Invention promotion firm

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Under United States patent law, an invention promoter is a person or company that provides services to inventors to help them develop or market unpatented (or non-utility patent pending) inventions. Said person or company also advertise through any mass media. ^[1] Invention promotion firms offer to evaluate the patentability of inventions, file patent applications, build prototypes, license inventions to manufacturers, and market an invention. They are distinguished from more conventional consulting firms and law firms offering the same or similar services in that they market their services primarily to amateur inventors through the mass media. ^[2]

Some of these firms, however, use high pressure sales tactics and make exaggerated claims as to what results a client can expect. Thus many clients who use these firms become dissatisfied with the results they get and feel as if they have been cheated.

1 Performance
2 Sources of revenue
3 US legal protections for inventors
4 Legal actions against invention promotion firms
5 Public posting of complaints against invention promotion firms
6 Defense of invention promotion firms
7 Guidelines for identifying unscrupulous firms
8 Not-for-profit inventor support organizations
9 References
10 See also

[edit] Performance

Accurate statistics of the success rate of invention promotion firms is difficult to come by. Nonetheless, as a result of certain legal actions taken against some of these firms, overall success rates have come to light. One such firm, Davison Associates, disclosed that of 900 ideas where a client had a prototype built of their invention at an average cost of $11,000, only 30 of those inventions were licensed within 6 months. Of the inventions licensed, only 10 made more in license fees than the cost of the invention promotion services. ^[3]

[edit] Sources of revenue

Invention promotion firms generally make their money from fees charged to clients for services. These fees normally must be paid up front and a customer may be told that they may have very little time, such as three days or less, in order to make a decision. Invention promotion firms may also receive a portion of their fees as a share of the royalty that an inventor earns on his or her invention. The total fraction of an invention promotion firm’s revenue obtained from royalties, however, may be less than 1%. ^[4]

[edit] US legal protections for inventors

The 1999 American Inventors Protection Act established disclosure requirements for invention promotion firms. These disclosure requirements include:

the total number of inventions evaluated by the invention promoter for commercial potential in the past 5 years, as well as the number of those inventions that received positive evaluations, and the number of those inventions that received negative evaluations;
the total number of customers who have contracted with the invention promoter in the past 5 years, not including customers who have purchased trade show services, research, advertising, or other nonmarketing services from the invention promoter, or who have defaulted in their payment to the invention promoter;
the total number of customers known by the invention promoter to have received a net financial profit as a direct result of the invention promotion services provided by such invention promoter;
the total number of customers known by the invention promoter to have received license agreements for their inventions as a direct result of the invention promotion services provided by such invention promoter; and
the names and addresses of all previous invention promotion companies with which the invention promoter or its officers have collectively or individually been affiliated in the previous 10 years.

The American Inventors Protection Act also provides civil penalties that can be assessed against invention promotion firms engaged in fraudulent or deceptive practices.

[edit] Legal actions against invention promotion firms

In 1997, the Unites States Federal Trade Commission launched “Project Mousetrap” to identify, prosecute and fine firms engaged in fraudulent or deceptive practices. ^[5] Actions were brought against:

International Product Design, Inc., The Innovation Center, Inc., and the National Idea Center, Inc., all of which were headquartered in Washington, D.C. and preceded the following four firms: American Invention Associates, Inc. headquartered in Miami, Florida; Invention Consultants, USA, Inc. of Philadelphia, Pennsylvania; New Products of America, Inc., of Atlanta, Georgia; International Licensing Corporation, Inc. of Reston, Virginia; and Azure Communications, Inc., of Reston, Virginia, doing business as London Communications, Inc. and which is the corporate headquarters of the four successor firms; and officers of one or more of the companies Robert N. Waxman, Peter Doran, Darrell Mormando, Julian Gumpel and Greg Wilson

National Idea Network, Inc., doing business as The Concept Network out of Indiana and Wexford, Pennsylvania; CEO and President Harry E. Sharf, III, Executive Vice President Wayne R. Obitz, and Senior Marketing Representative Robert J. Zarko

Davison & Associates, Inc., of Oakmont and Indianola, Pennsylvania; President and CEO George M. Davison, III, and sales associate Thomas Dowler. Davison & Associates now operates under the name "Davison Design and Development".

Eureka Solutions International, Inc. and OEM Communications, both doing business out of the West Pittsburgh Expo Mart in Monroeville, Pennsylvania; President and founder Gregory S. Bender, and sales representative Frank J. Cillo

In 2006, judgment was rendered against Davison & Associates. They were fined $US 26 million to be used to compensate defrauded clients. Davison has appealed the judgment. ^[6]

[edit] Public posting of complaints against invention promotion firms

The United States Patent and Trademark Office (USPTO) posts complaints online from dissatisfied clients of invention promotion firms and provides an opportunity for invention promotion firms to respond to the complaints. The USPTO, however, does not investigate the validity of any of the complaints or responses.^[7]

[edit] Defense of invention promotion firms

Many invention promotion firms vigorously oppose their characterization as being dishonest or unethical ^[8]. They point to the fact that most of their criticism comes from a small number of vocal opponents and that overall they have a high customer satisfaction rate.

[edit] Guidelines for identifying unscrupulous firms

Both the USPTO and the US Federal Trade Commission publish guidelines on how inventors can better determine if an invention promotion firm is scrupulous or not. Signs of an unscrupulous invention promotion firm include: