When developing a new invention or product idea, partnering with an existing orthodontic company is often the smartest play to make it a reality.  As highlighted in the book One Simple Idea, licensing is the business arrangement where one party grants permission to another party to utilize or “rent” its intellectual property.

Why Licensing?

The licensing model is ideal for the practicing orthodontist.  Licensing affords the ability to generate passive income by collecting a royalty per unit sold, typically paid quarterly.  The average royalty across industries is reported around 5 to 7%.  However, in a highly specialized field such as orthodontics, it is not unheard of to secure a rate of 10% or higher.  Aside from receiving royalties, it is often possible to negotiate that the licensee pays the legal fees for the patents, while you as the inventor retain the intellectual property rights.

Most importantly, licensing allows you to tap into a corporation’s existing supply chain and distribution network to get your product to market faster.  Also, you will be capitalizing on the company’s sales and marketing teams, essentially getting them to work on your behalf.

Alternatively, creating a business to manufacture and sell the product yourself can be a risky endeavor.  Not only are you wagering your money, but the precious commodity of time.  Think of the potential headaches associated with managing overhead, inventory and fulfillment.  By licensing your patented concept, you can avoid the pitfalls often associated with venturing a business.

Approaching Companies for Licensure

Orthodontic companies are hungry for exclusive products that will provide them with an edge over the competition.  Consider how many suppliers offer generic goods, whether it be brackets, wires or disposable items.  Now more than ever, corporations are actively seeking outside ideas due to a concept called open innovation.  Most of the mid-to-small size businesses do not have the resources to develop new products in-house.  Even if a company does have their own product development team, these engineers are not always attuned to the routine needs of the practicing orthodontist.  Moreover, many companies are eager to partner with doctors in hopes of an eventual endorsement (and if you aren’t willing to endorse your own product, you should consider going back to the proverbial drawing board).

The biggest hesitation often cited in approaching companies with an invention is the fear that they will “steal the idea.”  This trepidation is unfounded as companies do not want to embroil themselves in any legal or social media fiascos.  Filing a PPA, or provisional patent application, with the USPTO is a highly effective means for establishing perceived ownership of an idea, and is preferred over the pervasive NDA, or non-disclosure agreement.  Confidentiality agreements represent a gesture of professionalism between the parties and can act as a deterrent, but NDAs are notoriously difficult to enforce.  Furthermore, large companies will not be willing to sign your NDA simply because their product development teams could be working on a similar concept.  It may not be worth the risk to enter into this agreement from the corporation’s standpoint.  If anything, the company will present you with their NDA drawn up by their in-house counsel.

After the USPTO issues a filing date for your PPA, you can begin contacting orthodontic companies with your marketing sell sheet and video, as detailed in the previous article.  While the obvious channel is through your designated sales reps, also consider initial communication through websites, LinkedIn and Facebook Pages.  Personally, I have had good success at conferences such as the AAO Annual Session because you can get direct access to the decision makers.

When approaching companies, it is important to cast a wide net as the probability of getting a company to say yes often becomes a numbers game.  You will likely need to follow-up several times before getting a response.  While rejection is not uncommon, remember to thank the company for the opportunity and ask them for feedback on your product.  You will often get candid advice and valuable insight to improve your product or pitch.

Our collective ingenuity is essential for the evolution of the specialty.  By taking advantage of our intellectual property rights, we can help shape our own future.

If you missed the previous articles in this series, check out Inventing Our Future and Bringing Your Ideas To Market. Please leave any questions or comments either below or on the Ortho Cosmos Facebook Group.

Disclosure:

I recently licensed a product I co-developed with Dr. Richard Kaye to MidAtlantic Orthodontics (MAO). The ideas and concepts related to licensing have been adapted from best-selling author Stephen Key’s One Simple Idea and the inventRight consulting program, though I receive no compensation from them.  Also, only an attorney can give proper legal advice, which I am not.

Have you imagined the next great orthodontic technique or appliance?  Do you often dream up new ideas and concepts between patients?  Perhaps you enjoy inventing or entrepreneurial television shows like Shark Tank, The Profit or The Toy Box.  But how do you turn your ideas into reality?

