by Tom Hammersmith (updated 7/16/17)
If You Don’t Listen Carefully To This Advice – You’ll be reading this warning two years from now thinking, “Damn – I should have listened to him – I’ve lost all my money.”
In the 1990’s, invention scams sprouted-up all over the country. Finally, a crackdown by the Federal Trade Commission (FTC) put owners in jail and others were sued for millions of dollars. However, a few managed to survive. Ironically, the basic menu of bogus services hardly changed. Many companies simply changed their names and complied with new “invention marketing laws” that shielded them from federal lawsuits. However, the same old verbal misrepresentations, lies, and and inducements are continuing to this day.
These new “invention marketing laws” warn the public that only gullible fools will pay fees to an invention developer, but if you want to waste your money – then, go right ahead.
Today’s Invention Scam
So, if you’re an inventor (or someone with a new idea) – you may have seen a TV commercial (or an internet ad) for an “invention developer” who claims that you could make money by marketing your idea. Even George Foreman has been recruited as a pitchman. Today’s invention promoters send you a free “inventors package” including lots of hype and a “Non-Disclosure Form & Confidentiality Agreement” that you should return to them for a free review.
Sometimes, you’ll receive a DVD that shows the appearance of credibility and success, but don’t believe a word of it. Their testimonials aren’t real, their reputation on “business bureau” websites are bought and paid for, and their examples of “successful inventions” were not marketed through their own fee-based programs.
Now – it all starts: The Real Fraud Begins
After you send in your invention, a slick salesman will call you (or send an email) to tell you that your idea has been “accepted” by their firm. Additionally, they’ll tell you that: 1) your idea has tremendous potential, 2) their research dept. is excited about it, 3) they’ve never seen anything like it, 4) there’s nothing else on the market that’s similar, and 5) you could make a lot of money.
Next, they’ll send you a contract for $300 – $1500 for “a research report,” and they’ll tell you that if the report comes back “negative” – you’ll receive a full refund (beware: none of these reports are negative or critical). In fact, each report is filled with standard language (boilerplate) that describe the various stages for developing any invention. You might also receive “a preliminary” patent search (which is completely unreliable) along with a drawing and some other useless information.
At the conclusion of the report, it will state that your idea is sound, practical, or useful. So, now the company wants to submit your idea to the manufacturing “industry” and bilk more money from you. Eight weeks later, your worthless research report will arrive in the mail and you’ll be anxious to find out – what’s next?
Soon your consultant will call you to review your research report with you. Then, within (10) days, you’ll receive a Phase 2 “Invention Submission Agreement” asking for $2,000 – $20,000 that will provide completely useless services for developing and promoting your idea. They’ll probably state in their contract that you’ll receive up to 90% of “future royalties,” but this is just a ploy to rope you in. Since their method of promoting inventions is a total con-job – they don’t care about royalties because it’s always the same amount: ZERO! But, watch out for the greed factor – you’ll be very tempted to sign-up for 90% of “so-called royalties” because your salesman (invention consultant) is insinuating that you’re going to make millions.
The Hard Sell – The Big $$$
Your consultant will continue to deceive you by stating that: 1) the company will use every form of promotion to license or sell your invention, 2) you could receive a “cash-buyout” of millions of dollars, 3) you might receive a 5% royalty in addition to a huge upfront payment, and 3) they will pay all the costs associated with securing a royalty agreement (beware: they rarely – if ever – receive any legitimate interest from reputable manufacturers, corporations, venture capitalists, or organizations).
Now, this is just a small dose of the lies, misrepresentations, and outright deceptions that you will encounter with every single invention marketing company that asks you for money. So, how do they stay in business? Well, many of these firms have been closed down by the Federal Trade Commission. However, new ones keep popping-up who are more clever than their predecessors. For example, in their contracts, they include mandatory “Warnings to Inventors” that disclose the high-risk nature of inventing and the fact that most inventors lose their money. Federal and State laws require all invention companies to include a long list of warnings that describe the perils of trying to launch a new product.
