Spotting Sweet-Sounding Promises of Fraudulent Invention Promotion Firms
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:
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.
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.
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
"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.
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
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