Inventing 101: Terminology Inventors Should Know

Invent word cloud

The inventing process can be a daunting one, for veterans and newbies alike. All the industry jargon, legal vocabulary and technical terms can be confusing and detract you from understanding important inventing processes and guidelines and leave you feeling overwhelmed.

At Edison Nation, we try to remove as many barriers as possible that stand between inventors with great ideas and companies looking for innovation to expand their product lines. Even though we make it as simple as submitting an idea to an innovation search, there may be times that you come across confusing concepts or convoluted terminology in search descriptions or our inventor forums that you aren’t familiar with.

Edison Nation member, Roger Brown shared an informative A-Z glossary of inventing terms in the forums, which we wanted to share on the blog for easy access for all. Pro tip: bookmark this post or Roger’s forum thread and reference when you need a little help. The list is in alphabetical order, but we also suggest using your browser’s ‘find’ feature by pressing command + F on a Mac or cntrl + F on a PC to search for a particular term as it is very long!

3-D printer – Utilizing CAD drawing input the printer makes a 3-D solid model of the design.

Add-on – A product or service added to the main product to increase interest and sales in the main product.

Abandonment – In regards to patent law, the reply of an applicant to an office action that must be made within a prescribed time limit. If no reply is received within the time period, the application may be considered, depending on the jurisdiction, as abandoned or deemed to be withdrawn, and, therefore, no longer pending.

Adjusted Gross Revenue (AGR) – The revenue left after costs such as charge backs, spoilage, damages, returns and allowances are deducted from the profits.

Advanced Shipping Notice (ASN) – A document sent to the customer letting them know detailed information about their order such as the weight, number of boxes, how the product is packaged and how it is being shipped.

After Market – Parts/accessories that were not originally installed or they can be replacement parts for the original parts. EXAMPLE: Various car accessory kits available for purchase that were not original equipment when it was made.

Annuity Fee – Fee to be paid to maintain a patent application in force. Also called “maintenance fee” or “renewal fee”.

As Built Drawings – A set of drawings showing all the changes made during the construction phase of the product. These normally show the exact dimensions and positions of all the parts making up the product.

Bill of Materials (BOM) – A comprehensive list of the various materials, components, sub-components, and quantities of each component needed to manufacture the finished product.

Blister Pack– A clear or lightly-tinted piece of molded plastic attached to a cardboard backing used to display the product to the consumer. a/k/a “Bubble Pack”

Blow Molding – Method for making a product that requires a hollow space. Used for items such as bottles, cans, containers, jars, etc. The process normally uses two heated internal surfaces of a two piece mold, hot plastic and compressed air to make the product/part.

Branding – Method used to promote the product to the consumer. A proper branding campaign can be more effective than patenting to protect a product from knockoffs.

Business plan– Documents that summarize how the company will be structured operate, and how money contributed by investors will be used. It gives an investor an overall view of the company and the projected milestones they will meet and the proposed profit the company and the investor is projected to attain.

Buy Back – A provision in a contract where the seller agrees to buy back the merchandise for a certain price after being sold to the retailer if it arrives damaged, unsellable, customer returns, late shipment (such as a holiday item that arrives after the holiday) and other issues that the two parties have negotiated into the contract.

Canadian Standards Association (CSA) – recognized by OSHA (Occupational Safety Health Association) as a Nationally Recognized Testing Laboratory that tests products and if they pass testing, the CSA symbol/logo can be shown on the product indicating certification. CSA is very familiar with U.S. requirements.

Claim – A noun phrase defining the extent of the protection conferred by a patent, or the extent of protection sought in a patent application.

Clam Shell Packaging – is a container that can be clear or tinted that has two halves that come together to form the enclosure to hold the product.

Cold calling – Contacting a company for the first time to pitch an idea/product without knowing anyone within the company.

Commission of Europe (CE) – The CE mark is used to certify a product has met the European Union health, safety and environmental requirements that ensure workplace and consumer safety. If a manufacturer wants to sell their product throughout Europe they need this CE mark to avoid having to go through further product modifications from other European countries.