The problem is that the salesman (invention consultants) are unbelievably skillful at dismissing these warnings and know exactly how to keep you hyped up. When you speak to a salesman on the phone (or in their office) they are well-rehearsed at making you believe that your invention has a very good chance of success. Don’t believe a word of it – they’re pumping you up to get your money. The salesman will say anything to make you believe that your invention could become a real product.
The salesmen will stop at nothing. They’ll call you day and night to tell you how excited they are about your invention. They’ll also tell you that if you don’t market this invention – someone else will – and they’ll make all the money. The truth is: your salesman will say anything to motivate you to pay the fee because they receive a huge commission on your payments. In fact everyday, your salesman is telling other inventors the same exact lies that they’re telling you. Somewhere along the line, these salesman have lost their conscience and will say whatever is necessary to get your money.
You may find it hard to believe that these “nice consultants” are devious liars because they all sound so sincere on the phone or at their office. They seem to be your best buddy, but in reality they’re your worst nightmare; they know that you’ll never make a dime, and they couldn’t care less. For these consultants – it’s all about the commission. Remember: most fee-based invention marketing companies are scams.
A Hint for Law Enforcement Officials
Now, pay close attention because there is a dirty little secret that even the Federal Trade Commission overlooked while conducting their many investigations. The fact is that 70% of the “new ideas” (including yours) have already been submitted to these invention promoters in the past. Meanwhile, they’ve taken your $15,000 (for phase 1 & 2) and have been lying to you all along. In most cases, the invention promoter simply inserts your name into a previously written report, press release and other materials that were prepared for another client’s same exact idea!
So, the truth is, your “new idea” is probably not “new” to either the invention promoter or to the US Patent office. This is the heart of the scam. They’ll tell you that your idea is “not on the market” and you’ve received “the green light to proceed,” but this is just a slick trick to get your $$$. It’s a time-tested formula to build up your hopes and dreams – and then, let you down slowly over the next two years. Meanwhile, they’ve cashed-in.
Please go to this safe link to view the Federal Trade Commission’s latest lawsuit in March 2017 against an invention marketing company. All my warnings are substantiated: https://www.ftc.gov/news-events/press-releases/2017/03/ftc-halts-invention-promotion-scheme-charged-bilking-millions
Please read the “About” page which explains my first-hand experience.
Questions to Ask Your “Invention Consultant”:
To verify the allegations made here, simply ask your salesman to answer each question below in writing. There is a 100% guarantee that you’ll never receive any specific, truthful answers:
1) How many of your salesman’s clients have made money from marketing their inventions? (They’ll tell you that this information is confidential). What are the names of any successful ideas that were marketed by the invention company and where can you buy one? or find one on the internet? Did any of the company’s “successful” inventions go through the same exact process that you’re paying for? or did the invention company invest in these inventions or make special arrangements to get a few products on the market for their own credibility?
2) What are the total number of inventors that have made money with the company vs. the total number of clients that have paid a fee?
3) What are the names of a few successful clients who have made money? Where can they be found on the internet?
4) How can they promote your invention without an in-depth patent search and a legal opinion of patentability? What if the same exact idea has already been patented? What if the same exact idea is already in a “patent-pending” status?
5) How many prototypes has the company built in order to improve and promote the inventions they represent?
6) If the invention company promotes inventions at trade shows – how are your patent rights protected?
7) Who is the person at the company that has negotiated either license or sale agreements for an invention? What are the qualifications of this individual? Please provide the name of a patent attorney (hired by the invention company) who has filed a real utility patent application (non-provisional)? Is this patent attorney registered to represent you at the US Patent Office?
8) Who is the owner of the invention company? What are his/her qualifications in the field of invention development? Does the owner have any experience in selling an invention or acquiring a patent? Do any of the “invention consultants” (salesmen) have any experience promoting an invention – if so, what happened?
9) Have there been any lawsuits against the invention company for misrepresentations, fraud or wrongdoing? If so, how much money did the invention company pay to settle these claims? and to whom were the payments made?
10) Has the invention company changed its name or started a new company over the last 20 years? What were the names of these former companies and were they investigated or prosecuted by State or Federal agencies?
After a while, you’ll realize that you’ll never receive any specific answers in writing to the questions above. Hopefully, at that point, you’ll forget about working with any fee-based invention-scam.
