Are you looking for a way to expand your innovative reach? Is your team already working overtime to create and evaluate new product ideas?
Have you tapped into the power of invention submissions? If you set up an invention submission program correctly, you can bring in new ideas for your business while limiting the risks associated with unsolicited inventions.
Let’s dive into the core components of a typical invention submission program.
First, your business needs to understand why it is implementing an invention submission program. Your team certainly doesn’t need extra work to do just for the sake of doing work. But maybe you have goals to bring more products to market. Perhaps you are looking to increase the size or breadth of your IP portfolio. Maybe you have well-established distribution channels that are underutilized.
At this stage, you simply need to decide whether you will or will not accept third-party innovation submissions and, if so, how that will fit into your overall strategy.
To make things easy for your entire team, put together a written policy that outlines your program at a high level. Your policy can track the components we discuss here.
If you want a copy of our standard Open Innovation Policy, just send us an email.
Who is going to manage your submission program?
In small companies, many times the CEO or owner is the point of contact for outside inventors. While this is convenient and a natural starting point, consider putting a non-executive in charge of your submission program to limit the risk that an outside inventor might think your CEO stole their idea.
Try to specify in detail the types of inventions and innovations your company is looking for. You don’t want to spend extra time and money, or be exposed to unnecessary risk, sorting through inventions that you wouldn’t ever try to commercialize. So, make sure your submission program clearly says the types of inventions, services, products, brands, trade dress, industries, etc. your company is looking for.
Also, specify the types of things your company will not consider. Create a list of excluded inventions and innovations so you won’t be responsible to third-party innovators for any submissions that you’ve already specified are excluded.
If you’re serious about accepting outside innovations, put together a simple website portal that explains your program, links to your terms and conditions, provides standardized form fields for submissions, and possibly even includes some basic FAQs.
Using a standard platform for all submissions creates one more layer of protection between your team and any enthusiastic inventors who think everybody wants to steal their idea.
Want to see some sample submission portals? Check out the following links:
**A word of caution, if you’re an inventor looking to submit your idea to one of these platforms, ALWAYS read the terms and conditions and consider getting an attorney to tell you what they mean. You are likely giving up many rights in your invention, and you also might be creating significant liabilities for yourself, by submitting your idea to any business.
Always use a submission agreement and require submitters to agree to your terms and conditions. You need an agreement that is crafted to your specific needs. Your agreement needs to address several different potential issues:
• Confidentiality – will you keep the submitted ideas confidential?
• Correspondence – will you acknowledge the submission or create any requirements to communicate with the submitter?
• Obligations and Guarantees – can you let the submitters know you have no obligations to them and do not guarantee any form of partnership or other success?
• Ongoing Product Development – what happens if an inventor submits an idea that your internal team is already working on?
• Patents – will you require submissions to be patented? Patent-pending? Or will you accept all forms of ideas, regardless of patent status?
• License – will you require a license from the submitter in order to evaluate their idea? Will you provide typical license terms for inventions that you accept into your product development and commercialization?
• Ownership – who will own the idea, or the intellectual property rights to the idea, once it is submitted? If it is accepted?
• Non-competition – will you require exclusive consideration of the submission? Or can the idea be submitted to other companies at the same time?
• Rejected Submissions – what happens to rejected submissions? Do you tell someone when their idea is rejected?
• Representations, Warranties, and Indemnification – what happens if an idea is submitted and accepted but turns out to belong to someone else? Who will be responsible for potential damages?
• Governing Law and Jurisdiction – if there is a dispute about your terms and conditions, where can the dispute be resolved, and which state’s laws will govern the dispute?
Keep a log of all the ideas that have been submitted to your company, whether through the portal or otherwise. The log should include, at a minimum, the name and contact details of the submitter, the general nature of the idea submitted, the date of the submission, and any relevant notes from an initial review of the idea (or a note that the idea was not reviewed).
Ideally, you will have someone who is in charge of initial reviews of outside inventions. This person should not be involved in ongoing product development but should have enough insight about the general strategy of the business to make an initial decision whether the idea is or is not in alignment with the direction of the company and its brands.
You might have different layers of reviews that progressively involve more and more people from your team. Eventually, your process should allow for full buy-in from anyone involved in new product development, marketing, and launches.
Prior to a full commercialization review, it’s recommended that you keep ideas separate from key personnel who might be seen as “targets” by innovators, in case they think their idea is being “taken” by the decision-makers of the business without proper compensation. It’s much better to be able to tell outside innovators that key personnel have never had access to ideas or inventions that haven’t made it far enough in the review process.
Should you sign NDAs from inventors? Probably not. And definitely not if you haven’t had the NDA fully reviewed by an attorney who knows how to protect the interests of the business by reducing or eliminating the risks involved with NDAs from outside inventors.
Should you use your own NDA with inventors? Again, probably not. It’s not that NDAs are bad, but ideally you will only accept submissions on a non-confidential basis.
It’s much better to have a non-confidentiality agreement—where everyone knows the outside idea is not treated confidentially—so the submitter can limit their submission to only publicly available information, or whatever they feel comfortable submitting without any guarantees of confidentiality.
The problems with confidentiality agreements and NDAs are:
• Often NDAs don’t actually say what inventors think and want them to say
• Court battles around NDAs are expensive, even you companies think NDAs are easy to “get around” or hard for the inventor to enforce
Here are several other types of resources and documents that you will probably find helpful as you build out a robust idea submission program:
• Responsibility Matrix – make sure your team knows who is responsible for each task within the idea submission program, so they can do their task and other people can be restricted from access for tasks they don’t need to perform
• Submission Log – see above
• Submission FAQ – outside inventors will have lots of questions about your program that aren’t answered in your terms and conditions, so prepare some simple FAQs to answer those questions in advance
• Non-Confidentiality Agreement – this can be part of your submission agreement or a separate document, depending on how conspicuous you want to be about not accepting confidential information
• Non-Disclosure Agreement – be careful using these for the reasons listed above
• Commercialization Term Sheet – it’s helpful to have a standard term sheet for ideas that progress far enough in your review process
• Asset Purchase Agreement – if you’ll be buying the full ownership of any ideas, you can use an asset purchase agreement
• Technology and/or Brand License Agreement – if you’ll be licensing ideas from inventors and paying royalties, then you’ll probably use technology and brand license agreements
If you're ready to start your own idea submission program, use the links in this post to book your free strategy call with our team.
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