Computer Aided Designs (CAD) – Designs generated by the designer using computer software depicting the object so that it can be machined, tested, give specific dimensions, material specifications and more to aid in the production of the object.

Computerized Numerical Control (CNC) – Automated controls guide machines and varying tools to do the job that used to be done manually. A number of these machines use Computer Aided Designs (CAD) or Computer Aided Manufacturing (CAM) written programs to run the commands to operate the machinery.

Copycats/knockoffs – A product that is built similar to the original and is in direct competition with the original product. It may also be in violation of the original product’s patent. The term for this violation is called infringement.

Copyright – A form of protection provided to the authors producing original works. Normally designated by a ©.

Consumable – A product used by consumers or businesses that have to be replaced regularly. EXAMPLES: Paper products, foods, fuels, and more.

Cost of Goods (COG) – The total cost attributed to the production of the product sold by the company including the material and labor costs.

Declaration of non-infringement – A declaration obtained from a court that one’s actions do not infringe a particular patent. An action for a declaration of non-infringement may be brought before a court as a preventive measure prior to being sued by a patent proprietor.

Deliverables – Something specified to be accomplished or met in a contract.

Demand letter – A letter sent to a company “seeking royalties and threatening legal action for patent infringement.” Also called a “threat letter”.

Die casting – A process of metal forming where molten metal is forced into a mold/form and put under pressure to fill all the cavities to produce a part or object.

Direct Response (DR) – Method of selling a product to consumers via television direct purchase.

Discrete Manufacturing – A product is accounted for by distinct serial numbers, distinct amount of units, instead of accounting for production by weight or volume as in some other processes.

Display costs – The cost of a display holding a product divided by the amount of units it will hold. EXAMPLE: If a display will hold 40 units each unit is 1/40th the cost of the display.

Distribution Center (DC) – Location used for receiving, redistribution, and sometimes temporary storage of goods. a/k/a “Branch Warehouse” or “Distribution Warehouse”

Divisional patent application – A type of patent application which contains matter from a previously-filed application. Also referred to simply as “divisional application”.

Double Patenting – The protection of one single invention by two patents usually owned by the same proprietor.

Drop Shipping – Sending product directly from the manufacturer to a retailer’s stores.

Due Diligence – Time period where the company interested in possibly licensing a product does their research into that products market share, cost, return on investment, profit margin, manufacturing process and more before deciding to make an offer on the product offered for licensing.

Durable goods – A product with a longer life span than consumables such as computers, phones, furniture, electronics and automobiles.

Elasticity of Demand – An increase in sales as a product price drops and a decrease in sales if the price rises.

Electrical Testing Lab (ETL) – They are recognized by OSHA (Occupational Safety Health Association) as a Nationally Recognized Testing Laboratory that tests products and if they pass testing, the ETL symbol/logo can be shown on the product to indicate certification. They are known for having a lower cost structure than UL certification and quicker turnaround through their process.

Embodiment – In a patent or patent application, “a specific combination of features or a specific mode of carrying out the invention, by contrast to a more abstract definition of features which can be carried out in more than one way.

Essential patent – A patent claiming an invention that is required to implement a given industry standard. 

European Article Numbering (EAN) – Standardized 13 digit bar code system for identifying almost anything. The EAN code is compatible with the UPC.

Exclusivity – An agreement between the inventor and the company stating that the company will be the only party entitled to manufacture and sell a product. It is normally written for one market or all markets for the life of the contract.

Exploded View – Drawing showing the product disassembled so that the viewer can see the relationship of all the parts to each other. These are also used to in owner manuals to help the consumer order new parts.

Field-of-use limitation – A provision in a patent license that limits the scope of what the patent owner authorizes a manufacturing licensee (that is, a licensee that manufactures a patented product or performs a patented process) to do in relation to the patent, by specifying a defined field of permissible operation or specifying fields from which the licensee is excluded.

