1 of 2: IP & contractors

Two recent issues regarding intellectual property and sewing contractors (include service providers in general) have come up and I’m posting them separately in order to thread the comments appropriately because we need feedback on both.

Follows is a conversation I’m having with Robin. She has designed a product that I don’t want to be too specific in describing other than calling it a bag because I think it’s kind of a cool idea and I don’t think anybody is making them except from a utility aspect. I apologize for being vague but the item is something used in medical context so it has a technical application (health care related) and is used mostly by the elderly. Robin writes:

I have an elderly client that has me make her “designer” bags. I hate making them but they do turn out very well. I found a place in Chicago (I live fairly close) that manufactors these bags already.

I have several questions for you: After I present my idea, why do they need me? (I know, beginner’s paranoia), how do I get an appointment with them? Can I ask them to help me market it?

My response:

Why do you need to go to them at all? This is an ideal niche product you can handle on your own while you’re small and developing the potential. Reinvesting your profits, you can handle larger orders as they come along. Get another contractor when you need one. This could be a really fun product if you played with it. About marketing, join the forum. Think, where do these people hang out? Market to them there with a trunk show. Collect the money (or a deposit) to buy the goods. How about samples at doctor’s offices?

Robin responds:

I was thinking I needed the contractor because I hate making these things but I still want to profit from my idea. And they can buy the materials (and better materials) and findings for so much cheaper then I can. And they have machinery and employees who already know the product. Plus, I have other clients so I’m thinking I don’t want to spend my time selling. I’m still in the think tank, so I would be happy to hear any further thoughts or advice you have.

It was at this point I decided to bring this topic to you because she brings up some valid points that I think would interest many of you. First of all, I completely understand her point so my first response is moot. I am a firm believer in that you can’t make a go of something however profitable if you’re not passionate about it. However, I also completely understand she wants to profit from her concept, I think she’s entitled to it.

My first response is, in theory it is possible to work something out with the established bag manufacturer. Whether it is an option for this particular company, I can’t know. What I can say is from the perspective of the manufacturer (feel free to disagree). The thing that can represent value to the manufacturer is design and access to a new segment of the market. As this is a utility item, the company is not pursuing the product from a “designer” stand point and I can understand why. In their thinking (and they’d know), their market wants a utility low cost product. However, evidently there is a niche segment of the market that would appreciate more attractive options.

It makes perfect sense that a manufacturer would find a concept like Robin’s attractive because as their focus is utility, their internal infrastructure isn’t set up to maximize creativity. Therefore, the question becomes one of the value of Robin’s contribution to the venture. From the manufacturer’s stand point, Robin could bring design and marketing to the table. Now, I haven’t sent this to Robin so I don’t know how she feels about what I just said, so I don’t know if she is willing to commit some time to designing these bags and working on marketing.

The sum of what I think are the salient points of this topic, is that Robin has more to bargain with if she is willing to provide services to the manufacturer. Often, licensing for products takes on this timbre. I don’t think they’d be interested in buying an “idea”. Licensing payments for unknown, untried products are often based on actual services provided by the innovator because these are services a manufacturer can lack to make a success of the idea.

If Robin decides she’s willing to invest some time in working with/for the manufacturer, it is possible the manufacturer would be interested. Otherwise, they often are not. At such time that she agrees she could be involved to this extent, then I’d recommend getting an attorney to represent her interests. Of course, she’d first have to work on a proposal and a portfolio, highlighting the advantages she represents to the company.

What say all of you?

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  1. Miracle says:

    My initial response is that if she wants to make the product, but isn’t really “into” the whole process, she probably would be better off finding a DE-like partner(or an enterprising sales rep) than trying to license an unproven (in terms of a substantial marketing aspect) to the company. Manufacturers are solicited with such ideas constantly and it becomes difficult to profit share with someone who only has ideas (not to be insulting but follow me here) when in a lot of circumstances, they can get ideas from paid consultants and product development firms, without the royalties.

    Usually licensing involves something more advantageous for the company, meaning they get to take advantage of what YOU have of value. Licensing a brand name, artwork from a recognized artist, etc…

    I guess my point is that while I see the value of her idea, I don’t understand why a manufacturer would pay a royalty for such an idea (even if it involved services) when usually firms pay a fee (hourly or flat) to people to work on product development when there is no brand equity attached.

    I googled it because I wanted to find our more about this and I found this interesting article

    Although it applies mostly to patents, he does bring up interesting points.

  2. Kathleen says:

    I’d definitely agree (!) the article Miracle cites is worth reading, very true from my experience. However, since I know what this product is, I think it has more options than is typical and I’m the one who usually says that licensing a concept is usually a waste of time and that most licensing agreements are nearly always only viable for known personalities but I think this idea could be one of those rare exceptions. It isn’t a new product, only a design variation of one.

    Still, I don’t think she stands much chance of realizing any profits on the idea unless she’s willing to provide design and marketing services. That is what would constitute value to the manufacturer because this is a niche product. The perception of the market for this product is that the typical customer has limited resources and only wants the least expensive option to provide the function. I think that is often true but the demography is changing and contrary to popular belief, it is the elderly who have the most disposable income. Only 10% of the elderly are low income (as compared to +25% of working families who are poor). Existing options for this item are butt-ugly, I think there is room for design variations of this item (and I googled it, couldn’t find anything other than utility items).

    Again, if you are interested in the concept of licensing your product idea, the article Miracle linked to is spot on.

  3. Vesta says:

    I am approached ALL THE TIME about licensing and manufacturing designs. I’ve done it once, and now am not so sure it was a good idea. I’d much rather purchase a design outright. The article you linked to is right on, right down the line. I don’t know what a designer could do that would make me really want to license . . . I suppose if I didn’t have to retool, didn’t have to spend exorbitant amounts of money preparing the product for market (photography, packaging, etc), and the designer worked to get the product sales in the new niche . . . I’d consider it.

  4. Rick Grassadonia says:

    Back in November 2006, you posted comments regarding the pros and cons of a Sales Rep Contract. We are also considering hiring a sales rep and have concerns about the content. Even though the rep company has several independent reps throughout the USA, they are only obligated to visit the customer 4 times a year (we visit customers about every 6 weeks). Also, they include “Commissions will be due 25 days after the end of the month they were shipped in”. This may OK but what if the customer doesn’t pay on time? We are paying commission on un-paid invoices. Is there someone out there willing to review this contract and provide us the appropriate advise?

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