Before you begin
To realistically calculate your chances of success before entering into a time consuming, and possibly costly effort, you should make an honest evaluation of your personal circumstances as well as your invention.
Supporting Great Design
To realistically calculate your chances of success before entering into a time consuming, and possibly costly effort, you should make an honest evaluation of your personal circumstances as well as your invention.
Are you extremely self-motivated? Can you face business-related obstacles such as strong competition, criticism and rejection? Do you have the time, endurance and financial resources? Some inventors have left their permanent jobs to devote time to their venture, as the ‘turnaround time’ to get a new item on toy retail shelves sometimes exceeds two years. Research, legal fees and production can be expensive too.
As for your invention, there are industry-related questions you must consider: Is it unique? Will it sell? Is it cost-effective? Do you have legal protection? These questions are covered in more detail below.
If you have answered all of the questions above honestly, and have decided that the item you invented and your total commitment to bringing it to the toy marketplace give you a good chance for success, then you are on your way!
You must be sure the item you have invented, or something very similar to it, is not already in existence. More than 40,000 new toy products are introduced each year by about 350 UK manufacturers which employ their own salaried research and development specialists. Independent professional inventors use their personal contacts to sell their ideas to toy companies and design firms. A smaller number of independent inventors manufacture and distribute through their own companies.
Thoroughly research the toy industry at the retail level to see what is currently on the market. Visit as many outlets as possible that sell toys, including large toy chains and small corner shops; discount stores; catalogue showrooms; bookstores; etc.
A good time to do this is in the late summer or early autumn when most new products have arrived at retail stores for the holiday shopping season.
Observe how toys are sold: categories, pricing, packaging, product displays and amount of retail shelf space devoted to each category – important information, especially if you should later decide to manufacture your invention yourself. Remember too that something similar to your invention may already be in the planning stage. Read the toy industry magazines and also check the consumer press. Look for coverage of the Toy Fair held at Olympia every January, in the press and periodicals. All this research should tell you which products attract attention to help you develop your idea.
Conduct patent and/or registered designs or trademark searches, which are done prior to applying for this type of protection. Firstly the British Library allows individuals to conduct their own initial searches by using their links to the patent office database. Secondly, the British Library offers professional research services charged at a competitive rate. Searches can be time-consuming; also for a fee, patent and trademark agents who practise patent and trademark law can do searches for you. A list of these practitioners is available from the Patent Office.
The product must be able to be manufactured at a reasonable cost to allow a competitive retail price within its category and to ensure a profit. Your initial research at toy outlets should provide a good idea of price range within the product’s category and a rough prototype is important, too, for presentation purposes if you are trying to sell your item to a toy manufacturer.
Some prototypes, such as one for a board game, can usually be made at home. But some toys, such as those requiring custom-made moulds or pattern designing, may require professional input. To detemine the manufacturing cost, you will have to research suppliers and contractors for production cost estimates. For example, if you want to produce a board game, you will need to price printing, spinners, timers, tokens, boxes, assembly, and so on. For a stuffed animal you need fabric, stuffing, accessories: eyes, nose, mouth, voices, squeakers, musical movements, assembly, stitching, etc. Most plastic toys are compression, extrusion, injection, rotational or blow moulded, which usually require a custom-made mould. Wooden toys, because they usually require a great deal of custom handwork and high-priced raw materials, can be quite expensive to produce.
Today’s promoted, in-demand toy can quickly become tomorrow’s ‘has-been’. Does your innovation have growth potential? Does it have play value, will the consumer get his/her money’s worth and, most important, is it fun? Many inventors conduct informal market research by having friends or relatives play-test a product with the age group for which it is intended. Remember, toy manufacturers and design firms employ professionals who have many years of experience creating toys with long-lasting appeal, and they also carry out toy testing to make sure the toy has play value and appeal.
Anticipating trends is difficult even for the experts, so most large toy companies commission extensive market research to determine what types of toys children like and play with the longest and the types of toys parents want to purchase for their children.