Filing date – The filing date of a patent application is the date the patent application was filed in one or more patent offices. That date is typically the date on which the documents are deposited at the office, but may be later if there are defects in the documents. If a patent application is mailed to the USPTO by Express Mail, Post Office to Addressee, then the date the application was deposited in the post office is the filing date

First to file – A legal concept in which the right to a patent for an invention is determined by the first person to file for a patent to protect that invention.

First to invent – A legal concept in which the right to a patent for an invention is determined by the first person to make that invention.

First Right of Refusal – When an Inventor or company has a written contract stating that they will allow company X to see all ideas they design first and they will not send them out until written notice is given that company X has no interest in that product/idea. This is done prior to sending them out to other companies for review. There can be a clause in the contract that says they have first right of refusal for products in a certain market and all others are free to pursue elsewhere.

Footprint – The amount of space a product will take up on the store shelf or on the store floor as a display.

Free on Board or Freight on Board (FOB) – Which party (the seller or the buyer) pays for shipment and loading costs.

Fulfillment – The distribution process of moving products from the factory to the retailer, managing sales, and collection and distribution of funds.

Gap in the market (or Gap Analysis) – A void in the market that has potential customers and no one is serving a need/service. These gaps can be opportunities for companies or individuals to grab a customer base and expand their reach into the market place.

Garbage-in Garbage-out (GIGO) – Data/research is only as good as the information source it was gathered from in the first place. Faulty information will yield a faulty final analysis.

Hold Harmless Clause – A section in a contract/agreement that states one or both parties agree not to hold the other party liable/responsible for damages or other issues that may arise. These issues are normally stated in the agreement upon which they both agree.

Hook – The main feature/function a product has that will make a consumer see value in having the product. EXAMPLE: Saves time, saves money, does the task faster, easier than other product.

IGES – Neutral file format used to transfer files between various CAD software. Editing this type of file is normally not available because the history tree is unavailable in this format.

Indemnify – Contractual term protecting a person or company against damage or loss.

Indirect Infringement – When a patent is infringed by some party other than the one actually directly engaged in the infringement of the invention, but the original party is the cause of the infringement. For instance, when a third party supplies a product which is intended to be used, or can only be reasonably used or worked upon to make the device claimed in a patent.

Industrial Applicability – A requirement of many patent systems, requiring that an invention be capable of industrial applicability in order for a patent to be granted for that invention.

Industrial Design (ID) – A division of a product development/manufacturing company. EXAMPLE: You will sometimes hear companies say “We will have our ID department look it over. Or “It is in review with ID”

Industry Standards – Criteria within an industry that sets the rules used for day to day operations.

Injection Molding – Method similar to Blow Molding except you are squeezing the mold under high pressure. Molds are normally made from ceramic, steel or aluminum and used to make solid objects. Where Blow Molding objects are normally hollow inside.

Innovation Patent – A type of patent in some countries used for inventions that have a short commercial life or that offers a comparatively small advance over existing technology. It often has a shorter term of protection.

Intrinsic value – This is the price you see on a good or service based on its demand and availability. It does not reflect the quality of the good or service. Which means just because it costs a lot or a little doesn’t mean it is good or cheap.

Intuitive Use – If how a product functions is easily understood. Questions to answer:  Does the consumer understand the purpose of the toy, tool, product by just seeing it or is there a learning curve involved? Will it need a commercial built around it, specific packaging detailing how it is to be used, will it require an onsite video playing to get the consumers attention to the products value?

Invention Disclosure – A confidential document written by a scientist or engineer for use by a company’s patent department, or by an external patent attorney, to determine whether patent protection should be sought for the described invention.

Inventive Step – A patentability requirement according to which an invention should be sufficiently inventive, i.e. non-obvious, in order to be patented.

Investor/Angel Investor – Person(s) or group that invests money for the development and production of an idea/product. This investment is for a portion/ownership of the company/product.

