Avenue B-Selling your Invention

How do you find someone interested in purchasing your idea? Most toy manufacturers who seek new product inventions from outside will purchase ideas from toy design firms, who employ professional designers, and from independent professional designers and toy agents with whom they have worked in the past. Professional designers have fully developed skills, and design firms and agents are usually knowledgeable about a company’s needs. Some manufacturers will purchase an outside idea only after the item is actually on the market and has demonstrated consumer appeal and sales.

Many manufacturers do not accept outside ideas for a variety of reasons. Larger manufacturers have their own professional design staffs and do not rely upon new product ideas from independent inventors. It is more cost-effective for a manufacturer to employ salaried staff designers, rather than paying an independent inventor a royalty payment, which is a percentage of an item’s gross sales. It is also faster and easier for in-house professional designers to develop new versions of trendy toys. Lawsuits are another reason; on occasion a company’s own research and development staff are already working on an idea similar to one that has been submitted by an independent inventor and a conflict arises as to the ideas originator which is why agents are sometimes required in the process.

Your best chances may lie with contacting small and medium-sized manufacturers directly. These companies are more likely to have smaller budgets for product research and development, thus increasing the chances of their interest in purchasing outside ideas. Keep in mind that many ideas from in-house designers and other professionals get rejected too.

Be certain to match the manufacturer you contact with your product. You can determine a company’s product line thorough your toy store research, or obtain the list of toy manufacturers from the members area of the website that includes a product line description. Call manufacturers directly to ask if they accept outside ideas and, if so, to whom and where you may address correspondence if you cannot speak directly to the correct party. Although expensive, this method will save you time and money in the long run, as you quickly eliminate those companies not interested in outside ideas. If you prefer to write first, direct your correspondence to the Director of Product Development, or phone ahead for the person’s full name and title, including the proper spelling. IMPORTANT: When writing to toy manufacturers, remember that you are selling yourself as well as your invention. Be professional. Obtain your own letterhead stationery and type all correspondence. For this approach, since you have not determined how or even whether individual manufacturers prefer to receive outside submissions, it is advisable to send only a letter first and not a sample of your invention. Inquire whether or not they review outside ideas and what procedures you must follow. Be prepared to present, if requested, a prototype, videotape and photographs. Also prepare sketches or blueprints; legal protection obtained or filed. Manufacturers want to know that something “solid” exists, not just a “great idea”.

Before a manufacturer asks to see your invention, you will probably be asked to sign what is referred to as a Disclosure, or Idea Submission, Form of Agreement. These will vary in content; their primary purpose is to protect both you and the manufacturer, as it establishes exactly what you have revealed to them and at the same time releases them from certain liabilities regarding what has been disclosed.

If a manufacturer wants to use your invention, a royalty payment agreement is usually made between both parties. This is a confidential agreement between you and the manufacturer; royalty payments usually range from 2-10% of the gross of sales, with 5% the average. If your idea has been sold through a third party, you will have to pay them a percentage of the royalty you receive.

Check the toy industry trade magazines for classified ads placed by manufacturers or design firms who are looking for new product ideas. You also might want to place your own classified advert offering your invention for sale. Example: “For Sale – unique strategy board game combining elements of backgammon, checkers and chess. For ages 12 and up. Patent and trademark applied for, professionally test-marketed. Reply to Box 12.”

You may wish to obtain the services of a third party that will “broker,” or negotiate, the sale of your idea to toy companies. Manufacturers sometimes turn to these middlemen for outside ideas. They may be referred to as toy brokers or toy agents; some have general experience in the toy industry; many are toy inventors or former toy company staff designers themselves. Their fees, which may include a percentage of the royalty paid by the purchaser, and services vary, such as the type of inventions- board games only, for example – they will handle. As well as the link above, they are often listed in the Yellow Pages under “Toy Consultants” or “Inventors”. You should deal with them as you would other professional service people; if they haven’t been recommended to you, ask for references and check them thoroughly.

Invention or invention promotion firms are also brokers, with the exception that they usually handle all types of consumer products. Their services and fees vary: some may require a fee of 10% of the royalty paid; others may ask for as high as 50% and still others may work on a flat fee basis. When dealing with these firms, you should ask for solid evidence of their track record, such as examples of ideas that have been placed with toy companies, and confirm this with the references they give you. Check the invention firm with a local Better Business Bureau or Chamber of Commerce or have your patent or trademark agent do this for you. Prior to paying or signing anything, you may wish to discuss their materials with a solicitor or patent or trademark agent.

Design firms employ their own staff of inventors and designers, and sell the idea created by these salaried staff members to toy companies. They may accept well-developed prototypes. You should exercise care when any broker requires money in advance.