How can I license my invention without a patent?

Hello, my name is Ian Peterman. I'm CEO and founder of the Peterman Design Firm, and today we're going to talk about how to license a product without a patent. Now, disclaimer here, of course, I'm not a patent attorney and this is not actual legal advice, but this will give you a general idea of things that you can do. When you have an idea and you just, you don't want to develop it, you don't really want to invest a whole bunch of money into it, and you think the idea is valuable. So obviously the first, first part of that is, well, make sure that your idea is valuable. If it's something that's easily done by somebody else, if it's easily copied, then the idea is going to have less value than if it's something more complicated. You can also, you know, if you're not wanting to go the whole patent process, but the idea has some merit, then doing something like provisional patent could be a good way to protect it and allow you to be able to talk to people about it. There's very specific rules about how you can apply for one, what, how it works, what it means legally for protection, and that's all something I would highly recommend talking to a patent attorney about. And so if you're not wanting to take that full step, you know, things that you can do that would allow you to be able to pitch the idea would be creating a working demo. So, and being able to control that demo would be something where you set up a meeting, you know, you share some information, some generalized information, enough to pique somebody's interest and allow them to get an idea whether they're even interested So, you know, one of the first things a lot of people don't think about this is, well, they have to see if— decide if they actually want your idea. And if you don't give them enough information, whoever they are, whether you're selling, licensing, even getting investors, you don't give them enough of an idea, they're going to say no. Just because they get inundated with tons of ideas. People submit ideas to companies, people submit ideas to governments. VCs, angel investors, basically everybody is getting pitched all the time. Oh, give me money for my idea in some way, shape, or form. And so in order to set yourself apart from everybody else with an idea, because everybody has ideas, they're a dime a dozen at most, and you need to do something to that idea to make it valuable. To someone else enough so that they're going to actually spend money or do a licensing deal with you. And so something you can do is actually build it. You know, that could cost a lot of money, cost a little bit of money. It totally depends on your idea where you sit in that cost, you know, a couple bucks to make quick prototypes, or even if you— if it's, you know, developing an app. Maybe you can just learn to code, make a version yourself, and make your first demo, right? So you can do that. Basically costs nothing, is mostly just your time. All the way to it's going to take engineers and scientists, and you're going to want to prove it and back it and test it before you even present it to anyone. And now you're sitting in millions of dollars and playing that game, and there's everything in between. And so— You know, if you're wanting to pitch your idea and you don't want to take it down the patenting route, then, you know, there's different ways to protect yourself, you know, with not showing everybody the actual IP. So you don't have to show people exactly how something works necessarily, but show them what it does. So focusing on what is the problem it solves, how does it improve people's lives, what's the actual benefit of the product? And, you know, if you can bring a prototype or something like that that'll allow you to show that your idea actually works, then, you know, I've definitely talked to people that have gotten products to just a prototype stage, not even tried to patent it, and been able to take that prototype and show people, do a demo, say, hey, I got my thing. My thing works. Here's video of it. How it works, well, that's proprietary, but, you know, I got something that works. And so that can pique the right interest if you present that to the right person who's actually interested in what you are doing or interested in the problem that you're trying to solve. Then you can end up being able to get your idea in front of people that won't require you to have a patent necessarily. They— now, with the caveat to all this is patenting your idea. If it's really, really something that is patentable, then your value and how much you can ask for goes up typically when you have a patent, because the patent is an actual asset. It's something that you invested money in that gives you value back, and that value, that piece of paper, is currency. You can— it's something that you can use. The value of that patent can be determined. And I've worked on projects where someone's gotten a patent and it's worth a couple thousand dollars. Also talked to many people that are on the other end where they have a patent and their patent has been assessed in millions to billions of dollars because of the market value of what it can do in the market that it can be in and how many markets it can be in and be sold to and influence. So you can come up with ideas that are billion-dollar ideas, or you can come up with ideas that are several thousand-dollar ideas. And your agreement in terms of licensing with larger sums, if it ends up being valued more, you can negotiate a licensing deal often more quickly than if it's not, because then they're going to get a good deal. Basically, they're going to pay you only if it's successful, rather than trying to buy a patent from you or buy an idea from you. Now, there's also tons of places, there's even, you know, big corporations that offer cash for ideas. So they'll basically— there's submission forms you can put your idea in, and, you know, if they like it, Great, they are going to give you a check of some kind when you— when they do something with it and it actually turns into a product. And that can be, you know, that can be an interesting way. It's a great place students and, you know, that type of population that just wants— or anybody that just wants to put out an idea and kind of just put it out there and not do anything at all with it, then that's the route. You can go, just submitting it to companies that might kick you back a little bit. If you want to really license it, then you need to do something with it, and patenting is an option, but you have to do something in it to sell somebody on the fact that they should license with you. Now, licensing can be one part as well, so maybe there's cash up front plus licensing, it's just licensing, there's many, many structures you can do with it, but if licensing is your actual goal, then you need to provide enough value so that they are willing to sign on the dotted line that they'll pay you royalties. And they have to be certain enough that they're going to be able to invest into it and create a working product that can be sold in the market, that they're going to get a return on their value and have enough room in their margins to pay you your royalties. And that's that licensing agreement part. Is something you have to be aware of. And when you're negotiating that licensing, be aware of how much of a percentage are you taking and what's the value of the product when it's actually made. Now, is it going to be a super expensive product where there's going to be more margins, or is it going to be a super low margin? You're not going to have a huge amount of room, you know, if you come to somebody and say, I want a 30% royalty and there's only a 20% profit margin that can be even had by it. No one's going to really do that with you. So being aware of that is also really important when going for a license agreement. Hey, thanks for watching. We really appreciate our viewers. And if you haven't subscribed yet, please do subscribe to our channel so you can get more great videos like this in your feed and like the video. If you want to learn more about the Peterman Design Firm, please check us out on our website, petermanfirm.com. You'll find link and information in the description. And of course, we're on all social media as well, so check us out there. All right, thank you. Thank you.