There is a lot of talk about crowdfunding these days when considering starting a business. While crowdfunding is a great and innovative way to fund your new business, one must be careful to make sure others do not copy your invention or idea. Here are the first 8 tips for combating copycats written by Stephen Key:
1. Use the tools provided to us by the United States Patent and Trademark office and other governments in terms of intellectual property protection, including trademarks, copyrights and patents. I recommend filing a provisional patent application first. If you’re starting a business, need patent protection, and are willing to defend it in court, consider fast tracking it. The cost is a bit more to do so, but it could be well worth it.
Design patents can be of great value when it comes to combatting infringers. King writes that he likes that they’re a bit more affordable to file. That’s what I used to get eBay and Amazon to take down copycats of the guitar picks I invented and brought to market in the 2000s. Typically, because design patents are easier to obtain, they aren’t as valuable. But they’re fantastic tools when it comes to knockoffs.
Trademarks are extremely important. Plan ahead, because they take on average between six and nine months to be approved. Consider filing trademarks on phonetic and related versions of your name.
After you share your invention publicly, you have 12 months to apply for a patent in the United States. Be aware that in many foreign countries, there is no such grace period. So you could lose your right to file intellectual property if you launch your campaign too quickly.
2. Have inventory ready to ship. As an advertising vehicle, crowdfunding can’t be beat. Speed to market is the biggest issue at hand. If you have inventory and you’re set up to start shipping, you can beat copycats to market. Because so many creators don’t have product development or manufacturing experience, campaigns are notoriously slow to deliver. We’ve all read the stories; it’s jaw dropping how fast the Chinese can copy a design and get to market.
3. Next best: Line up a manufacturer and be ready to go, having done everything but pull the trigger. Consider manufacturing in United States first because doing quality control will be much easier. At the same time, start looking overseas for a future partner. Yes, your profit margins will suffer. But once your product takes off, you can switch over to a cheaper provider.
4. Third best, after that: Have a minimum quantity of inventory already ready. Most contract manufacturers require that you order a minimum number of units. Ask them what their lead-time is. You might be able to use the funds you receive from crowdfunding to pay the invoice on that initial order — thus avoiding having to spend your own money and the dreaded float.
5. Bring on someone who is familiar with manufacturing in China prior to launching. If you decide to go overseas first, I think one of the most important things you can do is hire someone with the right experience. For example, a non-disclosure agreement won’t cut it. You’ll want any Chinese manufacturer you work with to sign a non-use, non-disclosure and non-circumvention agreement (NNN).
6. Contact a potential licensee to notify them about your product before you launch. If your campaign is successful, reach back out. They will absolutely love that you have taken away risk by establishing proof of demand. You could also try to license your idea in earnest first. Using crowdfunding to validate the marketability of a product is very smart, in my opinion. There’s a reason large companies like Hasbro have teamed up with Indiegogo.
Having a market leader push your product out through its distribution channels is a big plus when dealing with retailers.
7. Stay under the radar. Don’t ask for too much money and don’t push too hard on social media. You’ll gain proof of concept, but will be less of a target.
8. Raise venture capital prior to crowdfunding. Many successful crowdfunding campaigns raise money prior to launch day. This is especially true for more complicated projects that require a certain level of talent and funds in order to ship and be sustainable.
The remaining 8 tips will be presented in our next blog post.
This article was written by Stephen Key and modified.
