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T hink 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 market them.

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 difficult. As

an alternative, others use the services of an invention promotion firm. Indeed,

some 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 facts are:

✔ few inventions ever make it to the marketplace; and

✔ although a patent can provide valuable protection for a successful invention,

getting a patent doesn’t necessarily increase the chances of commercial

success.

Invention

Promotion

Firms
Facts for Consumers

There’s great satisfaction in developing a

new product or service and in getting a patent.

But when it comes to determining market

potential, inventors should proceed with caution

as they try to avoid falling for the sweetsounding promises of a fraudulent promotion

firm.

Using 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. Often, however, the only information

you get is about the promoter.

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

you and your idea. 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, such as contacts at

manufacturers, before you sign a contract with

any invention promotion firm that claims special

relationships with manufacturers. If the promoter

provides only one or two names, be careful: The

contacts may be “shills” — people hired to give

favorable testimonials.

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. Sometimes the “research”

is bogus, and the “positive” reports are massproduced 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

market and license your invention to

manufacturers. Unscrupulous promoters may

require you to pay a fee of several thousand

dollars in advance, or to agree to make credit

payments instead. 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 wants to charge you a large fee in

advance — take your business elsewhere.

Inventor Protections

If you’re interested in working with an invention

promotion firm, here’s information that can help

you avoid making a costly mistake.

✔ The American Inventors Protection Act of

1999 gives you certain rights when dealing

with invention promoters. Before an invention promoter can enter into a contract with

you, it must disclose the following information about its business practices during the

past five years:

• how many inventions it has evaluated,

• how many of those inventions got positive or negative evaluations,

• its total number of customers,

• how many of those customers received a

net profit from the promoter’s services,

and

• how many of those customers have

licensed their inventions due to the

promoter’s services.

This information can help you determine how

selective the promoter has been in deciding
Facts for Consumers

which inventions it promotes and how successful

the promoter has been.

✔ 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. Some even offer to

finance the full amount to entice inventors

into making a quick decision. Reputable

licensing agents rarely rely on large up-front

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.

Check References

✔ Ask the promoter to give you the names of

many previous purchasers so that you can

pick and choose who to call for references.

Again, beware of shills.

✔ Fraudulent invention promotion firms may

promise to register your idea with the U.S.

Patent and Trademark Office’s (USPTO)

Disclosure Document Program. Although

many scam artists charge high fees to do this,

you can do it for $10 by filing your document

with the USPTO directly. 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 trade shows, but

don’t actually go to these trade shows, much

less market your idea effectively. Check with

previous clients and trade show sponsors

about whether their ideas were exhibited.

✔ 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 Before Moving Forward

Contracting for the services of an invention

promotion firm is no different from making many

other major purchases. Apply some common sense.

✔ Question claims and assurances that your

invention will make money. No one can

guarantee your invention’s success.

✔ Investigate the company before you make

any commitment. Call the USPTO at

1-866-767-3848, and the Better Business

Bureau, the consumer protection agency,

and the Attorney General in your state or

city, and in the state or city where the company is headquartered. Under the American

Inventors Protection Act of 1999, invention

promoters must give you the names and

addresses of all invention promotion companies they have been affiliated with over the

past 10 years. Use this information to determine whether the company you’re considering doing business with has been subject to

complaints or legal action.

If a promoter causes you financial injury by

failing to make the required disclosures, by

making any false or fraudulent statements or

representations, or by omitting any fact, you
October 2003

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers

Produced in cooperation with the U.S. Patent and Trademark Office

have the right to sue the promoter and recover

the amount of your injury plus costs and

attorneys’ fees.

In addition, while the USPTO has no civil

authority to bring law enforcement actions

against invention promoters, it will accept your

complaint and post it online if you complete the

form, Complaint Regarding Invention

Promoter, at www.uspto.gov/web/forms/

2048.pdf. The USPTO also will forward your

complaint to the promoter, and publish its

response online. To read complaints and

responses, visit Inventor Resources at

www.uspto.gov/web/offices/com/iip/index.htm.

✔ Make sure your contract contains all the

terms you agreed to — verbal and written —

before you sign. Often the contract says one

thing but the salesperson says something

quite different. If possible, ask an attorney to

review the agreement.

✔ Remember that once a dishonest company

has your money, you may never get it back.

You may have to sue the company under the

American Inventors Protection Act of 1999,

which permits a customer to recover for

injuries, costs, and legal fees if a promoter

has failed to make disclosures, made any

false or fraudulent statement or representation, or omitted any material fact, to a customer. You have the burden to show that the

law has been violated.

For More Information

• U.S. Patent and Trademark Office

The USPTO offers information about patents

and trademarks. Write: U.S. Patent and

Trademark Office, Commissioner for Patents,

P.O. Box 1450, Alexandria, VA 22313-1450;

call toll-free at 1-800-PTO-9199; or visit

www.uspto.gov. For more information about

the Disclosure Document Program, Provisional Applications or Non-provisional

Applications call 1-800-PTO-9199. In addition, every state has a Patent and Trademark

Depository Library that maintains collections

of current and previously-issued patents and

Patent and Trademark reference materials.

To order a copy of the American Inventors

Protection Act, call 1-800-PTO-9199, or

visit www.uspto.gov/web/offices/com/

speeches/s1948gb1.pdf.

• National Congress of Inventor

Organizations

NCIO offers free articles, information,

resources, and an online magazine

America’s Inventor Online. To contact

NCIO, call toll-free 1-877-807-4074, or visit

www.inventionconvention.com/ncio.

• United Inventors Association

UIA offers free articles, information, resources, referrals to local support groups for

inventors, and online copies of its newsletter.

To contact UIA, call 1-585-359-9310, or

visit www.uiausa.com or www.uiausa.org.

• Federal Trade Commission

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 consumer issues, visit

www.ftc.gov or call toll-free, 1-877-FTCHELP (1-877-382-4357); TTY: 1-866-653-

4261. While the FTC generally does not

intervene in individual disputes, the information you provide may indicate a pattern of

violations requiring action by the Commission. The FTC enters Internet, telemarketing,

identity theft, and other fraud-related complaints into Consumer Sentinel, a secure,

online database available to hundreds of civil

and criminal law enforcement agencies in the

U.S. and abroad.