The Meaning of the ROTH Questions
Many of you have used our
ROTH questionnaire to get a rough idea of the value of your patent. For those who have not , ROTH is a series of 10 multiple choice questions which when scored provide a number on a 100 point scale that indicates the degree of development that an invention has reached. Generally speaking the higher the ROTH score the easier the patent is to sell and the more money it is likely to bring in on sale.
What inventors often forget is that a patent is just a document protecting the potential future business resulting from a particular invention. The more credible the business value of that invention can be established in the mind of potential buyers the more salable it is. That is why many of the ROTH questions focus on marketing. The ROTH also makes use of the "Three Circle Model" (see previous article) which shows that an invention must successfully answer a Marketing, A Technology or Operations and a Financial question to be successful.
Marketing Questions
Question 3 is on the estimated size of the market for the product resulting from the patent. The number of potential buyers times the expected price will give the TAM or total addressable market for the invention.
Question 5 is on the time to market. The longer it takes to get a product to market the more uncertain the outcome. During long time intervals market conditions can change significantly. By the time the product is ready the market may have gone away.
Question 8 is on competition. The more a product faces opposition from well positioned and powerful competitors the less its likelihood of success. The competitors may not currently offer the same product but if they can quickly move into the market developed by the new product (given a weak and narrow patent) the sooner they will cut substantially into the potential earnings for the invention.
Often an inventor will answer Question 8 to say they have no competitors because no one is something exactly like their invention, but that is wrong. The correct questions to ask is "what is the customer using NOW" to solve the problem your invention solves. Your invention needs to be substantially superior to the existing solutions to have a chance to displace them.
Everyone offering an existing solution is your competitor. So when Edison introduced his electric light his competitors were the gas companies. He couldn't correctly say that because there were no other Electric companies he had no competition.
Question 9 is on Channel-- There are few topics of such importance that are more often overlooked by inventors. Except for those inventors with a marketing background, inventors often entirely neglect the issue of how they will get their invention to the customer. The huge unexpected cost of funding inventory, package design, shipping and other issues which channel owners often demand can be a major barrier to future sales. The Internet has reduced some of these barriers but not eliminated them and it has created some of its own.
Financial Questions
Question 4 is the first financial question and it asks how much money is needed to bring your product to market. This should include not just the money to build the first prototype. You may well have to finance inventory for a rollout on a TV show like QVC to demonstrate the market potential of your invention.
Question 6 can also be considered a financial question. It has to do with the barriers to entry in your market. The range of letters goes from very low barriers with little cost to the extremely high barriers such as FDA approval of new drugs. It has been reported that the cost of getting a new drug approved by the FDA is at least 900 Million dollars. A very high barrier indeed. One of the reasons that it is so hard to develop drugs for less common diseases is this huge barrier.
The two patent questions 1 and 7 can also be consider financial questions. Question 1 has to do with the amount of time remaining on the patent. The less time the lower the value and questions 7 has to do with the scope of the patent protection. Ranging from very little protection to coverage in the US and foreign countries. The more patent protection you seek the more you will pay in patent acquisitions and maintenance fees. But the broader the patent protection you own the larger share of the market you can claim if, and its a big if, all the marketing "ducks" are in a row.
The final question (10) deals with the kind of organization you have to bring your product to market. Are you operating under your own name out of proverbial garage or do you have the resources of a large corporation behind you.
It should be plain by after reading this article that the questions in this simple multiple choice test go a long way towards helping you value your invention. Using it shouldn't be a one time activity, because as your invention develops hopefully its score will rise and perhaps your idea will move from the recesses of your brain into success in the marketplace.
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