How to Make Money From Your Invention (Chapter 10, Part 1) – Lessons Learned From Case Histories

How to Make Money From Your Invention (Chapter 10, Part 1) - Lessons Learned From Case Histories

Cotton PlantsLesson 1 – Demonstrating acceptance in the market goes a long way towards finding a willing licensee.

While at the University of Arizona, Gary Thacker had an idea on how to save money in a cotton tillage research project. It involved a method of embedding the stalks and roots of the cotton crop, using a uniquely modified plow with a single pass tillage.

Gary built a proof-of-concept prototype and demonstrated the process. After filing an invention disclosure, the university did not want to pursue this area and gave Gary the rights to the invention. He patented the plow and formed the Pegasus Machinery Company in his garage, to pursue the development and commercialization of the plow.

Farmer Plowing Field on TractorHe was successful in selling some units but was not making much money. Gary took out an ad in the Farm Equipment Manufacturers Association newsletter indicating that this technology was available for license.

The Rome Plow Company wanted this new product for their line of plows. They bought all the assets of Pegasus and acquired an exclusive license from Gary on the new plow technology. As part of the deal, Gary stayed on as a product rep for three years.

The plow is now known as the Rome-Pegasus plow. It is also marketed by John Deere as the Frontier cotton plow.

EvolutionThis was an example of a successful licensing deal from both sides.

Rome Plow was in the business of selling plows and recognized the potential of the plow because it was already validated in the market place.

The license provides income and Gary was also able to participate in the market development for Rome Plow under the 3-year contract and will likely have additional opportunities.

Water HeaterLesson 2 – A successful deal from the licensee prospective. What about the licensor?

In 1978, Harry E. Wood had a patent on a direct contact water heater. He had received support from the predecessor of the Inventions and Innovations Program for this invention.

Harry Wood sold the patent rights to Kemco Systems, Inc. in 1978. Kemco, who was in the water recycle business for commercial laundries, continued the development of the equipment and commercialized the energy saving water heater. They also received a patent on the improvements they made on the equipment.

Kemco has built a nice business from the Wood patent and now offers a range of water heating capacities for commercial use in a wide variety of industries and has over 3000 installations under their belt.

Cash BagKemco has done well, deservedly, with their purchased patent, which has already expired.

Would Harry Wood have been better off with a royalty license rather than an outright sale? It is difficult to know since we don’t have the details of the purchase nor do we know Harry Wood’s circumstances at the time.

The lesson is that you should carefully consider the future prospects for your invention.

Oil Pumping RigLesson 3 – Keep your options open.

Geo-Microbial Technologies, Inc. (GMT), a small research, development, and business organization, has patented, with the aid of I&I funding, a new biotechnology named Bio-Competitive Exclusion (BCX), along with product formulae named Max-Well 2000, for use in tertiary oil and gas recovery. The process concurrently attacks existing poisonous and corrosive hydrogen sulfide in the reservoir and surface production systems, and prevents the formation of more hydrogen sulfide.

BacteriaMax-Well products are soluble, inorganic nutrients that target and control beneficial in-situ microorganisms that compete with and inhibit sulfate reducing bacteria (SRB), the source of biologically produced hydrogen sulfide. The beneficial microbes also produce large amounts of bio-surfactants, solvents, and gases that release and mobilize residual oil trapped within the reservoir. These treatments result in increased oil production, sweetened water, reduced corrosion costs, safer working conditions and improved revenue.

GMT has commercialized the BCX/Max-Well 2000 development and markets through its subsidiary, The LATA Group, Inc. Similar biotechnical approaches are being introduced into the global tertiary oil recovery marketplaces that serve to further validate the BCX technology.

GMT has commercialized the BCX/Max-Well 2000 development and markets through its subsidiary, The LATA Group, Inc. Similar biotechnical approaches are being introduced into the global tertiary oil recovery marketplaces that serve to further validate the BCX technology.

Petroleum RefineryThe LATA Group is taking a dual approach to profit from this invention. While pursuing commercial sales in the global marketplace, they retain the option of a licensed or joint venture technology transfer to larger international product and service providers that are well known and established in the petroleum industry.

Licensing is only one approach, and it may not happen as quickly as you would like. The lesson in this case history is that inventors should keep their options open to multiple ways of profiting from their development. First building a commercial business is an approach that makes good sense, and improves the likelihood of an attractive and profitable disposition of the technology.

Electrical Control PanelLesson 4 – Prototype or pilot demonstration is important in getting continued funding.

George Dzyacky spent many years in the petroleum refining industry and knew some of their problems. One of them was the flooding of distillation columns. This can result in damage to the column and lost production. The existing controls came into play after the problem appeared. George invented software that can be incorporated into the existing control panel and can predict when flooding will occur. When this happens the program signals the process to briefly lower the temperature until the system is stabilized.

University of TexasThe invention was patented and a company, 2ndPoint, Inc., was formed to exploit the technology. From his experience in the industry, George knows that it would be difficult for a small inventor to convince a large refiner to consider a new, unproven process control technology. It had to be demonstrated, at least on a pilot scale.

Funding came from the I&I program for a pilot demonstration at the University of Texas. The pilot test was successful and the technology drew the attention of the faculty and their industrial sponsors. One of the sponsors was in the business of supplying systems for the petroleum refining industry and has now incorporated the software in one of their commercial distillation units. If the long-term test goes as expected, the likelihood is that the company will license the technology on an exclusive basis and promote it to the whole refining industry.

Software DevelopmentThe lesson of this case history is that George understood the industry and knew that it would be very difficult to promote the software without results from a pilot test.

He was fortunate that he chose a place to run the pilot test at a site that had the attention of the companies that could profit from his invention.

Then again, maybe it was good planning.

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This information is presented for the general education of independent inventors by the Invention Patenting Group. The Invention Patenting Group makes no warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed herein, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the Invention Patenting Group.

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