Inventor Scam Come-ons
Do you know what it takes to convince a budding inventor that someone is honest and trustworthy? It's trivially easy. First you tell the inventor to be VERY secretive about their invention. Not to trust even you until the inventor has your signature on a non-disclosure agreement. Once you've gotten that taken care of then you simply tell the budding inventor that his/her idea is GREAT. Makes no difference what the idea is. You just tell them their idea is great and since they already know that for a fact they'll instantly confirm that you are honest. You can ice that cake further by casually mentioning that VERY FEW ideas are GREAT---but this one is, you saw that immediately. And lastly, the clincher, you tell them it is imperative that they HURRY to get a patent (or do some other ostensible patent rigmarole) to protect themselves ASAP. They already know that a patent will protect their idea from dreaded thieves. And that's it! Now you have the complete trust of the budding inventor who will do whatever it takes to keep "forward progress" going---even if it means bankrupting themselves and their family.
The above scenario is played out over 100 times every day all across the USA. And it nets the outright scam artists probably somewhere between 200 and 300 million dollars a year. But lesser versions of it are played out in patent attorney offices, machine shops, engineering firms, prototype shops, tooling makers, print shops, packaging consultant offices, etc., etc., even inventor clubs and organizations, i.e., among the "honest" providers of inventor help. The net result is still that some $1.5 to 2 billion dollars is wasted by inventors every year because they are so easily suckered into spending money by abuse of their own (mis)beliefs.
Let's go down them one by one. Certainly secrecy is important to maximize ones potential--that is POTENTIAL--patent rights. Unfortunately 9 times out of 10 there are really NO potential patent rights because someone else already had the idea and it's been patented or published. By emphasizing SECRECY on your part the scam artist not only reinforces your beliefs they prevent you from talking to almost anyone who could quickly disabuse you of your misbelief in the newness of your invention. Pretty slick huh? What you should have done when you first had your idea is to thoroughly research it to determine if the problem you think you've solved already has readily available solutions---then objectively determined if yours really would be substantially better. But secrecy keeps you from talking to the experts that would know about those solutions---or even the existance of a solution very much like yours BEFORE you came up with it---or way better than yours. For much more about protecting your rights while getting feedback see www.idearights.com $ .
Second it really is a rare idea that is GREAT. Maybe one in 100,000 or more. Odds are overwhelmingly that yours is not the one. But you're probably so head-over-heals in-love with your idea--and have your ego so wrapped up in it and your greed gland so juiced--that you desperately must believe that your invention is that one. The real fact of the matter is the scam artists really do tell ALL (or very nearly all) budding inventors that their idea is GREAT. The inescapable conclusion is that they are either totally incompetent to judge the worth of ideas or that they are practiced liars. Most will really fall into the latter category but we'll leave some room for the "benefit of the doubt." Of course they'll tell you that the odds are very long against you---they'll likely put it in terms of "less than 5% of all patents ever make any money." They're only telling you that to 1) keep their behind covered, 2) convince you of their honesty, 3) because they suspect you may already have heard that (or will) anyway, 4) make you feel MUCH better, i.e., bloat your ego, because they (supposedly the experts) want you to believe you are pretty unique (rather than the 4th sucker that day falling into their trap). Reread that last sentence and you ought to note there isn't one reason there that is IN YOUR BEST INTERESTS.
And thirdly the pressure to HURRY is generally wildly misplaced. Sure, there is some need to be first but in the USA you don't have to be first to file, all you need is witnessed records that you were first and either are diligently pursuing reduction to practice or you haven't abandoned your invention. Again see the www.idearights.com $ web site. While being first is the presumed reason for the HURRY the real reasons are much worse. Hurrying helps insure the money comes out of your pocket NOW, before you have time to objectively look at the situation, and it pretty nearly always locks you to them because, by golly, they are the only service provider YOU currently know of and, unless YOU risk killing time researching other service providers, they'll be the ones to get the money. Again, pretty slick huh?
It's not a pretty picture but that is how the scam (and not quite scam) game works. And there are a couple more nuances I'll tell you about in a minute. But first I'll note that just avoiding scams doesn't get you anywhere. What does? First, and I may be biased since I created all these web sites, I suggest you read this InventorHome.com $ web site as well as the aforementioned www.idearights.com $ web site and the www.willitsell.com $ web site which gives a suggested sequence of safe, inexpensive ways you can get cranking. Yes that last web site also pushes a book. And unfortunately following the process suggested on that web site should lead you to, if you make objective business decisions, stop all work on at least 9 out of 10 of your invention ideas before you ever have to spend a dime on them.
