATURAL FIT!

What are the options?aside from an NDA, there are 4 main ways to protect an idea,but only pick the ones that truly secure the IP:

Patents – protect how something works or what it’s made of

Registered designs – protect what something looks like

Copyrights – protect artistic works such as books and images

Trade marks – protect a brand and a trading image

Protecting the idea (properly)

“A game whereby the score is kept through the use of toy eyeglasses with attachable nosepieces. As the players accumulate points (or demerits), pieces are added to the nose, effectively extending its length”

US, Canada and the EUDesign registration:

Do• keep it short• use lots of images/prototype• focus on the uniqueness of the idea• highlight its feasibility• leave a handout that makes sense without you

Don’t• S.P.E.L.L. I.T. O.U.T• tell them things they already know• stretch their minds• bounce all over the place – illogical progression• make it up

Pitch it well (considered)

THE PITCH:

Customer: Top 10

Price: SRP $15.99

C.O.G: ca $2.00

Box size: 267x267x60mm

THE RESULT:

Customer: Spin Master USA

Price: SRP $15.99

C.O.G: ca $2.00

Box size: 267x267x60mm

From the bottom upalways pitch to the bottom 7 target customers first in orderto perfect the pitch in time for the top 3

Learn to love criticismbelieve the negative feedback and distrust the positive aspolite whenever reworking or improving the pitch

Smell the coffeeknow when to cut your losses – if the top 10 are clearlyuninterested then please move on or find an agent

Practice makes perfect (tips)

Royalty %a licensed idea will usually earn a royalty between 5-10% ofthe customer’s Net wholesale price

Advanced paymentusually an amount that covers the development costs relatedto the idea, which will be recoupable against future royalties

Territories and Perioddon’t just give the customer the world without knowing ifthey can deliver it – retain as much control as possible

Getting it right (contractually)

Winner of the W.I.T.T.Y award 2013(Winning Inventor Toy of The Year)

• Best selling game in the US 2012

• 1,000,000+ sold games in 2 years

• $10 million+ in sales

• More than $600,000 in royalties

1 Have an original and/or intelligent idea;

2 Design it from the retail shelf backwards;

3 Let it speak for itself;

4 Don’t fall in love; it’s just an idea; and

5 When you get there, make sure you get a good deal

In simple terms (please)