Although this path is more time-consuming and costly, as well as requiring general business skills, it may lead to success and the personal satisfaction of establishing a thriving business of your own; or having a toy company purchase your idea after you have made it successful. Toy companies are more willing to purchase an idea that has demonstrated consumer appeal. Many large toy manufacturing enterprises began as small entrepreneurial businesses.
If you decide to form your own business to manufacture and distribute your invention yourself, you must be able to: raise capital; contract for production services at an affordable cost; obtain orders from toy retailers and ensure timely delivery; and continue promotional activities to increase consumer interest and sales. You will face competition for retail shelf space, especially from major toy manufacturers and retailers’ own-brand toys.
Some other areas of consideration are: legal matters – patent and/or trademark protection is only one; safety – there are regulations covering more than 100 areas, including small parts, sharp points and edges, flammability, toxicity, electrical hazards, proper labelling, etc especially those intended for children under the age of three; product lifecycle and stability of demand; new competition; and distribution – making sure that as many retailers nationwide which sell toys are carrying your product.
Starting and maintaining a successful business requires many skills, but these can be acquired.
Proper planning is crucial. Create a business blueprint prior to introducing your product to help avert crisis later.
You must develop your product fully, determine cost-effective manufacturing, distribution and marketing strategies, and then project sales growth to avoid product shortage.
Where do you find help in learning these management skills and creating a business plan? For specialised information about the toy market, read the toy industry trade magazines – Toy News, Toys n Playthings, Toy World. You may also want to obtain copies of annual reports of publicly-owned toy manufacturers and toy retail chains. Toy consultants, who can be found online, offer varying services and fees, but they can usually provide information themselves or obtain it for you from other sources.
For general business assistance and information, try contacting the Department for Business, Energy and Industrial Strategy or your nearest “Business Link” or Chamber of Commerce.
Learn how to be a successful entrepreneur by studying how others have done it. You could also join clubs, societies or associations in your area from which you can request material. The British Inventors Society also lists local area inventors groups on its website.
There are various publications aimed at new businesses available from the UK Government which may be helpful to you and which you can get through your local “Business Link” office.
Now you are ready to go into production. You may plan to purchase all the raw material (components) and assemble your product at home, or hire various suppliers and contractors to perform these services for you.
Safety is fundamental to the development and manufacture of toy products, especially those items intended for children under the age of three. All toys must comply with EN71. The European Toy Safety Directive gives the regulation for most aspects of toy safety but inventors should also be aware of the regulations on general product safety and if relevant other directives for a particular product – for example regulation on electrical items if the toy has electrical components and the strict chemical regulations than cover all toys. All toy manufacturers are required to place the CE mark on their products to denote conformity with EU regulations. Visit the toy safety pages of the website for more guidance.
How do you reach toy buyers? Traditional outlets are toy, game and hobby stores, large national chains as well as small, independent toy shops; discount, variety, department, gift/novelty and drug stores; and others, such as online, supermarkets, card/stationery stores and catalogue showrooms. Your product may also, or only, be suitable for sporting goods or book stores, museum shops, college bookstores, etc. After determining the best retail outlet for your product, you can sell directly to stores in your area.
Advertise in one or more toy trade magazine or other suitable magazines read by toy buyers looking for new products. You can target a large number of toy buyers by exhibiting at a toy trade show, especially the Toy Fair, the largest dedicated toy trade show in the UK. Toy Fair is held every January at Olympia in London and is organised by the British Toy & Hobby Association. It is a dedicated toy trade show and is a great place to meet buyers, licensors and retailers from lots of sectors ranging from multinational children’s product buyers to the smaller specialist retailer. Exhibiting at Toy Fair represents the most cost-effective way to present a product to toy retail trade. Very few industries provide such a relatively inexpensive method of entry into the marketplace. For information about Toy Fair visit www.toyfair.co.uk
UK manufacturers and importers of toys are eligible to join the British Toy & Hobby Association. Membership fees are based on a company’s annual toy sales. For membership information please contact:
Tracey Butcher, British Toy & Hobby Association, 142-144 Long Lane, London, SE1 4BS. Tel: 020 7701 7271 Email: tracey@btha.co.uk
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, which employ professional designers, and from independent professional designers and toy agents who they have worked with 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 on new product ideas from independent inventors. 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 idea’s 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, thereby 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 through 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 – although this is often withheld now due to data rules. 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. Ask whether or not they review outside ideas and what procedures you must follow. Be prepared to present, if requested, a prototype, video 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, while many are toy inventors or former toy company staff designers themselves. Their services and fees, which may include a percentage of the royalty paid by the purchaser, vary, such as the type of inventions they will handle – board games only, for example. 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.
