INVENTION SCAM COMPANIES AND HOW THEY OPERATE

Many of the invention scam companies advertise on TV, radio and/or especially on the Internet.
These companies promise to protect your invention, present the details of your product to manufacturers, distributors and retailers. They even promote that they represent you at tradeshows and assist in negotiate licenses agreements. They provide these services for an upfront fee.
These companies hire commissioned salespeople whose job is to contact inventors that responded to the advertising methods described above. The truth is that these salespeople care very little about your invention and will say practically anything to get the inventor excited and comfortable with the salesman. The salesmen only want to make a commission. These companies do very little in return for the money you just spent.
The following is the typical process followed by these illegitimate firms.
Step 1 – “The Hook”: The Company runs ads on television or radio offering free information for inventors on how to patent and market their inventions along with a TOLL-FREE number for ordering the material. The material that arrives is typically only promotional brochures about the company. In most cases it includes an invention submission document requesting the inventor to submit their invention in confidence. DO NOT SEND BACK THAT DOCUMENT!
Step 2 – “The Initial Pitch”: The salesperson makes a follow-up call to the inventor and explains the invention process (according to that company’s systems). They try to establish creditability with the inventor and ultimately offer for a fee, to obtain a registered patent attorney or patent agent’s opinion letter and a marketing analysis report for the invention.
This so-called marketing analysis is a complete waste of money. Over 90% of the information included in the report is generic that every inventor receives. Very little information is specific to the invention. They try to bolster the value of the report by including some kind of artwork. The artwork can be a 3D-drawing or even a first draft patent art piece. Regardless of the art medium, the only reason it’s included is to get the inventor excited when they see their invention come to life. It is nothing more than a ploy by the invention company to keep getting more money from you.
The salesperson typically states that if the opinion and analysis are favorable, the company will offer their services for patenting and/or marketing. The salesman tells the inventor that they will send an agreement that will explain and verify everything that the salesman told them. In most cases, the agreement is effectively a contract which describes in very oblique language the terms and conditions of the services which may vary significantly from the terms expressed verbally. Please note that it is always recommended that you consult a lawyer before signing any contract, particularly when you are uncertain as to what it is that you are signing.
In addition, the salesperson may suggest that in order to protect the invention that the inventor should also mail a set of the first set of documents to themselves. It is important to note that this does not protect your invention and is of little practical value.
Step 3 – “The Set-Up Pitch”: The inventor is told that the invention has passed a rigorous screening process and has been selected by the company for development. The company may even provide a “realistic” figure for cash advances and royalties that can be earned by the inventor. At this point, the company asks for an up-front fee for their services as well as a royalty of all further earnings from the invention. In some instances, the company also offers to reduce the royalty in exchange for more up-front money. However, the company does not notify the inventor of any negative opinion letters and the “market assessment” is typically not specific for the invention itself. That is, a market report for a new toothbrush would state how many toothbrushes were sold in North America last year and not identify the likely number of the invention which could be sold. Finally, the royalty rate quoted by the company is likely to sound very reasonable, because the company does not expect to make any money off of the up front fees – all of their profit comes from the royalties.
Nothing is farther from the truth. Rarely if ever does the inventor earn any royalties and obviously neither does the invention company. The company makes 100% of their profits from the up front fees.
Step 4 – “Marketing Services”: The invention company promises to present your invention to manufacturers, distributors and retailers. They even promote that they will represent you at invention tradeshows and assist in negotiate licenses agreements. However, their promotional package typically includes all of the inventions currently being promoted by the invention company and is not directed to any specific field or industry. These packages are sent arbitrarily to companies. Most if not all of the recipients generally discarded these packages because they know they are bogus. Think of this, does a busy manufacturer really have the time to browse through this package? The truth is that most manufacturers dislike these invention companies. They know who the legitimate companies are and will usually only do business with them.
The trade shows at which the invention is promoted (if it is promoted at all) is often a trade show for invention marketers. These trade shows do very little for the inventor but it sounds very credible. The invention company cannot possibly present all of the inventions they have because it would much too time consuming and it never happens that way.
The company may also offer to include your invention in a database and to relay all offers to you and help you in negotiating licenses. As you will appreciate, these services are of little benefit if no one sees the database and no offers are received.
Finally, the company may promise to file a “patent document” to protect your invention. This “patent document” may be: a patent filed at the United States Patent and Trademark Office. However, 90% of the patents offered by the invention company are Design patents. A Design patent only protects the way an article looks and NOT how it works. Therefore, if you have an invention with moving parts and the like and you only obtain a Design patent you actually have very little protection. It is not suitable for most inventions. On some occasions the invention company will provide a Utility patent with claims so narrow, that no effective protection is obtained. Even if the company employs a qualified patent agent or attorney to prepare the documents, it is important to note that the attorney is working for the company and not the inventor.
In closing; there are a number of warning signs that can indicate that the invention promotion company you are dealing with is not legitimate. These include the following:
· Company offers to provide invention assistance or promotion in exchange for large advance fees. If a company says that they make their money off licensing fees, why are they asking for up-front money? Reputable licensing agents rarely rely on up-front fees.
· Company claims to have great records licensing their clients’ inventions. Ask the firm how many clients have made more money than they spent. Ask for names of some representative clients.
· Company promises or assures you that your invention will make money. No one can guarantee an invention’s success.
Remember, once a dishonest company has your money, you are unlikely to ever get it back.

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