I have been in direct sales for a specialty product for over 18 years and have sold in 28 countries. I have a customer who has offered me the choice of marketing his patent pending unique hand/rehabilitation fitness item. My question is should I simply format a binding consultant agreement or aim to form a separate partnership business? The new equipment has awesome potential, has a Medical Reference Letter, has a national fitness chain interest, post surgery applications, etc.. I have been told to offer licensing rights if I choose. Product has been purchased by a few Major University AD's, with minimal marketing exposure. I believe the product is perfect to aid in creating jobs with above average income, especially for those who are interested in sales and marketing. And, product could be offered with "exclusive distributorship" per region and state or country.??? Should I seek funding and offer small equity? Direct contact # 407-831-7432. Need mentor/partner asap..?
Answers
Robert,
I suggest that you understand what the "patent pending" means. If the owner has simply applied for a provisional patent in the US then I'd be careful before getting too committed. Provisional patents are good for a year and are granted with no review for prior art.
If the owner has applied for a full patent then you need to understand if it's an apparatus patent or a method patent. Method patents are seldom worth anything.
If it looks like the product is well on its way to a full apparatus patent and if the owner has the funds to make whatever improvements will be needed for broad use then your idea of buying the distributions rights could be lucrative.
Be aware that if this is declared a medical product then you should be mindful of the FDA requirements.
This sounds like a good bootstrap fund-able product. This means that you'd want to fund it by getting and initial order from someone - hospital, Drs, some company etc. - then you take that order to the bank to leverage funding.
I'd do some more homework first before making the leap.
Sergeant Paone - I am surprised that you have not yet received any responses. The answer to your thoughtful questions really depends on your professional & financial objectives. If you want to minimize your personal risk and degree of involvement with this new opportunity then clearly licensing would be a path to explore. The fact that you have demonstrable sales already is a plus point when it comes to negotiating licensing deals. There are of course risks associated with licensing (a Google search will provide you with some information). If you want to set up distributorships then I would recommend the formation of company. You will need an attorney to help you with the crafting of distribution agreements (there are many different models). Any distributor will require you to commit to some level of marketing, product training, and after sales support. Is your purpose of offering equity merely to raise capital or are you hoping to bring in "smart money"? There are a whole bunch of other ideas I can share with you but I just wanted to give you some quick initial responses. All the best to you! Kumar Chittipeddi
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