Most companies will not look at outside ideas unless an application for protection has been obtained.
There are three statutory forms of IP protection: design patents, trademarks and copyrights.
You can hire an agent registered to practise before the UK Patent office to provide this service for you for a fee. You can also seek advice about securing ‘unregistered’ design protection. Meanwhile, it is important that you document your idea and put the original documentation in a safe place. You may want to keep an ‘invention ledger’: a bound notebook to record all pertinent information regarding the steps you have taken to protect your idea, a file for legal documents, sales receipts etc. Keep this ledger up to date. Include a description and sketch of the product, its elements and how it works. If you make a prototype, photograph or video it and keep a copy with the ledger.
For further information visit The Patent Office
Patent
The most comprehensive protection of an idea is a patent. Many solicitors advise this form of protection. This can be arranged through a patent agent. However, it is usually impractical to patent ideas for two main reasons:
1. The fees and costs in pursuing a patent are considerable. Even for professional inventors, the ratio of ideas to successes is such that it is economically not justifiable to take out patents on their ideas.
2. The time taken for a patent to be granted and enforced is usually much longer than the lifecycle of the product. There are few items of longevity in the toy world. Most companies change at least one third to one half of their line every year. Although court action can be retrospective, the damage has often been done.
Patents can be taken out for the United Kingdom and elsewhere in Europe or in individual countries throughout the world.
Design Registration
The next most comprehensive form of protection is design registration. Any graphic material can be registered (provided it is original) for a few hundred pounds at the Design Registration Office. This protects against all similar designs, even if those designs were conceived seperately and are coincidental.
Photographs or drawings with an aesthetic content (not industrial product engineering). Again, this is expensive if registration is done speculatively.
This form of protection applies to the United Kingdom only.
Alternatively you can investigate the right to protection under the Unregistered Designs Directive.
Copyright
A good and much used form of protection is copyright. Any graphic or textual material can be copyrighted by putting a ‘c’ in a circle followed by the name of the person or company who owns the copyright and the date, (for extra security, a copy of the work may be deposited with a solicitor or at a bank to prove date of copyright). Copyright gives good protection for games and for items which can be manufactured and/or made up into three dimensions from drawings without further investigation.
However, there are disadvantages:
1. It is difficult and expensive to detail a design or mechanism comprehensively.
2. Small deviations from the original material may invalidate a copyright infringement.
3. In order to make a claim, it is necessary to prove that the infringing party has copied directly the original material. Coincidental similarity is not covered.
Non-disclosure form
Some solicitors advise that inventors should get companies to sign a non-disclosure letter or confidentiality form before they see the new idea. This gives protection specific to the relationship between the inventor and person or company to whom the idea is submitted. However, because this type of document is legally biased in favour of the inventor and is constrictive, most companies will not sign. In order to evaluate a product it is difficult to treat it confidentially and a company may unwittingly be liable to the inventor in the future.
Conclusion
Whatever form of protection an inventor has, it is important to keep an accurate record of what was shown and submitted to be signed by both parties. Litigation is rarely successful financially.
The simplest and most effective protection is reputation, and it is suggested that anyone wishing to submit an idea should call or write for references. The UK toy and game industry is small enough for word to get around rapidly of any unethical business behaviour.
Once an idea has been licensed it is usually up to the licensee to protect the product. They have the expertise and, more importantly, the money to do so.
