Quirky Patent Deals Transfer Inventor's Ownership of Ideas
Quirky Patent Policy
We recently learned about a company called Quirky. In short, Quirky encourages inventors to disclose their ideas in exchange for a share of the profits arising from the commercial product.
According to Quirky’s mission, “we make invention accessible. We believe the best ideas in the world aren’t actually in the world… they’re locked inside people’s heads. We exist to solve that problem.”
For a startup or individual inventor, Quirky seems attractive for two reasons:
- First, an inventor doesn’t need to diligently pursue developing the idea. According to Quirky’s website, “[i]t doesn’t matter if it’s a little doodle, a crazy chemical formula, or a “wouldn’t it be cool if…”, sharing your idea is the first step toward bringing your idea to life.”
- Second, the entire experience is designed to be very nurturing—sort of like crowdsourcing product development. The community helps develop the world’s next great idea. Everyone who contributes to an idea is rewarded. But no one really needs to do anything that they don’t want to do.
How it works: Share your idea with Quirky
Quirky actively encourages inventors to join it’s community and share ideas. An inventor submits an idea to Quirky. Then, the community decides which ideas should move forward through various stages of development. For successfully developed commercial products, the royalties are shared with the community. The end result? According to Quirky, “the world prospers.”
Does Quirky seem to good to be true?
At first glance, Quirky seems like a nurturing environment for inventors—an organization that selflessly fosters innovation. But, there is a catch. A big catch. The inventor gives away all rights to the intellectual property. According to Forbes Magazine: “If you’re a serious inventor you’d have to be desperate to go for a deal like this.
Here is Quirky’s response to this seemingly one-sided deal: “99% of the people in the world don’t have the ability to develop and market a product idea…and those are really the people Quirky is for. If you are part of the 1% with the ability to manufacture or license a product idea, then Quirky may not be the best option for you.”
You give your idea away to Quirky
Intellectual property is exactly as it sounds. It is property, just like land, houses, cars, etc. Accordingly, transferring ownership of intellectual property is akin to transferring title to tangible property. Ownership changes hands.
In the United States the inventor starts off by owning 100% of his or her invention. This natural right rewards creating the idea. Accordingly, the inventor owns 100% of the patent—100% of the property.
Working with Quirky requires transferring 100% of this ownership to Quirky Inc. In exchange, the inventor receives access to the community, which provides help developing the idea. The inventor also receives a small percentage of future product revenue. Returning to the land analogy (above), cutting a deal with Quirky is akin to giving your home away in exchange for help renovating it and a percentage of the future rental income.
Quirky owns your idea
According to Quirky’s intellectual property policy, “by submitting your idea to Quirky, you grant a license in all IP in the submission to Quirky…. you assign ownership in all IP in the submission to Quirky.” Just to be clear, “In all cases the listed inventors assign ownership of all patent rights to Quirky.”
Some critics have asked, “Why does Quirky need to own all IP in idea submissions accepted for further development? Is this negotiable?” Quirky responds by repeating that it will take all of the intellectual property: “In order to successfully develop and commercialize a product, Quirky must devote significant resources and accept exposure to a multitude of legal risks. Quirky cannot sustain this level of investment and risk taking without having the ability to control the exploitation of IP embodied in its products.”
Not true. There are virtually limitless ways to exercise control over assets without transferring ownership of the property. For example, a contract. For illustration, the managing partner of a multi-member company controls the company but probably does not own all of it.
Quirky reward the inventor with a piece of a piece of the pie
By giving all ownership of the invention away, what does the inventor stand to gain?
This question is also answered on Quirky’s webpage: “In return for ownership of IP in a commercialized product, Quirky pays the contributing user a perpetual royalty commensurate with the degree of contribution.” “We calculate royalties using our influence engine.” This “influence engine” determines which users receive a portion of the royalties when Quirky shares net sales income with the community. That income is shared at two rates:
• 30% of income from sales directly to consumers through the Quirky.com shop.
• 10% of income from wholesales to retailers.
Accordingly, an inventor gives Quirky 100% ownership of the invention. Then, Quirky pays the inventor some share of 10-30% of the income, depending on the inventor’s “degree of contribution” as determined by the “influence engine.”
An Alternative to Giving Away Your Invention
In the United States, inventors are entitled to own 100% of their inventions. The US government comes up with 100% ownership without an “influence engine” by recognizing that the invention would not exist but for the genius of the inventor. An inventor can protect this 100% ownership of the invention by drafting a patent application and filing it with the United States Patent and Trademark Office.
After filing a patent application, the inventor can search for investors to help cover the costs of developing the invention. Depending on the size of the investment, the inventor may have to sell some of the company. These negotiations provide all of the material for ABC’s hit television show Shark Tank. (Notably, investors will not entertain conversations with inventors who give away all of the rights to their invention).