15 February 2018
Welcome to the Dragons’ Den… but how will you make your big idea work?
By Andrea Craig, Director, Hayes + Storr Solicitors
Many contestants on BBC2’s popular Dragons’ Den reduce me to shouting at the television – “Have you registered a patent?” “Have you protected your ideas?” “Who owns the design?” The programme has been informative, amusing and infuriating for an unbelievable 13 years, and every week the ‘dragons’ will be irritated or dumbfounded by budding entrepreneurs who don’t know or understand what sort of business they have; whether they own or have protected their products; or whether they have a contract in place with a customer. Worst of all, contestants are convinced their businesses are worth a fortune – despite this lack of knowledge.
Whatever your big idea (an invention, a work of art, a machine, tools or even medicines for example…) protecting your intellectual property makes it easier to take legal action against anyone who steals or copies it. It’s your responsibility to defend your intellectual property including registering designs, patents and trademarks (IP) and to take action if someone uses it without permission (known as infringement). Before you make an approach to a manufacturer or a distributer, make sure you use a non-disclosure agreement.
Do your homework
Sometimes you wonder if contestants have ever watched an episode of Dragons’ Den before applying. Turning an idea into reality involves more than just handing your design over to a manufacturer or developer and waiting for the cash to flood in.
Work out who your customers are. How do you know anyone wants your product? If you don’t know there’s a market, you’re likely to fail.
Who’s the competition?
Are there similar products out there? Who’s buying them? What do they cost?
What’s your USP?
What unique selling point (USP) makes your product more attractive than what’s already available? Where’s the gap in the market you intend to fill?
How do you know your design doesn’t already exist? Make sure your idea doesn’t infringe on someone else’s intellectual property – you can search for trademarks and registered patents using the Intellectual Property Office’s search service or by hiring a patent attorney or advisor.
Create a Prototype
Once you’ve established there’s a market for your idea that hasn’t already been thought of and protected legally elsewhere, you’ll need to put a prototype together. Work towards making your idea as close to the finished product as possible.
Write a business plan
Make sure your business plan has substance. It needs to be backed up by research, realistic statistics and facts.
Slicing the action
Inventors usually capitalise on their ideas in two ways – by licensing the invention to an existing business or by coordinating the manufacturing and marketing of the idea themselves. If you decide to go down the former route, start approaching companies one at a time. And remember to use a non-disclosure agreement to protect your position.
What’s it worth?
What the ‘dragons’ try to explain is that in order to encourage investment, entrepreneurs must show an idea will generate commercial return. If you don’t have ownership of your product and haven’t achieved any turnover and sales it’s almost impossible to come up with a value for the business. If you’ve been working alone and have no business experience, your best strategy is to license your idea to a company with proven business expertise. The cash may flow in one day in the form of royalty payments – but don’t expect an instant return.
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.
If you’d like more information on any of the issues detailed in this article, please contact Hayes + Storr on 01553 778900.