Kill Fee – Amount paid for services rendered if the deal/contract is cancelled.

KISS method (Keep It Simple Stupid) – Taking a look at any project, process, idea and finding the simplest and most direct path.

Landed Cost – The total amount it costs of a landed shipment that includes freight, insurance, port fees, purchase price and any other costs that might be incurred to bring the product to the final port of destination.

Large Entity – In United States patent law, one of the available applicant’s status, along with the “small entity” status and the “micro entity” status.

Letter of intent or MOU (Memorandum of Understanding) – Either document is used to state each party’s intent and course of action to meet a common goal. These documents are normally followed by a formal contract between the two parties once everyone is in agreement.

Liability risk – The risk associated with liability for a product purchased by an individual that may cause or has caused damages to those owning the product. Most companies try to avoid these issues by proper design, testing and quality control of the product. Companies can purchase insurance to help defer the costs of lawsuits which may arise from liability issues.

License – A contract wherein a party (the “licensor”) grants to another party (the “licensee”) the authorization to use an invention which is subject to a patent, generally in exchange of a financial compensation, the royalties.

Licensing agent or Broker – A person that represents an inventor and their product to possible investors, manufacturers, and licensing companies. They get a percentage of the royalties of any licensing deal accepted as part of their services.

Licensing Agreement – Document stating the terms of payment both parties agree to for licensing the product. These include, minimums, advances, royalties, payment schedule, length of contract and assigned rights.

Licensing Evaluation/Review – When a company takes the time to consider adding a new product to their product line. During this time the company evaluates the cost to bring the product to market and if it can be done at a profit.

Like for like sales – Process where this year’s sales figures are compared against last year’s sales figures to determine which products within the product line moved better than the others.

Limitation of liability – A disclaimer within contract detailing the conditions/limits under which the disclaiming party can be held liable for damages or loss.

Line Extension (sometimes called Brand Extension) – Adding new products to an existing brand and hoping that the existing name recognition will help fuel sales and exposure of the new products.

Line Review – When a company is showing their product line to a retail chain in hopes of either establishing a line of products within that retail chain or expanding the current line they have within that chain already.

Line Sheet – A breakdown about the product being sold provided to the retailer outlining the minimum quantities needed per order, the price per unit, a photo of the product, if they come in varying colors or sizes, discounts for orders over a certain volume, what are your best sellers, payment terms, lead time on orders, shipping method, damage and return policy.

Maintenance Fee – A fee to be paid to maintain a patent or a patent application in force. Also called “annuity fee” or “renewal fee”.

Manufacture Gross Profit (MGP) – The difference between the development price and the wholesale price.

Manufacturer’s Break Strength (MBS) – Point at which the product will most likely fail. There are many variations of this break point depending on the materials used and the product itself. EXAMPLE: The break point for a rope is different than the break point for an audio speaker. Each has its own set of parameters at which it will fail.

Manufacturing Broker – Person, company or group that will find a factory to manufacture your parts or product and takes a direct fee, or percentage of each unit made as payment.

Margin – The difference of the cost price of a product/service and the selling price of that product/service.

Market share – The percentage share a company has of total sales within a given market.

Milestone – A scheduled accomplishment that is met within a project. This can be a deliverable event in a contract or a process/project. Most milestones are measureable and observable and are one portion of a series of milestones to end with the completion of the project.

Minimum Order Quantity (MOQ) – The minimum amount of product that has to be ordered to get the product and the manufacturer to make a profit.

Minimum royalty payment – The lowest amount per the contract the inventor will receive quarterly in royalties no matter how many units of the product are sold.

Minimums – Clause in the contract that states whether a product sells X-amount units or not, the inventor still gets paid X-amount per year.

Misdirected perception in packaging (also involves perceived value) – When the consumer feels they are getting more for their money by making the packaging bigger. EXAMPLE: Potato chips are sold by weight not volume, but the larger bag makes the customer think there is more inside until the bag is opened.