More Scam Come-ons
Most new inventors struggle only a few days with the effort of prototyping, manufacturing, patenting, and marketing before they have the "great idea" to "just license" their invention and let someone else do all the work and put their own money at risk. But finding a licensee also turns out to be hard work and has a stumbling block that turns most inventors into quivering masses of spineless, do-nothing jelly. That stumbling block is "fear of rejection." The carrot the scammers dangle in front of inventors faces is that they will take all the pain out of rejection because they will "try" to find the licensee for the inventor through their "contacts." The inventor never has to face the many rejections---just (presumably) glory in the final licensee when found. The reality is the "trying" effort of the scammer is whatever is the very least they can get away with.
Perhaps as little as mailing out 100 letters to "contacts" whose addresses they found in publicly available sources such as the Dunn & Bradstreet database or the Thomas Register. In other words, what the inventor expects is a serious, professional, business effort at "trying" to find a licensee but what they get is the least effort that satisfies the wording of the scammer's inventor assistance contract. And worse, the supposed "inside" company contacts list that the inventor is expecting the scammer to use doesn't exist at all. The inventor gets nothing more than they could have done themselves but at about 100 times what, in dollars, it would have cost them to do it themselves.
It is also very common to find "inventor help" scams that really will "guarantee" the inventor a licensee. While the inventor expects that licensee to be a legitimate manufacturer/marketer the reality is the "license agreement" will be only a contract with the scammer himself as the licensee. And all the contract will really do is lock up the inventor's rights to license their invention for maybe 10 years. In other words, if the inventor gets disgusted with nothing happening and goes out and finds a real licensee on their own it's the scammer that gets to cut a deal with the legitimate licensee and not the inventor. The inventor only gets whatever piece their agreement with the scammer calls for.
Of course what the scammer will do is insist to the inventor that they have a hot prospective (legitimate) licensee just waiting for the inventor's signature on a deal with the scammer---"so things can proceed with the hot prospect deal." Of course some excuse, such as the (legitimate) licensee backed out of the deal, will arise shortly after the inventor signs. Then nothing will happen unless the inventor makes it happen outside the scammer's "efforts." There was, of course, no "hot prospect." What inventors that sign such agreements fail to grasp is that their contract with ANY licensee MUST include some REAL, enforceable "performance clause." "Performance" usually falls into 3 areas: 1) an immediate up-front payment ($5,000 is pretty normal), 2) a production/marketing start date (normally 6-12 months hence), and 3) a minimum annual royalty payment. The scammer, of course, offers none of those and, in fact, often required a $795 or $1,500 payment from the inventor "so the (scammer's) firm can 'evaluate' the inventor's idea and cast about for prospective licensee interest." Certainly legitimate evaluations cost money too but you'll get back specific information (and, unfortunately, usually a recommendation to not proceed any farther).
Should I mention that the only agreement that counts with anyone is the one that is written on the contract paper? I'll bet the contract MUST be signed to get the scammer to do the deal and I'll also bet that the contract specifically states that not only are the words on the paper the sum total of the agreement but further that there were no representations otherwise. Another reasonable bet is that the party signing the deal for the firm will NOT be the salesperson that made all the promises and assurances, maybe even provided interpretations of contract language, to the inventor. That way the scammer and his firm are protected against any (inadvertent) lies their salesperson might have told to convince the naive inventor to sign.
Come-ons from the "Honest" Folk
"I can get you a patent for that." Of course what the inventor thinks "that" means is their invention IDEA. But don't be fooled for a second. A truly legitimate patentabliity opinion will BE IN WRITING and will SPELL OUT what the inventor has that is NEW over the prior art. And, yes that opinion letter and a patentability search will likely cost $700. More likely than not what the patent agent or attorney saying "that" means (as they'll swear they explained to you) is only that your invention has some nuance that can be patentable as an "improvement" patent over existing prior art--that improvement may only be cosmetic so a (worthless) design patent can be gotten or be a functional "improvement" in the sense that it adds onto prior art and it works but not in the sense that customers would find it an improvement worth purchasing.
Additionally you might be "guaranteed" that their patent search (and opinion?) will not miss a patent that the USPTO uses to deny you a patent or they will gladly refund your search (and opinion?) money. Here's the real deal. Three or four years later you WON'T be denied a patent because the patent practitioner will have, at your expense, fought hard to get a patent issued that covers some small nuance that is novel and non-obvious over the prior art (but is probably commercially worthless). Or, unlikely but possible, three or four years later you are denied a patent and you've spent $10,000--to the practitioner's benefit--so you can now "get back" the $300 to $700 you spent for the patentability search. You're still out well over $9,000 and all it cost the practitioner was 2-4 hours that they don't get paid for.
