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Protecting Yourself From Invention-Promotion Scams
Posted on Saturday, July 28, 2007 @ 23:00:36 UTC by vlad
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It's a common story, yet it breaks my heart every
time someone tells me their version: An aspiring inventor sends his or
her product to an invention promotion company, pays a large fee (often
their entire savings) and gets nothing in return. Not only have they
been embarrassed, but they've also been depleted of the money they
could've used to further develop their product.
Often these "firms" will charge thousands of dollars, promising to
bring an inventor's product to market within a specified time period.
They prey on the inventor's excitement and passion. These firms
advertise on TV, radio, the Internet, newspapers and in magazine
classified sections. Their guarantee and promise of success is tempting.
While not every
invention-promotion-and-marketing company is fraudulent, unfortunately
many good ones go underground to avoid being associated with the
unethical and dishonest firms. How do they work? Be aware of a company
that promises too much using these tactics:
These firms have become so damaging and pervasive that the Federal
Trade Commission issued a statement warning against them: "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." For more information call (877) FTC-HELP.
So how can you separate the good from the fraudulent when it comes
to getting help promoting your idea? Here are eight important tips to
keep in mind when considering an invention promotion company:
1. If it sounds too good to be true, it probably is.
Anyone who gives you extreme assurances on getting your product
licensed or is a little too enthusiastic about your product is probably
giving you the hard sell. Licensing is difficult and never a certainty,
no matter how brilliant your idea. They know you believe in your idea
and they capitalize on your own initial bias. 2. Treat this relationship like you would any other serious business relationship.
Insist on a written proposal. Read and ask questions about the fine
print and check the company's credentials. Be sure you understand what
they are committing to -- and not committing to -- as well as what is
expected of you.
3. Get references. If a company has a good track record
and reputation, ask to speak to at least two other clients with whom
they've worked. Then, actually speak to those clients. Note that if a
company is in the business of bilking inventors, they can easily
concoct fake references. Therefore, cross-check the validity of these
clients. Ask them questions that you can verify, such as: What is your
patent number? When was it issued? What manufacturer licensed your
product? Where is your product sold?
4. Be suspicious of pay-upfront deals.
For a legitimate operation, a modest upfront payment is reasonable if
it's clear how the money will be used and the prices seem appropriate.
An example of this would be $100 to $500 for the creation and
duplication of a marketing packet, with which you should be provided
copies. A legitimate company is compensated on its performance and
results, usually in the form of a percentage of future revenues.
Even if they don't charge a lot out of the gate, more upfront
fees may be coming. These companies have been known to charge a small
fee upfront for a "feasibility study" and then come back with, "Great
news! Your product can make it big!" This is the hook. They'll then ask
for another payment, which typically ranges from $3,000 to $15,000, and
which they claim will go toward costs like market research, a
preliminary patent search or identifying licensing partners. I have
heard from a number of inventors that after paying this money, they
never hear from the product submission company again.
5. Use the Web to check for complaints about the company. Search "invention" on the U.S. Federal Trade Commission Web site and the U.S. Patent and Trademark site. These sites also have instructions on how to file a complaint.
6. Refer to the American Inventors Protection Act of 1999.
The law requires a firm to present certain provisions to you prior to
contracting. These provisions include the number of inventions the firm
has evaluated over the prior five years, the number of customers the
firm has contracted with, the number of customers who have made money
and the names and phone numbers of other invention companies with whom
the principals of the firm have been previously affiliated. 7. Be sure your agreement contains clear timelines.
These timelines should state when the company should achieve certain
benchmarks and when it will communicate progress to you. It should also
contain a clause that permits you to terminate the agreement if you are
dissatisfied, without releasing any of the rights to your invention.
8. Some of these companies have offered "guaranteed patents."
Understand that anybody can submit and receive a patent if the claim(s)
are narrow enough. Few, if any, serious patent attorneys I know would
offer a "guarantee" of issuance of a patent if the claims are being
written as broadly as possible. Therefore, before accepting any
"guaranteed patent" you may want an outside USPTO-registered patent
attorney to review the documentation.
The bottom line? Be skeptical. Keep your eyes and ears open and
your wallet closed until you've completed due diligence on the company
with which you plan to do business.
Source: Protecting Yourself Via: http://www.keelynet.com/#whatsnew
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Re: Protecting Yourself From Invention-Promotion Scams (Score: 1)
by polarbear on Monday, July 30, 2007 @ 12:12:00 UTC
(User Info | Send a Message) http://polarbear.gq.nu | | Yeah, Davison's been hounding me, but the courts[ in PA] made them reveal that they've only had 8 successes in 322,000+ submissions... sounds like they get your idea all tied up legally so you can never develop it, and don't let go... |
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