Multi-Brand Strategy – This is the practice of marketing a number of competing products by the same company but using different brands to compete against each other. This allows the company to gain more shelf space and keep others limited to smaller shelf space. It also makes it look like there are more players in that space than there really are which can give the impression to the consumer this is a need product. The company hopes it gets the consumer thinking “Why else would there be so many choices if it wasn’t something a lot of people are using”.

Non-Disclosure (NDA) – A document that both parties signs agreeing to keep any information discussed or shown confidential. Each party must get a signed original for their records of the document.

Non-exclusive – An agreement that the company has the right to manufacture and sell a product, but the inventor is still able to make the same agreement with other companies.

Non-obviousness – A patentability requirement according to which an invention should not be obvious to a “person having ordinary skill in the art”, in order to be patented.

Non-provisional patent application – A United States patent application that is not a provisional application. A complete non-provisional application differs from a provisional in that a non-provisional must contain at least one claim and is to be examined. A non-provisional application may also claim priority to a prior filed application, which is not permitted with provisional applications.

Novelty – A patentability requirement according to which an invention is not patentable if it was already known before the date of filing.

Oblique Drawing – A three dimensional drawing of the object that can be used by the inventor or a business to showcase the product and its features.

Office Action – In regards to patents, a formal report from a Patent Office examiner to an inventor or attorney detailing which claims in a patent application were allowed for later issue (publication) in a patent and which claims were rejected. The examiner gives reasons for allowance or rejection.

Off-Shore – Generally referencing manufacturing done outside the United States.

Operation Cost Target (OCT) – The max amount a company will spend on a particular project. This usually covers the material, labor and overhead associated with the project to make final completion.

Original Equipment by Manufacturer (OEM) – Producer of the end product. EXAMPLE: The motor for a car that was originally installed at the facility where the car was built.

Patent – An issued document by the U.S Patent Office that the patent claim(s) has been recognized by the U.S. government and that the patent holder owns that claim. It helps protect rights to that unique patent and claim.

Patent Agent – Works with the product developer/Inventor to negotiate patent agreements. Does similar work as the Patent attorney, but is normally not a lawyer.

Patent Application – Documentation submitted to the USPTO by an inventor as a request to be the sole owner of an idea or invention’s patent. The application will include elements of a patent which may also be modified during the application process approval.

Patent Attorney – Writes patent claims, researches the patent, and works to help the client obtain a patent on their idea/product.

Patent Infringement – Commercially exploiting an invention claimed in a patent without permission of the patentee.

Patent Pending – A warning that a patent application has been filed for an invention integrated in a product. The warning indicates that the applicant(s) may be entitled to some rights even if a patent has not been granted yet, or that the applicant(s) will be entitled to some rights once a patent is granted.

Patent Search – A search done by a patent lawyer or patenting firm to see if any other patent has been issued on the same or similar concept being considered. Any claims similar to the product idea will have to be addressed and rebuttal as to why the idea is unique from the patent issued.

Patent Troll – A person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question.

Patentability – A set of substantive requirements for a patent to be granted. An invention satisfying these requirements is said to be patentable.

Patentee – One to whom a patent was granted. Also called “patent holder” or “patent proprietor”.

Perceived Value – What a consumer sees as value that prompts them to buy one product over the other.

Plan-o-gram (POG) – A drawn plan that designates the placement/ location of the product on the stores shelves. These plans are normally prepared by the corporate office for the store/retail chain for its employees to follow.

Polyethylene (PE) – One of the most commonly used plastics. It can be found in plastic bags, plastic containers, bottles and more. a/k/a “Polythene”

Polypropylene (PP) – A thermoplastic used in a wide array of products such as plastic containers, plastic parts, various packaging and more. a/k/a “Polypropene”

Prior Art – Material publicly available prior to the priority date of an application which may anticipate the subject of and prevent the grant of a patent.

Product Adaptation – Making improvements/modifications to an existing product to make it stand out from the others currently on the market.

