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Invention Promotion Scams

NOTICE: TO ALL CONCERNED Certain text files and messages contained on this site deal with activities and devices which would be in violation of various Federal, State, and local laws if actually carried out or constructed. The webmasters of this site do not advocate the breaking of any law. Our text files and message bases are for informational purposes only. We recommend that you contact your local law enforcement officials before undertaking any project based upon any information obtained from this or any other web site. We do not guarantee that any of the information contained on this system is correct, workable, or factual. We are not responsible for, nor do we assume any liability for, damages resulting from the use of any information on this site.

Facts for Consumers from the Federal Trade Commission

Invention Promotion Firms -- January 1994

You may have a great idea for a new product or service, but a
great idea is not enough. You need to know how to develop and
market it commercially. You could try to sell your idea or
invention to a manufacturer who would market it and pay you
royalties. But finding such a company could be an overwhelming
task. You also could consider using the services of an invention
promotion firm.

Some invention promotion firms may help you get your idea or
invention into the marketplace. But be aware, some inventors have
paid thousands of dollars to firms that promised to evaluate,
develop, patent, and market inventions and got nothing for their

So be cautious. Your enthusiasm for your idea may make you
vulnerable to promoters who make false or exaggerated claims
about the market potential of your invention.

This brochure tells you how to spot some common signs of trouble,
how to protect yourself, and what to do if you become a victim.
It also lists government agencies and private organizations that
offer additional information and assistance.

How to Identify Legitimate Firms

Often, it is difficult to distinguish between a fraudulent
invention promotion firm and a legitimate one. This may be
because unscrupulous and honest firms often use many similar
advertising and sales techniques, market evaluations, and
contract strategies. However, there are some comparisons made in
the next three sections that may help you identify legitimate

Advertising and Sales Techniques

Some invention promotion firms advertise through television and
radio, and classified ads in newspapers and magazines. They
target independent inventors, frequently offering free
information to help them patent and market inventions. They also
may advertise a toll-free "800" telephone number that inventors
can call for written information. However, the information may
consist only of brochures about the promoter.

If you respond to the ads, you may hear from a salesperson who
will ask for information about yourself, your idea, and a sketch
of the invention. As an inducement, the firm may offer to do a
free preliminary review of your invention.

Also, some invention promotion firms may claim to know or have
special access to manufacturers who are likely to be interested
in licensing your invention. Further, some promotion firms may
claim to have been retained by manufacturers who are looking for
new product ideas. These kinds of claims often can be false or
exaggerated. Therefore, before signing a contract with an
invention promotion firm who claims special relationships with
appropriate manufacturers, ask for some proof.

A Market Evaluation

After giving your invention a preliminary review, a firm might
tell you it needs to do a market evaluation on your idea, which
may cost several hundred dollars. Such reports from questionable
firms often make vague and general statements and provide no hard
evidence that there is a consumer market for your invention.
Reputable company reports, on the other hand, deal with
specifics. Before you pay for a report on your idea, ask what
specific information you will receive.

A Marketing and Licensing Contract

Some invention promotion firms also may offer you a contract
where they agree to act as your exclusive marketing and licensing
agent. For this, a questionable firm may require you to pay an
upfront fee of as much as $10,000 and to commit a percentage of
the royalties the invention may earn. On the otherhand, reputable
licensing agents typically do not rely principally on large
upfront fees. They normally rely on royalties from the successful
licensing of client inventions and are very selective about which
ideas and inventions they pursue. A request for an upfront fee
frequently is another distinguishing characteristic of a
questionable invention promotion company.

How to Protect Yourself

If you are interested in working with an invention promotion
firm, consider taking the following precautions before you sign a
contract and pay significant amounts of money.

l Early in your discussions with a promotion firm, ask what
the total cost of its services will be. Consider it a warning if
the salesperson hesitates to answer.

l Be careful of an invention promotion firm that offers to
review or evaluate your invention but refuses to disclose details
concerning its criteria, system of review, and qualifications of
company evaluators. Without this information, you cannot assess
the competence of the firm or make meaningful comparisons with
other firms. Reputable firms should provide you with an objective
evaluation of the merit, technical feasibility, and commercial
viability of your invention.

l Require the firm to check on existing invention patents.
Because unscrupulous firms are willing to promote virtually any
idea or invention with no regard to its patentability, they may
unwittingly promote an idea for which someone already has a
valid, unexpired patent. This could mean that even if the
promotional efforts on your invention are successful, you may
find yourself the subject of a patent infringement lawsuit.

If no valid, unexpired patent exists for your idea, seek
advice from a patent professional before authorizing the public
disclosure of your idea.

l Be wary of an invention promotion firm that will not
disclose its success and rejection rates. Success rates show the
number of clients who made more money from their invention than
they paid to the firm. Rejection rates reflect the percentage of
all ideas or inventions that were found unacceptable by the
invention promotion company. Check with your state and local
consumer protection officials to learn if invention promotion
firms are required to disclose their success and rejection rates
in your locality.

In reality, few inventions make it to the marketplace and
still fewer become commercial successes. According to experts
used in FTC cases, an invention promotion firm that does not
reject most of the inventions it reviews may be unduly
optimistic, if not dishonest, in its evaluations.

l Be wary of a firm that claims to have special access to
manufacturers looking for new products, but refuses to document
such claims. Legitimate invention promotion firms substantiate
their claims, which you can check.

l Be skeptical of claims and assurances that your invention
will make money. No one can guarantee your invention's success.

l Avoid being taken in solely on a firm's promotional
brochures and affiliations with impressive-sounding

l Beware of high-pressure sales tactics.

l Investigate the company before making any commitments. Call
your Better Business Bureau, local consumer protection agency,
and Attorney General in your state and the state in which the
company is located to learn if they know of any unresolved
consumer complaints about the firm.

l Make sure your contract contains all agreed upon terms,
written and verbal, before you sign. If possible, have the
agreement reviewed by an attorney.

l If you do not get satisfactory answers to all of your
questions with an invention promotion firm, consider whether you
want to sign a contract. Once a dishonest company has your money,
it is unlikely you will ever get it back.

For More Information

A number of government agencies and private organizations offer
publications and assistance to independent inventors. You can
call the U.S. Patent and Trademark Office at (703) 557-4636 and
the U.S. Small Business Administration (SBA) at 1-(800)-827-5722
for publications about inventions.

You also may want to call your SBA district office to learn about
services available through the Small Business Development Centers

Inventor's clubs, associations, and innovation centers also can
be valuable sources of information and services. For their
locations contact the following organizations:

United Inventors Association of the United States of America
P.O. Box 50305
St. Louis, Missouri 63105
(stamped, self-addressed envelope required)

National Congress of Inventor Organizations (NCIO)
727 North 600 West
Logan, Utah 84321
(801) 753-0888

Minnesota Inventors Congress
P.O. Box 71
Redwood Falls, Minnesota 56283-0071
(507) 637-2344

What to Do If You Are a Victim

If you believe you are a victim of a fraudulent invention
promotion, first contact the firm and try to get your money back.

If you are unsuccessful, report your problem to your Better
Business Bureau, local consumer protection agency, and the
Attorney General in your state and in the state where the company
is located. Your information may help an ongoing investigation or
demonstrate the need for one.

You also may file a complaint with the FTC by writing:
Correspondence Branch, Federal Trade Commission, Washington, D.C.
20580. The FTC generally does not intervene in individual
disputes. However, the information you provide may indicate a
pattern of possible law violations.

(Downloaded from CompuServe's Consumer Forum (go SAVE) )

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