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Spotting Sweet-Sounding Promises of
Fraudulent Invention Promotion Firms
Think you've got a great idea for
a new product or service? You're not alone. Every year,
tens of thousands of people try to develop their ideas
and market them commercially.
Some people try to sell their idea
or invention to a manufacturer that would market it
and pay them royalties. But finding a company to do
that can be overwhelming. As an alternative, other people
use the services of an invention or patent promotion
firm. Indeed, many inventors pay thousands of dollars
to firms that promise to evaluate, develop, patent,
and market inventions. Unfortunately, many of these
firms do little or nothing for their fee.
The Federal Trade Commission (FTC)
has found that many invention promotion firms claim
- falsely - that they can turn almost any idea into
cash. But, the agency says, smart inventors can learn
to spot the sweet-sounding promises of a fraudulent
promotion firm. Here's how to follow up if you hear
the following lines:
"We think your idea
has great market potential." Few
ideas - however good - become commercially successful.
If a company fails to disclose that investing in your
idea is a high-risk venture, and that most ideas never
make any money, beware.
"Our company has
licensed a lot of invention ideas successfully."
If a company tells you it has a good track record, ask
for a list of its successful clients. Confirm that these
clients have had commercial success. If the company
refuses to give you a list of their successful clients,
it probably means they don't have any.
"You need to hurry
and patent your idea before someone else does."
Be wary of high pressure sales tactics. Although some
patents are valuable, simply patenting your idea does
NOT mean you will ever make any money from it.
"Congratulations!
We've done a patent search on your idea, and we have
some great news. There's nothing like it out there."
Many invention promotion firms claim to perform patent
searches on ideas. Patent searches by fraudulent invention
promotion firms usually are incomplete, conducted in
the wrong category, or unaccompanied by a legal opinion
on the results of the search from a patent attorney.
Because unscrupulous firms promote virtually any idea
or invention without regard to its patentability, they
may market an idea for which someone already has a valid,
unexpired patent. In that case, you may be the subject
of a patent infringement lawsuit - even if the promotional
efforts on your invention are successful.
"Our research department,
engineers, and patent attorneys have evaluated your
idea. We definitely want to move forward."
This is a standard sales pitch. Many questionable firms
do not perform any evaluation at all. In fact, many
don't have the "professional" staff they claim.
"Our company has
evaluated your idea, and now wants to prepare a more
in-depth research report. It'll be several hundred dollars."
If the company's initial evaluation is "positive,"
ask why the company isn't willing to cover the cost
of researching your idea further.
"Our company makes
most of its money from the royalties it gets from licensing
its clients' ideas. Of course, we need some money from
you before we get started." If a
firm tells you this, but asks you to pay a large fee
- up-front or to agree to make credit payments - ask
why they're not willing to help you on a contingency
basis. Unscrupulous firms make almost all their money
from advance fees.
Inventor Protections
The American Inventors Protection
Act of 1999 gives you certain rights when dealing with
invention promoters. Before an invention promoter can
enter into a contract with you, it must disclose the
following information about its business practices during
the past five years:
- how many inventions it has evaluated,
- how many of those inventions got positive or negative
evaluations,
- its total number of customers,
- how many of those customers received a net profit
from the promoter's services, and
- how many of those customers have licensed their
inventions due to the promoter's services.
This information can help you determine
how selective the promoter has been in deciding which
inventions it promotes and how successful the promoter
has been.
Invention promoters also must give you the names and
addresses of all invention promotion companies they
have been affiliated with over the past 10 years. Use
this information to determine whether the company you're
considering doing business with has been subject to
complaints or legal action. Call the U.S. Patent and
Trademark Office (USPTO) at 1-866-767-3848, and the
Better Business Bureau, the consumer protection agency,
and the Attorney General in your state or city, and
in the state or city where the company is headquartered.
If a promoter causes you financial
injury by failing to make the required disclosures,
by making any false or fraudulent statements or representations,
or by omitting any fact, you have the right to sue the
promoter and recover the amount of your injury plus
costs and attorneys' fees.
In addition, although the USPTO has
no civil authority to bring law enforcement actions
against invention promoters, it will accept your complaint
and post it online if you complete the form, Complaint
Regarding Invention Promoter, at www.uspto.gov/web/forms/2048.pdf.
The USPTO also will forward your complaint to the promoter,
and publish its response online. To read complaints
and responses, visit Inventor Resources
at www.uspto.gov/web/offices/com/iip/index.htm.
To order a copy of the American Inventors
Protection Act, call the USPTO toll-free at 1-800-PTO-9199,
or visit www.uspto.gov/web/offices/com/speeches/s1948gb1.pdf.
Produced in cooperation
with the U.S. Patent and Trademark Office
October 2003
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