Product Development – Normally consists of a business, a division of a company or companies that work on all or a single branch of the process that has dealings with design, innovation/creation and marketing of new products.

Product Launch – Date the company plans to have the product on store shelves available to consumers.

Product Line – A collection of products produced by one company for sale for profit.

Product Placement – A method of getting product expose/publicity by having the product used in something the public sees such as advertisement, media events, celebrity endorsement, used in a movie or TV by the actors or placed in view in the background.

Product Search – A company that holds an innovation search for a sponsor/company looking for innovation in a particular area. It can also be the process of doing a search to see if a product already exists within the market place.

Proof of Concept – The ability to demonstrate via a prototype, engineering model, 3-D animation, etc. that the product actually will work as claimed.

Prototype – Functional model that can demonstrate a product’s features. It can be crude to manufacture ready in quality.

Provisional Patent Application (PPA) – An inexpensive method to file a “holding spot” with the patent office for one year on an idea. During that one year, a full patent application needs to be filed.

Public Pair (Patent Application Information Retrieval) – A great resource for finding out if maintenance fees are current or the patent has lapsed. Gives information on issued or published patent application status (http://portal.uspto.gov/pair/PublicPair).

Quick Response Bar Code (QR Barcode) – A two-dimensional bar code that is inside a square block and can be read by most Smart Phones. It is associated with a link to a website, additional information, phone number, text, video and wide variety of other information. They are very commonplace outside the U.S. and gaining popularity within the U.S.

Radio-Frequency Identification (RFID) – The wireless non-contact use of radio-frequency electromagnetic fields to transfer data.

Ready To Assemble (RTA) – Products that require assembly after purchase.

Realistic Expectations (in reference to inventing) – Having a good vision of the reality of a situation understanding what cannot and can be done. A good practical understanding of how things work and what can be expected. Knowledgeable of the industry they work within or at least willing to learn how the system works.

Repetitive Manufacturing – The process of making the same product during a manufacturing cycle. This normally happens in an assembly line type of environment.

Retail Price – Price stores charge the consumer for the product.

Retainer or Hold fee – Monetary payment made to inventor to allow company to exclusively keep a product/idea longer for further evaluation or development.

Return on investment (ROI) – This is what investors look at before putting in any money. What will the return in profits to them be versus how much they have to put in? This is where they decide what the risk factor is.

Running Royalty – A royalty paid to the inventor based on the number of units sold or manufactured instead of a onetime lump sum.

Seeding the Market – Placing small amounts of new product in strategic retail locations.

Sell sheet – A one or two page document with drawings, and benefit explanations specific to the product. This allows the reader to get a full overview of the product and its marketability.

Sell-In – The wholesale price a retailer is given from the manufacturer.

Shelf Life – For items such as produce, meats and other items that deteriorate it is the time that the item can remain effective/viable. For other goods it generally means how long they expect it to remain in inventory.

Shipping Container – A container that can be sealed and reused normally used to ship product from one country to another via ship or overland by truck or train. They are typically two sizes twenty foot in length and forty foot in length.

Small Business Association (SBA) – Organization that helps small businesses with loan programs and mentoring/counseling. They also ensure a certain percentage of federal dollars are expended to small businesses.

Small Entity Status – In United States patent law, a status allowing small businesses, independent inventors, and nonprofit organizations to file a patent application and maintain an issued patent for a reduced fee. An entity that does not qualify for small entity status is charged double the fees charged small entities.

Spoilage – The number of items broken in a shipment from the factory or fulfillment center to a retailer.

Stock Keeping Unit (SKU) – Every SKU is identified with its own unique number tied to a particular item. This helps track product and inventory. These numbers can be tied to the items EAN or UPC.

STEP – Neutral file format used to transfer files between various CAD software. Editing this type of file is normally not available because the history tree is unavailable in this format.

Subject Matter Expert (SME) – Person that has the most knowledge of a particular subject. In an inventor’s case, they should be that expert on their product.