Before we begin, let’s briefly review the common forms of intellectual property (IP) granted under United States law:

Copyright

A copyright affords the creator of an original work privilege to its use and its distribution, hence ‘copy’ ‘right’. In all countries where the Berne Convention standards apply, copyright is automatic, and need not be obtained through official registration with any government office. It is important to distinguish that copyrights protect the manner in which the information is distributed, not the ideas or concepts themselves.  Copyrights can be applied to many forms of media including television, film and music.  In orthodontics, copyrights are typically assigned to journal publications, textbooks, clinical photography, and content for presentations or webinars.

Trademarks

A trademark refers to a name, phrase, logo or symbol which uniquely identifies a brand.  The most conspicuous example in orthodontics is Invisalign®, which is obviously a trademark of Align Technology, Inc.  Marks with the encircled R, have been legally vetted and registered with the United States Patent and Trademark Office (USPTO).  Interestingly, marks designated by the superscript TM are informally claimed and are not on file with the USPTO.  These unregistered trademarks are more difficult to defend in matters of infringement.

Patents

While there are technically three types of patents in the United States, utility and design patents are the most applicable to our specialty.

In basic terms, a utility patent covers how an invention functions or is manufactured.  Utility patents protect an invention for 20 years and often take 2 to 3 years to issue.  The associated legal costs vary considerably, but can range from $10,000 to $25,000.

A design patent, on the other hand, protects the unique ornamental appearance of an invention only and is unrelated to its function.  Design patents are valid for 14 years and can typically be obtained for less than $10,000 in legal fees.

Utilizing Provisional Patents

As one can see, obtaining patents can be an expensive proposition.  While your natural instinct might be to contact a patent attorney to prevent your idea from getting stolen, you may spend a small fortune on protecting an idea that ultimately no one is interested in.  If a product won’t generate enough sales revenue, the patents won’t be worth the investment in the first place.  Keep in mind that 97% of patents never make enough money to pay for themselves!

Taking this into consideration, obtaining “patent pending” protection for your invention is quite attainable through a more economical, DIY approach.  As detailed in the book One Simple Idea, you can perform a preliminary search yourself using Google Patents and Google Images to determine if your invention is truly unique.  This exploratory phase is referred to as a “prior art search.”  Also, if inventing an orthodontic product, remember to thoroughly check the suppliers’ catalogs and websites for similar items.

The next step is to create a virtual prototype, which is a preliminary 3D rendering or CAD file of your concept.  It is not necessary to invest in an actual working prototype, which can be quite costly.  Graphic designers and engineers can be reasonably hired through websites such as Fiverr, Upwork or Guru.  Be sure to have any freelancer you work with sign a non-disclosure and work-for-hire agreement first.

Once a representation of your product is made, develop a simple, one page “sell sheet” or video that explains its unique features and benefits.  These marketing materials will eventually be used to pitch corporations and assess the demand for your product in the marketplace.

Immediately prior to contacting companies, file a provisional patent application (PPA) for $130 with the USPTO.  This PPA can be written yourself in plain, non-legalese language, deferring the upfront legal expense.  Include graphics and visuals of your design as well as potential work-arounds.  While the USPTO reviews your PPA for completeness’ sake, no one actually reads it!  A provisional patent establishes a filing date and grants you “patent pending” status for a one year period.  During this critical time, you are able to shop your idea around to find an interested party that will want to bring your product concept to market.  From a business standpoint, this step is critical. 

In the final installment of this series of posts, I will discuss how to approach the orthodontic companies with your ideas.  I will also highlight the advantages of the licensing business model, and why it is a preferable approach over financing or venturing a product on your own.  If you missed Part I in this series, check out Inventing Our Future.

Kindly leave any inventing questions or comments either below or on the Ortho Cosmos Facebook Group.

Disclosure:

I recently licensed a product I co-developed with Dr. Richard Kaye to MidAtlantic Orthodontics (MAO). The ideas and concepts related to licensing have been adapted from best-selling author Stephen Key’s One Simple Idea and the inventRight consulting program, though I receive no compensation from them.  Also, only an attorney can give proper legal advice, which I am not.