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
Some people try to sell their idea
or invention to a manufacturer that would market it and pay royalties.
But finding a company to do that can be overwhelming. As an alternative,
others 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... and then 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
few inventions ever make it to the marketplace;
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
determinig market potential, inventors should proceed with caution as they
try to avoid falling for the sweet-sounding promises of a fraudulent promotion
or 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.
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 your idea
and you. 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 before you sign a contract with any invention promotion firm
that claims special relationships with manufacturers.
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. 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 marketand
license your invention to manufacturers. Unscrupulous promoters may require
you to pay a fee of several thousand dollars in advance. 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 charges you a fee in advance—take
your business elsewhere.
Heads Up If you're interested in working
with an invention promotion firm, here's information that can help you
avoid making a costly mistake.
Many fraudulent invention promotion
firms offer inventors two services in a two-step process: one involves
a research report or market evaluation of your idea that can cost you hundreds
of dollars. The other involves patenting or marketing and licensing services,
which can cost you several thousand dollars. Early in your discussion with
a promotion firm, ask for the total cost of its services, from the "research"
about your invention through the marketing and licensing. Walk away if
the salesperson hesitates to answer.
Many fraudulent companies offer to provide
invention assistance or marketing services in exchange for advance fees
that can range from $5,000 to $10,000. Reputable licensing agents rarely
rely on large upfront fees.
Unscrupulous invention promotion firms
tell all inventors that their ideas are among the relative few that
have market potential. The truth is that most ideas don't make any money.
Many questionable invention promotion
firms claim to have a great record licensing their clients' inventions
successfully. Ask the firm to disclose its success rate, as well as the
names and telephone numbers of their recent clients. Success rates show
the number of clients who made more money from their inventions than they
paid to the firm. Check the references. In several states, disclosing the
success rate is the law.
Ask an invention promotion firm for
its rejection rate—the percentage of all ideas or inventions that the invention
promotion firm finds unacceptable. Legitimate firms generally have high
Fraudulent invention promotion firms
may promise to register your idea with the U.S. Patent and Trademark Office's
Document Program. Many scam artists charge high fees to do this. The
cost of filing a disclosure document in the PTO is $10. 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 tradeshows. Most invention promotion scam
artists don't go to these tradeshows, much less market your idea effectively.
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 Contracting for the services of
an invention promotion firm is no different from making many other major
purchases. Apply the same common sense.
claims and assurances that your invention will make money. No one can guarantee
your invention's success. Here is a list
of questions you will need answered.
Investigate the company before you make
any commitment. Call the Better Business Bureau, the consumer protection
agency, and the Attorney General in your city or state, and in the city
or state where the company is headquartered to find out if there are any
unresolved consumer complaints about the firm.
Make sure your contract contains all
the terms you agreed to—verbal and written—before you sign. If possible,
ask an attorney to review the agreement.
Remember that once a dishonest company
has your money, it's likely you'll never get it back.
For More Information The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the marketplace
and to provide information to help consumers spot, stop and avoid them.
To file a complaint, or to get free information on any of 150
consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357),
or use the online
complaint form. The FTC enters Internet, telemarketing, and other fraud-related
complaints into Consumer Sentinel, a secure, online database available
to hundreds of civil and criminal law enforcement agencies worldwide.