Scissors - these were invented to cut with more accuracy than a knife. Sharp, small and large scissors will cut through just about anything. So scissors have an intrinsic value that no matter how you color them, package them, sell them, they still cut. A patent protects the invention, the license creates the money.
So why do inventors give away the patent?
I worked with a company owner 4 years ago to help her raise money for her start up. She had a patent that was the "unique value proposition" of her business. Fast forward 4 years, $10 million raised in Venture Capital, a languishing economy and less revenue coming in. The VC's (fondly referred to as Vulture Capitalists) stepped in and ousted her and her top management team.
And they now own her patent!
Her patent had intrinsic value with a wide application across a variety of business segments outside her own company that it resembled a permit to print money.
Her buyout included options, stock and a cash buyout. But not her patent. The company holds the patent and the venture capitalists own the company.
Should the company fail, she will lose the value of all her options and stock, which means she will be left with - NOTHING. The VC's own the patent and they will make the money by licensing it out.
May I mention that she is a brilliant experienced serial entrepreneur and had created her most recent company to help WOMEN?
I would like to opt on the side of success. That the VC's will appoint a new CEO with the passion and focus to make the company successful.
But the lesson remains the same:
If you thought of it, if you invented it, file a patent for it. As Jane Wurwand, founder of Dermalogica says "I own it all and thank god for that!"