The Contract
Once the inventor and the manufacturer/marketing company (the licensee) have reached an agreement, a contract needs to be negotiated. The main points to be found in a licensing contract are:
1. The parties – details of the identity of the licensor (or his agent) and the licensee.
2. The product – the subject matter of the agreement.
3. Financial commitments – royalty rates, the basis of calculation, the timing of payments and details of any advances and minimum guarantees.
4. The territory – the geographical area in which the licensee will be permitted to exercise their rights.
Financial commitments
Royalty rates are generally 3-8% of the licensee’s net sale price. Rates vary due to certain factors – for example, lower rates for items to go with a character licence, higher rates if the item is a proven success in another territory.
Advances are an up-front payment in advance of royalties.
Minimum guarantees are also frequently a part of licence agreements. A minimum guarantee is the absolute minimum payment that will have to be made to the licensee, regardless of the success or failure of their use of the product. This also ensures that the licensee does not hold on to an idea indefinitely without making payments.
You may wish to use a character in or on your new design. The character licensing industry generates a worldwide income of more than $70 billion yet it remains a mystery to the majority of people not directly involved in it. Put simply, it is the use of a character to promote a product or service. Characters, be they cartoons, film-based or those that have originated from books or comics, are known as intellectual properties and like all property they have an owner. Whether the owner created the property or otherwise acquired the rights, they are the only ones who are ultimately able to permit use of that character for licensing purposes.
The rights holder is known as the licensor and the individual or company who wish to make use of the character in conjunction with their product, is know as the licensee.
Often a licensor will choose to work through an agency such as The Copyright Promotions Licensing Group, who will then handle the business of selecting licensees most appropriate to their client’s character. As the licensing business has become more specialist, so agencies have improved their business to offer services such as artwork approval, which ensures that the visual integrity of the characters is maintained and, in the case of larger agencies, design and PR functions. A good agency will ensure the best interest of their client’s character is maintained by ensuring that it is not over licensed and that licences are granted to a broad range of suitable licensees.
Why use licensed characters?
Use of a licensed character brings to a product or service many advantages. A well known character such as Dennis the Menace, may have years of heritage. The character is also likely to have a high level of exposure perhaps via TV, books, videos, films or a combination.
As a licensee, an individual manufacturer will benefit from the activity of other licensees. Licensed characters can generate a tremendous playground ‘must have’ factor. A hit TV show for example leads to demand for all associated products. Finally, characters can bring with them parental approval as parents may be familiar with a character from their youth and therefore feel that they trust and understand them.
How the process works?
Every property is different and for a licensing programme to succeed it needs to be carefully thought out. At The Copyright Promotions Licensing Group a marketing plan is put together for each character taking a number of things into consideration:
Licensee selection process
Licensing agents both approach and are approached by potential licensees. In order to ensure that the most suitable match is made, the best product licensed and the maximum sales achieved, a number or factors regarding a potential manufacturer are taken into consideration:
The contract
Once agency and manufacturer have reached an agreement and with the licensor’s approval, a contract will be negotiated.
The main points that a manufacturer can expect to find in a character licensing contract are:
Product development
Once the contract has been agreed, design work can begin. The licensing agency should be equipped to assist licensees as necessary and to ensure that the end product is of the required standard.
Agencies will often get involved in all stages of development from initial concept work through to artwork and pre-production samples.
The agency will further assist licensees by supplying full information about activity surrounding both the property itself and other licensees on the programme. Regular update reports and frequent meetings ensure a co-ordinated approach to licensing giving maximum effect in terms of sales.
This chapter was written by Jane Garner of Copyright Promotions Licensing Group, an organisation with head offices in London. Fifteen territories across mainland Europe are covered by an additional ten offices whilst sub-agents are used worldwide. The company has a marketing led approach to licensing with each industry sector covered by specialists. It is also able to offer in-house design and PR services.