"It's cheap, only $65. File for a Provisional Patent immediately then you can say 'patent pending' and you're 'protected' for a year." Don't fall for it. First there is no such thing as a "Provisional Patent." There is a Provisional Application for Patent and what it "protects" is NOT your invention but what is called your "priority date" but only for exactly what, if anything, is novel, non-obvious, and enablingly described in your Provisional Application. The reality is often the patent agent or attorney feeding you this line wants to get you into the 12 month squeeze box so they can crank the screws down on you 9-10 months later to "get your full application written and filed before your 'Provisional Patent' 'expires.'" For more on all this again see www.idearights.com $ web site.
Feel free to contact me to contribute more "what the inventor helper says but knowing full well that the inventor will hear something entirely different" examples of come-ons that suck in naive inventors.
Come-ons After Your Patent Issues
It never stops. Someone will always be trying to part you from your money. This continues to hold true after your patent is allowed. Often the first indicator of your patent's near future issue and arrival date in your mailbox is the "offers" you start getting in the mail. Yep, the USPTO sells your address to any buyer that wants it. Some of these offers are fairly innocuous as we'll see but a good many are more dastardly.
Plaques How about a nice plaque to commemorate your patent issue? Take your patent to a local trophy shop and the odds are they can do it for you for half the price of any of these in-the-mail offers. Still, these aren't too bad a deal to commemorate your (usually worthless) patent. Good for your ego and a great conversation starter when hung on a wall of your home.
Merchant Accounts But very bad deal merchant accounts. Sure, if you've got production started to make and sell your invention you'll want to get a merchant account so you can accept credit card purchases. But first try getting one through your bank. They are getting more and more likely to make it easy for you and give you a good deal. A very good deal is no monthly fee, no per sale fee, no minimum, and only a 2% of your sales amount charge. But don't hold your breath for quite that good a deal. More typical will be a $10 monthly fee, a $.50 per sale fee, and a 2.5% sales amount charge. The in-the-mail folks will want you to lease equipment only from them and often for over $50 per month for some number of years, have an additional $50 monthly fee, have a $.75 or so per sale fee and want 3% or better of your sales amounts. Do your homework, there is no hurry.
Web sites or web pages Either of the "they'll do it all for a flat fee" or "they'll do you a page and you pay monthly for 'exposure.'" Oh, and they'll lock you in for a year or more. The reality is that unless YOU drive prospective licensees or buyers to your web page you'll really only get hits from other inventors wanting to see what someone else is doing. You might, if you're really lucky, get 10 hits a year from corporate people looking for inventions to license. Most honest corporations that seek inventions already look at the Patent Office's Official Gazette---and reject out of hand all but one or two things in it during an entire year. They don't have time to scour the internet looking for the MANY sites that purport to "help inventors" by setting up a page for the invention.
Find a Licensee Warning Signs: We saw your patent; We think it will fit well with some of our clients; We have contacts in major industries; We feed products to QVC & HSN; We split the costs and profits based on what you feel comfortable with... There ARE legitimate services (les.org); You may have to pay a nuisance fee, maybe $200 (generally you find them but not through spotting an ad); Reality -- you can do it all yourself: Research the players in your field; Prepare a package of solid information; Find the decision maker contact info, prepare a legitimate presentation that shows you've studied the market and the firm, and make the presentation yourself.
You’re REFERENCED! These may start some time after your patent issues, 6 months or 18 months would not be unusual. Usually it's a post card warning that "your patent is referenced by another patent, send $75 for info to..."; May at one time have been a useful service and back then it cost about $250; Now maybe the fee is about $50-$100; The “threat” suggestion is that somehow another patent referencing yours will damage it. Reality: You can look them up yourself online!; Www.uspto.gov/patft; Pick "number search" then find your patent number; Scroll down the text past the basic bibliographic info and you'll find a a “References Cited [Referenced By]” link; Click the link and the list, if any, of patents that reference yours will come up. And, BTW, look at your own patent and you'll see it references prior patents too.
Infomercial Opportunities Warning signs: They inquire about your PRODUCT; They wonder how soon you’ll be producing; They love it and it would be great on TV; If you have a product they want to offer it; They’ll split the production costs with you; They’ll pay the air time in major markets!; In exchange for $x per unit sold (say half); Of the $21,000 production cost you pay only $7,000 and the rest of your share comes only out of revenues from sales. Reality: Only 12% of legit infomercials ever make a profit; Real production costs for what you'll get are $500-$1000; Ad placements are Pay Per Order (PPO), i.e., free unless something sells, or very cheap brokered remainder slots; The stations are small, fringe, cable ones that technically fall within the major SMSAs (Standard Metropolitan Statistical Areas) but that only reach a very small percentage of their population.
Copyright © 2004 James E. White
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