Technical Drawing (TD) – Drawing(s) showing enough detail, dimensions, and notes sufficient for the product’s construction.

Test marketing – When a product is exposed to a select sample of the population so the company can get a snapshot of consumer’s reaction to the product. Based on these positive results, they may decide to move forward with the product or reject it before going to a full scale launch of the public. It can also be used to find and fix issues found by the test market group prior to full scale launch.

Trade Barrier – The barrier normally imposed by the government on the exchange of international services or products. This can be enacted by tariffs, customs policies, import/export policies, restrictions on licensing, quotas limiting so many of a certain product into the country, technology transfer restrictions and a host of other factors.

Trade secret – Know how, confidential information, formula, process that gives the company/individual a competitive advantage and if the know how, confidential information, formula, process is disclosed will harm the company/individual.

Trademark – A symbol, name, device or even a word that is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. The same name can be used by two different companies because they are in totally different categories of trade. Trademark is what consumers recognize as the brand/insignia of your product/goods. A Service Mark and Trademark are very similar to each other. With the exception that a Service Mark doesn’t apply to products/goods, it only applies to services

Turns – How many units of a product can fit on the shelf and how many times you will need to refill it in a year?

Unit Cost – Final cost to the manufacturer after adding in all of the associated costs to manufacture. This can include the materials, molds, shipping, taxes, tariffs, employees, etc.

Universal Product Code (UPC) – This is normally a 12 digit barcode placed on the item being sold. UPC is used for pricing at the checkout, inventory, sales, ordering stock and a host of other options. (12 in the U.S.; 13 in Europe)

Unrealistic Expectations (in reference to inventing) – Unreasonably idealistic in approach and vision of how things really work and what is believed should happen. Inventors who have unrealistic expectations could be deemed impractical and difficult to work with from a company’s perspective. Not knowledgeable of the industry they are working within and feels the industry should bend to their demands.

Upfront payment or “advance on royalties” – Payment made prior to the product going to market to the Inventor. Once the product is on the market the Inventor does not receive any royalties until the advance is equaled in royalties paying the company back for the advance.

Underwriter’s Laboratory (UL) – They are recognized by OSHA (Occupational Safety Health Association) as a Nationally Recognized Testing Laboratory that tests products and if they pass testing, the UL symbol/logo can be shown on the product to indicate certification. They are known for having very high standards in compliance and do follow-up with companies to ensure they maintain those standards in production.

Utility – In regards to patents, a patentability requirement mainly used to prevent the patenting of inoperative devices such as perpetual motion machines.

What the Market Will Bear – The top price the consumer will pay before they decide it is too costly for their wants/needs. Example music CDs could sell at $8 and still make a profit but they know consumers are willing to pay $12 and up for their favorite music group.

Wholesale Price – The price a company charges for a product normally sold to a retailer. The retailer will then increase the price they paid and sell it to the consumer. NOTE: This is normally the price used when referring to a royalty rate percentage paid per unit in a licensing agreement to an Inventor. It is not to be confused with the Retail Price that is charged to the consumer.

Wish List– Some companies will send out a list specifying the areas they want to see new ideas.

Work for Hire – Normally a fee paid for services rendered where the person providing the service has no legal ownership of the finished product. EXAMPLE:  A prototype is made by a company. They performed the work but the inventor owns the finished product. If the inventor sells a million of them, the prototype company does not get any further compensation than the fee initially paid for the original service of having the prototype made.

Working Load Limit (WLL) – This is normally the recommended safe area in which the product performs as desired/designed.


 

Have you ever thought, “wouldn’t it be cool if…”?

Learn more about Edison NationJoin Edison Nation for free

We exist to get product ideas out of your head and onto retail shelves, all at no risk to you.

1 Comment Inventing 101: Terminology Inventors Should Know

  1. Paul

    Can you include “Patent Prosecution” and maybe some more buzz words pertaining to patent applications?

Comments are closed.