INVENTOR HOPES 4TH TRY'S THE CHARM : ORDERS FROM STORES, CAMP REVIVE HOPES.

Byline: Fred Leeson The Oregonian

Richard Gabriel describes himself sometimes as president of the world's oldest start-up.

The Portland architect founded Ramagon Toys Inc. in 1979 after he invented and patented a construction toy that is a space-age cross between Legos and Erector Sets.

Gabriel figured the toy would blast off and soar in the national toy market. Eighteen years later, he still thinks so.

``My enthusiasm has never dampened,'' he said recently. ``But I've had my doubts about when.''

Gabriel is in the midst of his fourth attempt - and using his third strategy - to launch Ramagon. This time he's tackling the task himself with an ample boost from his son, Randall, 30, who lives in Hong Kong.

Gabriel considered the do-it-yourself approach when he first formed Ramagon, but doubted he had enough business experience or knowledge of the toy industry.

Now perhaps he has. He persuaded Toys `R' Us to place Ramagon in 26 stores in five Pacific Northwest states during the recent Christmas season.

Though he isn't sure of the Christmas sales yet, Gabriel hopes the nation's largest toy store chain will want to place Ramagon sets in all 600 of its stores. He also has negotiated a deal with U.S. Space Camp, a chain of residential camps where children learn about space and science.

The camps use Ramagon sets in their teaching and make the toys available for children during free time. The camps also sell the sets in their gift shops.

``The kids really like it,'' said Lynn Brown, a camp supervisor in Mountain View, Calif. ``It's really a simple toy, but they can do so much with it.''

Gabriel felt sufficiently enthusiastic about Ramagon's prospects to send out a letter to Ramagon shareholders six weeks ago. It was the first time in years that he had communicated with hundreds of investors who paid 50 cents a share for 1 million Ramagon shares in a small public offering in 1983.

Gabriel didn't let his optimism carry him into predictions of profitability. ``We are still a fragile company economically,'' he said. ``For many years, we didn't have the money to send out a mailing.''

Gabriel invented the construction toy in 1976. He faced the choice of taking on manufacturing, distribution and marketing himself or selling the right to use his patent through a licensing agreement.

``Coming out of the chute, licensing is a good way to go unless you've got good business acumen and the ability to get financing,'' Gabriel said.

Another reason many inventors turn to licensing is because they want to continue inventing rather than run a business. Most licensing deals call for royalties to be paid to the patent holder based on sales made by the licensee.

In 1979, Ramagon signed a deal with Highland Industries, a California company that produced plastic mementos and gifts under National Football League licensing. Gabriel imagined himself sitting on the beach in Bermuda while royalty checks poured in.

That didn't happen. Highland didn't know the toy industry, and the business ultimately went broke. When Highland failed to meet its contractual quota for a second year, the deal came to a halt.

Gabriel didn't walk away empty-handed, however. Thanks to a carefully written contract, Ramagon retained the plastic-injection molds used to make the toy parts. Gabriel said the company never would have survived without help from his lawyer, Charles McClung, in patents, trademarks and licensing agreements.

In 1984, Gabriel signed on with a new licensee, Bachmann Industries of Philadelphia, a respected producer of toy trains.

``We thought we had it right that time,'' Gabriel said. But construction toys proved to be far removed from toy trains. The deal ended after two years with Ramagon Toys Inc. still bleeding red ink.

``Toys are real cutthroat,'' said Mike Zaha, a Portland inventor and product developer, said. ``It's a tough market to get into.''

Zaha said knowing in advance which licensing agreements will work is nearly impossible. He contends the two most critical ingredients are enthusiasm by the licensee and the licensee's distribution channels.

``If a licensee doesn't have genuine enthusiasm for your product, they're not going to take the time and effort to make it successful,'' he said. ``The product has to be dynamite, and there's got to be a good strategic fit.''

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Photo: Inventor Richard Gabriel is making a fourth attempt to get Ramagon Toys Inc. launched.

Associated Press