The Copyright Promotions Licensing Group
One Queen Caroline Street, 2nd Floor, London, W6 9YD
Tel: 020 8563 6400
Fax: 020 8563 6465
Email:cplginfo@cplg.com
Web: www.cplg.com
With innovation driving the industry, there are many companies continually looking out for new and original ideas. While there will always be a need for major manufacturers to have in-house designers, it is more likely that ‘off-the-wall’ inventions will come by strange and unusual routes to market.
Many people confuse character licensing with product licensing. Product licensing grants a right to exploit a unique and original concept. Character licensing is the application of a character logo or brand which has public awareness and is applied to a product in order to increase sales.
A new toy idea can itself develop into a character licensing opportunity as a result of its easy recognition and heritage. Sometimes a manufacturer uses a product licence together with a character licence to give it instant recognition and bolster initial sales.
How it works
1. Most toy and game companies have a person or team whose job it is to look at new ideas. These people evaluate hundreds of new ideas every year.
2. Professional inventors usually make presentations in person. Amateurs have to be content with sending a submission by post. Some companies will not deal with amateur inventors directly. This is often due to bad previous legal and technical experiences which come about through lack of understanding of the peculiarities of the toy and game business. It is common, therefore, for amateurs (and some professionals) to use agencies. They take a proportion of the royalties but take care of the development costs, protection, licensing and royalty collection.
3. While companies are always on the search for new products, evaluation usually takes place from November to April. The decisions for the new line need to be made by April to June in order to get the product completed for toy fairs in the following year.
4. Evaluating a product is not a science. The gut feeling of a particular toy executive plays an important role. However, there are key questions such as:
– Is the product exciting to the target market group?
– Is the product good value for money?
– Is the product safe?
– Is the product easy to advertise or promote?
– Is the product revenue going to justify the initial investment?
– Is the product unique?
– Is the product protectable?
5. Most product licensing agreements should be concluded by July in order to give toy companies time to develop and finalise the product for launch at the following January’s Toy Fair.
Product development
Once the contract has been signed, the inventor’s work is usually done. It is common for the inventor to be excluded from the development programme and have no moral rights – i.e. no right to approve or disapprove of the final samples, etc. However, in certain cases where relationships have been established, the inventors are invited (or paid) to be part of (or even control) the development programme. This of course applies almost exclusively to professional inventors or agents.
This section has been contributed by Seven Towns Ltd.
Seven Towns has been a supplier of original toys and games to the toy industry for 30 years. They have licensed products to almost all the major toy companies throughout the world and have brought more than 300 toys and games to the market.
Seven Towns Ltd
7 Lambton Place
London
W11 2SH
Tel; 020 7727 5666
Email; info@seventowns.com
Web; www.seventowns.com
The British Toy & Hobby Association is keen to work with universities to encourage design students to think of the toy industry as a destination career.
The toy business is a fast moving, fashion industry that has to keep pace with children’s ever-changing tastes and create new, exciting toys for children to play with and enjoy. Although a lot of the manufacturing process is undertaken in the Far East, the UK remains a vibrant source of innovation in the design and marketing of toys and the industry is constantly on the look out for young, innovative designers who can bring originality to the toys and games market.
Since 2008, the BTHA has invited a number of university design students and their professors to the Toy Fair on the final day of the show each year to attend a seminar, walk around the exhibition, and meet the wider industry.
If you are a course leader or a student wishing to attend the Toy Fair please email: Rebecca@btha.co.uk
If you are considering the toy industry as a career you may wish to think about the following points:
If you would like to find out about available positions within the industry you could try visiting the jobs pages of the trade publications:
ToyNews
Toys n Playthings
Toy World
Other useful links:
The Chartered Institute of Patent Attorneys
The World Intellectual Property Association WIPO
Espacenet, for searching published patent specifications to determine whether an idea is new
Mojo Nation support inventors of all backgrounds, experience and skill-sets to help bring their toy and game ideas to life, from sketch to shelf.
Please note that the BTHA is unable to help inventors further and any calls to the BTHA will be redirected to this web page.
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