IP Tragedies

The creation of a great idea has intrinsic value, meaning that in and of itself it creates revenue.

Scissors - these were invented to cut with more accuracy than a knife.  Sharp, small and large scissors will cut through just about anything.  So scissors have an intrinsic value that no matter how you color them, package them, sell them, they still cut.  A patent protects the invention, the license creates the money.

So why do inventors give away the patent? 

I worked with a company owner 4 years ago to help her raise money for her start up.  She had a patent  that was the "unique value proposition" of her business.  Fast forward 4 years, $10 million raised in Venture Capital, a languishing economy and less revenue coming in.  The VC's (fondly referred to as Vulture Capitalists) stepped in and ousted her and her top management team.

And they now own her patent!

Her patent had intrinsic value with a wide application across a variety of business segments outside her own company that it resembled a permit to print money.

Her buyout included options, stock and a cash buyout.  But not her patent. The company holds the patent and the venture capitalists own the company. 

Should the company fail, she will lose the value of all her options and stock, which means she will be left with - NOTHING.  The VC's own the patent and they will make the money by licensing it out.
 
May I mention that she is a brilliant experienced serial entrepreneur and had created her most recent company to help WOMEN?

I would like to opt on the side of success.  That the VC's will appoint a new CEO with the passion and focus to make the company successful.

But the lesson remains the same:

If you thought of it, if you invented it, file a patent for it.  As Jane Wurwand, founder of Dermalogica says "I own it all and thank god for that!"

Women and Intellectual Property Protection

This past month one recurring theme among my female clients rose above all others: Intellectual Property protection.  Each woman had confusion on who owns what in their partnerships. They seemed unable to ask for just compensation for their ideas or unique products invented. 

Let me say this very clearly:  It's yours if you invented it.  Copyrights, patents, trademarks are easily registered with the US gov't to ensure ownership and revenue rights for years to come. Tony Robbins does it, Martha Stewart does it, so why not you? 

I asked Beth Andrus, author of "The Essential Business Handbook," to weigh in on the matter.

"I work with very small businesses and many of the women I encounter are new to the business world," says Beth.  "Women are often reluctant to take legal steps to protect their intellectual property as they think it involves a long expensive process with lots of attorney fees.

"I have found that women will form partnerships quickly, without committing to paper the division of labor and IP.  Women don't want to appear distrustful as most of their partnerships are based on some type of 'best friend' emotions. Important to have someone neutral draw out the terms of the agreement for you so the emotion is kept to a minimum," suggests Beth, CEO of  www.minibizbuzz.com.

This is so true! We meet a woman with whom we have instant bonding. We talk, we plan, we dream and work our fingers off to get the 'dream' going. And then when "putting it writing" needs to be done, it's either blood on the table or dissolution of the partnerships with hurt feelings on both sides.

I advise all my clients the following: 

Protect all your material.  File with the US Gov't all your ideas, process, books, CD, DVD that you have developed.  Hold the material as an individual so you can then license it out to the company created to sell the service or item. You enjoy the protection of the US gov't on ownership and revenues.

Take a toy away from any two year old and they'll tell you firmly, 'Mine!' Let's take a page from their playbook shall we?