Developing Under Another's Business (Possible? Incentive for existing business?)

[genagena]

Hi, this question concerns coming up with an idea/variation of an existing product.


Hypothetical scenario:

A successful business markets a particular kind of product and a guy comes up with the same idea, only with variants of said products (e.g. Dairy Queen Blizzard with cookie dough vs. Dairy Queen Blizzard with Reese's Pieces). Because these can be sold under the same brand and his guy has limited resources and no known established brand of his own, inquires with the successful business owner about ideas for other variants of his products and to therefore, sell his own under his brand. Would a business owner even entertain this proposal, and if so, should the guy get royalties?

And what happens if the guy proposes to also pay for the manufacturing/stocking of his version of the products? How much more should he get then?

[Freelancier]

Happens all the time, where a small guy gets a big guy interested enough in remarketing their product. But the small guy better have defensible patent(s) to protect themselves before approaching the big guys, because big guys are often bullies who will knock you down and steal your lunch money.

[genagena]

Happens all the time, where a small guy gets a big guy interested enough in remarketing their product. But the small guy better have defensible patent(s) to protect themselves before approaching the big guys, because big guys are often bullies who will knock you down and steal your lunch money.

Thanks for the prompt reply! That was a major part of my concerns actually... Usually it's a no-brainer and I would patent right away or at least get an NDA, but I guess I have to be more specific and state that this is about food. How would one protect themselves in this situation?

[Freelancier]

If all you have is an idea, you aren't anywhere when it comes to food (or beverage). If you have already gone to the effort of doing the production and finding a market for the product, lining up various distribution channels, then you have something they might want to buy. Without that, ideas are just ideas and you might as well become an employee in their product development department for all the idea is worth. So where are you on this path?

[genagena]

If all you have is an idea, you aren't anywhere when it comes to food (or beverage). If you have already gone to the effort of doing the production and finding a market for the product, lining up various distribution channels, then you have something they might want to buy. Without that, ideas are just ideas and you might as well become an employee in their product development department for all the idea is worth. So where are you on this path?

Yes, I'm aware that ideas need to materialize or at least be protected before they're shared.


As far as what my plan is, my mind is actually very scattered with all kinds of projects I have in mind. Some are ebooks, some are food products, some are technology products ... Being that food is not my main venture and the fact that I'm only an 18 year old student, I thought it'll be best to start with a side project and join forces and develop with someone more established (if they allow me) seeing as I don't have the start up funds or the experience at the moment. Like I said before though, I also feel that my idea for a food product neatly fits under the same vision (eg. 'all natural' and raw) the other business is doing, so instead of coming up with a similar brand name and starting from scratch marketing very similar products and competing with this guy, why not merge and put it all under his brand? That's my train of thought at the moment. If I sound naive it's because I am for now. I'm not sure if I'll be laughed at and ignored if I email this business with an offer to sell similar products under his brand. And before I propose my unique ingredient combinations, should I first supply an NDA? Or else what is stopping him from saying "Oh okay, good idea thanks" and making them himself to sell?

To be as specific as I can without giving too much away, an analogy is that he is currently selling teriyaki flavored beef jerkys with no artificial ingredients. I also have ingredient ideas for beef jerkys with no artificial ingredients, only with other flavors like let's say ... ginger flavored and soy-flavored. I want to bring these products to market and I think it'll benefit us both by combining it all altogether under a general natural beef jerky brand. (Obviously beef jerky isn't my product of choice, but just so you get the idea ... )

Again, thanks for taking the time to help me. I really do appreciate it with all the ideas running through my head and no idea what to do first with them.

[HooktoWin]

Yes, I'm aware that ideas need to materialize or at least be protected before they're shared.


As far as what my plan is, my mind is actually very scattered with all kinds of projects I have in mind. Some are ebooks, some are food products, some are technology products ... Being that food is not my main venture and the fact that I'm only an 18 year old student, I thought it'll be best to start with a side project and join forces and develop with someone more established (if they allow me) seeing as I don't have the start up funds or the experience at the moment. Like I said before though, I also feel that my idea for a food product neatly fits under the same vision (eg. 'all natural' and raw) the other business is doing, so instead of coming up with a similar brand name and starting from scratch marketing very similar products and competing with this guy, why not merge and put it all under his brand? That's my train of thought at the moment. If I sound naive it's because I am for now. I'm not sure if I'll be laughed at and ignored if I email this business with an offer to sell similar products under his brand. And before I propose my unique ingredient combinations, should I first supply an NDA? Or else what is stopping him from saying "Oh okay, good idea thanks" and making them himself to sell?