Question: How can I get my money back if I’ve already paid an invention marketing company?
Call your invention company and ask to speak to someone about receiving a refund. They will connect you to a well-trained employee who will try every trick in the book to keep you happy. This individual will know exactly what to say (they have these conversations everyday with disgruntled clients), and they’ll try to convince you that you’re in good hands and tell you that everything possible is being done to promote your invention. This person will sound so sincere about wanting to help you, that you’ll find it hard to believe that the company is totally ripping you off.
Be determined and persevere: Next, threaten to send a written complaint to: The Federal Trade Commission, The Attorney General (AG) in your State, the AG in the State where the company is located, your (2) Senators offices, Yelp, RipoffReports.com, Google Reviews and The Better Business Bureau. Then, you’ll need to write a complaint letter detailing the salesman’s misrepresentations and the company’s fraudulent services. You should send this letter (or an email) to the person you’ve been speaking with at the invention company. Tell them that if you don’t receive a full refund within (10) days – the complaint letter will be sent to all the organizations listed above. Also, advise them that you’re considering contacting a lawyer who is very familiar with the invention business.
At this point, the person you’ve been speaking to at the invention company will be concerned. She’ll tell you that she doesn’t have the authority to offer you a refund and will need to call you back. Then, a few days later you’ll receive a phone call, and she’ll try offering you: 1) extra services, 2) a better type of patent, or 3) an extension of your contract. Tell her – no – only a full refund. Well, now the game begins. She’ll call you back again and this time she’ll offer you a few hundred dollars (if you sign a general release). Tell her – no – only a full refund. A few days later, she’ll call back and offer approx. one-third to one-half of your total payment. Tell her – no – and this time you can mention that you’re thinking about contacting an investigative journalist on TV.
Remember: just keep saying – no – to every “partial refund offer” and eventually, you should receive all your money back. However, if they’re still being stubborn: 1) send out your complaint letter, 2) contact an attorney, and 3) call an investigative journalists (like “7 On Your Side”) – this will keep up the pressure. The last thing that the invention company wants is to be scrutinized by Attorney General’s, the Federal Trade Commission, lawyers or reporters.
The Right Way – at least you’ll have a chance:
1) Hire a registered patent lawyer and pay for a thorough (not preliminary) patent search ($750 – $1500 for most inventions).
2) If your idea is patentable – hire the patent attorney to file a utility patent which will “stop others from making and selling your invention.” If your Idea is not patentable – and if there’s a patent currently in effect (17 years from the date it was granted) – then, move on and invent something else. However, if the patented invention has not been licensed; you could locate the patent holder (contact info. is on the patent) and ask the inventor if the patent is still available for licensing or marketing. As crazy as it sounds, you might be able to work together with the patent holder and form a joint venture (make sure your patent attorney is involved).
3) If your invention is unpatentable because of an expired patent – then, you can still proceed to develop your invention. Unfortunately, no one will pay you for it because it’s in the public domain. However, if you want to manufacture it yourself and then find distribution outlets (or sell it directly to the public) – you can move forward.
4) Once your utility patent is filed, you should hire an engineering company to build a working model (prototype). An engineer should assist you to improve the product and make sure that it works properly (have the engineer sign an agreement stating that they’re not co-inventors and not entitled to receive any future patent rights or royalties).
5) Go on the internet and seek out the type of companies that are selling similar products and find out which companies are making, distributing or marketing such items. Then, have your patent attorney write a letter to companies that might be interested in seeing your prototype and reviewing your patent-pending documents (they’ll need to sign a confidentiality agreement).
6) If you receive interest from such companies, ask your patent lawyer to follow-up and make an appointment with the interested parties. If any of these companies want to license or buy your future patent rights – let your patent lawyer handle all correspondence and negotiations. The attorney will advise you about “industry standards” for royalty agreements and typical terms and conditions when a licensing a patent. Give the attorney your input, but listen to the advice being offered to you.
