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Federal Trade Commission Warning About Invention Promotion
Firms
Think you have 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 commercially market
them.
Some people try to sell their idea or
invention to a manufacturer that they believe would market it
and pay royalties. But finding a company to do that can be difficult.
As an alternative, others use the services of an invention promotion
firm. Indeed, some inventors pay thousands of dollars to firms
that promise to evaluate, develop, patent, and market inventions...yet
do little or nothing for their fees.
Unscrupulous promoters take advantage
of an inventor's enthusiasm for a new product or service. They
not only urge inventors to patent their ideas or invention,
but they also make false and exaggerated claims about the market
potential of the invention. The facts are:
- few inventions ever make it to the marketplace; and
- although a patent can provide valuable protection for a
successful invention, getting a patent doesn't necessarily increase
the chances of commercial
success.
There's great satisfaction
in developing a new product or service and in getting a patent.
But when it comes to determining market potential, inventors should
proceed with caution as they try to avoid falling for the sweet-sounding
promises of a fraudulent promotion firm.
Using Invention Promotion Firms
Advertisements for invention promotion firms are on television,
radio and the Internet, and in newspapers and magazines. These
ads target independent inventors with offers of free information
on how to patent and market their inventions. Often, however,
the only information you get is about the promoter.
If you respond to the ads — which may
urge you to call a toll-free number — you may hear back from
a salesperson who will ask for a sketch of the invention and
information about you and your idea. As an inducement, a firm
may offer to do a free preliminary review of your invention.
Some invention promotion firms may claim to know or have special
access to manufacturers who are likely to be interested in licensing
your invention. In addition, some firms may claim to represent
manufacturers on the look-out for new product ideas. Ask for
proof, such as contacts at manufacturers, before you sign a
contract with any invention promotion firm that claims special
relationships with manufacturers. If the promoter provides only
one or two names, be careful: The contacts may be "shills" —
people hired to give favorable testimonials.
After giving your invention a preliminary
review, a firm might tell you it needs to do a market evaluation
of your idea — for a fee that can be several hundred dollars.
Many questionable firms don't do any genuine research or market
evaluations. Sometimes the "research" is bogus, and the "positive"
reports are mass-produced in an effort to sell clients on additional
invention promotion and marketing services. Fraudulent invention
promotion firms don't offer an honest appraisal of the merit,
technical feasibility, or market potential of an invention.
Some invention promotion firms also may
offer a contract in which they agree to help you market and
license your invention to manufacturers. Unscrupulous promoters
may require you to pay a fee of several thousand dollars in
advance, or to agree to make credit payments instead. Reputable
licensing agents usually don't rely on large advance fees. Rather,
they depend on royalties from the successful licensing of client
inventions. How can they make money when so few inventions achieve
commercial success? They're choosy about which ideas or inventions
they pursue. If a firm is enthusiastic about the market potential
of your idea — but wants to charge you a large fee in advance
— take your business elsewhere.
Inventor Protections
If you're interested in working with
an invention promotion firm, here's information that can help
you avoid making a costly mistake.
Check References
- Ask the promoter to give you the names of many previous
purchasers so that you can pick and choose who to call for references.
Again, beware of shills.
- Fraudulent invention promotion firms may promise to register
your idea with the U.S. Patent and Trademark Office's (USPTO)
Disclosure Document Program. Although many scam artists charge
high fees to do this, you can do it for $10 by filing your document
with the USPTO directly. The disclosure is accepted as evidence
of the date of conception of the invention, but it doesn't offer
patent protection.
- Unscrupulous firms often promise that they will exhibit
your idea at trade shows, but don't actually go to these trade
shows, much less market your idea effectively. Check with previous
clients and trade show sponsors about whether their ideas were
exhibited.
- Many unscrupulous firms agree in their contracts to identify
manufacturers by coding your idea with the U.S. Bureau of Standard
Industrial Code (SIC). Lists of manufacturers that come from
classifying your idea with the SIC usually are of limited value.
Tips Before Moving Forward
Contracting for the services of an invention promotion firm
is no different from making many other major purchases. Apply
some common sense.
- Question claims and assurances that your invention will
make money. No one can guarantee your invention's success.
- Investigate the company before you make any commitment.
Call the 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. Under the American Inventors Protection Act
of 1999, invention promoters 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.
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, while 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.
- Make sure your contract contains all the terms you agreed
to — verbal and written — before you sign. Often the contract
says one thing but the salesperson says something quite different.
If possible, ask an attorney to review the agreement.
- Remember that once a dishonest company has your money, you
may never get it back. You may have to sue the company under
the American Inventors Protection Act of 1999, which permits
a customer to recover for injuries, costs, and legal fees if
a promoter has failed to make disclosures, made any false or
fraudulent statement or representation, or omitted any material
fact, to a customer. You have the burden to show that the law
has been violated.
For More Information
You may also contact Innovation Law Group as we have
had extensive experience in handling inventors claims against invention
development companies.
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