To be as specific as I can without giving too much away, an analogy is that he is currently selling teriyaki flavored beef jerkys with no artificial ingredients. I also have ingredient ideas for beef jerkys with no artificial ingredients, only with other flavors like let's say ... ginger flavored and soy-flavored. I want to bring these products to market and I think it'll benefit us both by combining it all altogether under a general natural beef jerky brand. (Obviously beef jerky isn't my product of choice, but just so you get the idea ... )

Again, thanks for taking the time to help me. I really do appreciate it with all the ideas running through my head and no idea what to do first with them.

Hi Genagena,

An NDA might get you a yes. But a No is much more likely.


If you Do have a relationship with this business/owner, he may be insulted when you present an NDA.
If you Don't have a relationship, most businesses/owners are hesitant to get entangled with an NDA.


A provisional patent can offer better protection IF your idea is patentable. (http://www.nolo.com/legal-encyclopedia/how-protect-invention-when-pitching-30208.html)

If it's not and you're looking to pitch this idea then an NDA can work if it's done well.
If you end up going the NDA route here's what I've been told by other attorneys. Your NDA should place a dollar value on the violation
e.g. You manufacture this idea outright and it's worth X. Share/use this outside the terms of this agreement and you agree to pay X (per infraction).

If you don't have these kinds of specifics in your NDA it's going to be very, very hard to enforce in court. (http://www.xconomy.com/seattle/2011/02/15/what-you-probably-dont-know-about-non-disclosure-agreements/)

If the partner you have in mind is well funded they can use stalling tactics in the event that you decide to try and enforce your NDA (in court).
This basically boils down to a calculated risk.

Is this a common thing for you to have ideas that you share with other businesses/potential partners? If it is I can recommend some simple yet effective info.

Let me know,

Andrew

[genagena]

Hi Genagena,

An NDA might get you a yes. But a No is much more likely.


If you Do have a relationship with this business/owner, he may be insulted when you present an NDA.
If you Don't have a relationship, most businesses/owners are hesitant to get entangled with an NDA.


A provisional patent can offer better protection IF your idea is patentable. (http://www.nolo.com/legal-encyclopedia/how-protect-invention-when-pitching-30208.html)

If it's not and you're looking to pitch this idea then an NDA can work if it's done well.
If you end up going the NDA route here's what I've been told by other attorneys. Your NDA should place a dollar value on the violation
e.g. You manufacture this idea outright and it's worth X. Share/use this outside the terms of this agreement and you agree to pay X (per infraction).

If you don't have these kinds of specifics in your NDA it's going to be very, very hard to enforce in court. (http://www.xconomy.com/seattle/2011/02/15/what-you-probably-dont-know-about-non-disclosure-agreements/)

If the partner you have in mind is well funded they can use stalling tactics in the event that you decide to try and enforce your NDA (in court).
This basically boils down to a calculated risk.

Is this a common thing for you to have ideas that you share with other businesses/potential partners? If it is I can recommend some simple yet effective info.

Let me know,

Andrew



I have no relationship with the owner, so I'm sure formality and caution would be expected.

Thank you for the warnings about how to apply the NDA. I realize that patents are ultimately the best protection, though costs and the type of product (food) are restricting. Are NDAs very costly to construct, assuming I would have to see a lawyer?

And I would say yes (for the future). I have a lot of ideas and since I am not an engineer or in any way handy, I will eventually be presenting ideas to a lot of people to manufacture for a prototype before a patent is secured. I also imagine myself pitching to businesses and retailers before my product is made to save costs just to ensure demand is there. If you have any information or advice at all, I would greatly appreciate it.

Thanks again for your substantial reply, Andrew!:)

[Owen]

because big guys are often bullies who will knock you down and steal your lunch money.

That is probably one of the most accurate and amazing thing I have ever seen you say on this website.