7) Another alternative is for you (or investors) to finance the manufacturing of your idea on a small-scale. You’ll need to locate a “contract manufacturer” who will produce and package the product for you. Then, you can try to sell it directly to distributors or to the public. If you’re successful in selling-out your initial run; you may find more investors (with deeper pockets) to help you expand your manufacturing capabilities. This type of entrepreneurship is exemplified on TV show, “Shark Tank.”
One last point: there are also certain individuals who have faked their credentials and pretend to be “invention experts.” Fortunately, many of these individuals have been exposed by FTC and sued by attorneys who took the time to investigate the lies being perpetuated by these tricksters. Beware: they are only after your money and have no track record of success. Incredibly, they have fooled the media, invention associations and naive inventors to believe that they are real advocates for patent reform and inventor’s rights. Unfortunately, their intentions are just as bad as the invention promoters. Check them out carefully, and you’ll discover that they have no credibility whatsoever.
Additionally, these self-proclaimed “patent experts” create websites with free information from The US Patent Office. Many of them spend their time on the internet spewing out nonsense about how to market an invention. To establish credibility, these hoaxsters pay a small fee for memberships and listings in “Who’s Who” publications. Then, they’ll criticize invention promoters and call them scams to gain your confidence. But, what are their real intentions? To fool you and get your money. http://ronaldjriley.blogspot.com/
Only 2% of all patents have made money. However, if you hire an invention promoter – your chances of success are close to zero. Be smart and perform your own due diligence when hiring any individual or company. Just type into “Google Search” – the name of the person or corporation you’re investigating and then include: + complaints + fraud + lawsuits. You’ll be amazed at what’s there. Also, don’t forget to check-out the patent lawyers at the US Patent Office – and make sure that they’re “registered” and in “good standing.”
Meanwhile, as a precaution – just ask any invention promoter to show you a copy of a real royalty check from a verifiable manufacturer – and after that – you’ll never hear from them again.
This blog has been created for individuals with new ideas who deserve to know the truth about this difficult, high-risk and mostly shady business. Therefore, please listen to this advice. You don’t want to be re-reading this article a year from now (after you’ve lost $10,000 or more), and then kick yourself for being so gullible.
An Effective Utility Patent vs. Limited forms of Protection
These invention promoters may also want you to pay for a “Design Patent” which only protects the exact outer shape of your idea. However, a Design Patent does not protect the way the invention works. In some cases, the invention company will offer to file a “Provisional Patent Application” which does not protect the design, function or any aspect of your idea. This “provisional” application simply registers your invention at The US Patent Office on a specific date for $130 and gives you one year to file a real patent application (non-provisional). After the one year has expired, you will still need to file a real patent application (usually $8,500 – $15,000 for a simple invention). Needless to say, the invention company has no intention of paying for a real patent application that offers the only form of legal protection.
*Disclaimer and Legal Disclosure: The companies, organizations and individuals listed below have a habit of threatening and suing individuals like me who tell truth about this deceptive industry. Although my comments are protected by the First Amendment, many of these firms want to protect their yearly income of $5M – $20 million dollars in client fees. They have plenty of money to spend on lawyers to try to silence their critics.
Naturally, these con-artists get very upset when the truth is made public because smart inventors walk away from most fee-based invention promoters. Additionally, their salesman get very frustrated because commissions are lost after they’ve tried every trick in the book to rope you in.
*It is important to note that this article is not singling out any specific firm, individual or organization for wrong-doing. The list below has been obtained from an internet search using the key words: “fee-based invention promoters, inventor complaints, and invention development scams.” All of the information in this article is already in the public domain and is readily available from other sources. Therefore, please perform your own due diligence and decide for yourself if an invention developer fits the description that is found on countless “inventor warning” websites.
Finally, beware of so-called “consumer affair” and “business bureau” websites that are paid a fee by invention firms to give the false impression that they have no complaints or only favorable ones. Some invention promoters even create their own misleading “complaint boards” (under clever, legit sounding names) and write 5 star reviews for themselves that are nothing but lies. They try to fill-up the first (3) pages of their “Google search” with fake reviews, websites that they’ve created to enhance their “credibility” and deceptive “youtube” videos that are masterfully designed to fool you.
Your best bet to confirm the information in this article is to search under the key words: “invention scams.” It’s all there.