There are early steps to take in order to protect your idea and begin developing a prototype. But, even before you do that, we strongly suggest that you look over the “Criteria for Success” link to help you determine if the idea will be profitable.
Some ideas that are wonderful solutions to a particular problem will not appeal to a wide enough market to make them profitable. Or, they will have too many inherent problems, such as cost of production or consumer education, to make them workable.
A thorough market and patent search is extremely important to make sure the idea is really yours to pursue. Once you have determined that it is a marketable idea and has not already been patented or marketed, it is time to begin your inventor’s journal.
We have put together the following steps on How to Invent in order to help you through the invention process.
These are the steps we took when we invented Ghostline®. You may wish to use them as a guideline or you may wish to blaze your own trail. However you choose to proceed. . . Happy Inventing!
- Research your idea to see if it already exists (link to Research your idea)
- Develop a prototype of your invention (link to prototyping)
- Get an invention evaluation (link to invention evaluation)
- Protect your idea (link to patents)
- Determine your marketing plan (license or build a business around your invention?)
- Find a manufacturer who will license your invention/patent
As of 2013 the United States became a "first to file" country rather than a "first to invent" country. This is how the rest of the world does it so we are not in step with them. As a result, it is no longer necessary to have an inventor's journal to prove when you first started working on your invention. It is nice to keep a journal simply to track your journey through the inventive process but it will simply be for your own use. It will be of no use to you in claiming your invention. Now, you must file as soon as you possibly can and hope that you are the first to file on your idea.
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|Research Your Idea|
It is essential to conduct a search to make sure that you are the first person with the idea. We suggest that you start by going to the type of store that would eventually offer your invention for sale.
For example, if your idea is an office product, go to office supply stores and make sure that you do not find your invention already being offered. Also, check specialty catalogs that might be likely to carry an invention such as yours. If you do not find it at the kind of store that carries similar items or in a catalog, then it is time to do a preliminary patent search.
There are several ways to do this. One way is to go to the nearest Patent and Trademark Depository Library (you can find the link for the PTDL’s on our Resources page). The librarians in the Patent and Trademark Depository Libraries are very knowledgeable and helpful and this service is free. Or, you can conduct a fairly thorough preliminary patent search by going to the USPTO online. You will need to enter every key word that you can think of to describe your invention. It is also very important to do a classification search. Many times you will come across inventions listed in the same classification as yours that you might have missed if you had only done a key word search.
We offer a step-by-step guide to online patent searching. The home page of the USPTO has changed since this e-book was written but everything else remains the same. You can start by simply looking for the link to “search patents” on their home page. You can find a link to this free e-book on our Resources page.
Also, when conducting your preliminary patent search, it is very important to search all possible years. When we were inventing Ghostline®, we found a patent from 1877 (that was NOT a typo) that had to be listed as prior art for our second patent.
It is possible to do a fairly good preliminary patent search yourself, if your invention is a simple one. We conducted our own patent search at the Patent and Trademark Depository Library here in Dallas. The librarians there led us through it step-by-step. We satisfied ourselves that we had been pretty thorough. When we went to our patent attorney, however, he looked over all the printouts we had made of any patents that we thought looked similar to our idea in any sort of way. He said it looked like we had done a good job but he still through it was advisable to have a professional search done. When the professional search came back they had found exactly the same prior art that we had. That is very unusual but we had the help of the Patent librarians and we had a simple invention. It is always a good idea to have a thorough professional patent search done before investing your time, effort and money in an idea.If you live anywhere near Washington, DC or if you can make a trip there, you can go the United States Patent and Trademark Office and do the search there yourself. The public is welcome to go there and get the help of their librarians.
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|All About Patents|
Before you file for a patent it is important to understand a little about the process. It is possible that someone has had your idea, patented it and done nothing with it (thus the importance of a thorough patent search). It is also possible that someone may have already filed for a patent on your invention but it is still in the patent pending process. If it has already been patented you can find out about it. Since there is a chance it could be in the patent pending process you must decide if you want to proceed with your own patent application hoping that you are the first. Patent pending applications are made public after 18 months if the inventor has not specifically indicated that he/she does not wish to have it made public (and they are not filing for any foreign patents). For the first 18 months after a patent has been applied for the patent pending applications are not made public so there is no way to find out if one is already in the system.
If your idea is great enough, your enthusiasm is great enough, the potential profit is great enough and your possible market is large enough, you may decide that you want to try for a patent. Only you can make that judgment call after you have conducted the most thorough preliminary patent search and you have had a professional patent search performed.
International patents may be applied for in individual countries or an inventor may choose to file a Patent Cooperation Treaty (PCT) application in which he may choose up to seven countries to include in his application for patent coverage. The U.S. can be selected as one of those countries. Of course, it is also possible to file for worldwide coverage. The cost of filing international patents can quickly become prohibitive for the average inventor. It is better to carefully select the country or countries that would be the most likely lucrative market for your product. An inventor has exactly one year from the filing date on her U.S. patent in which to apply for international patent(s). If she does not apply within that year, she forfeits all rights to ever file for international patent coverage.
There are a few ways to go about filing for your patent. The first, of course, is to go to a patent attorney. The second is to go to a patent agent. The third is to do it yourself with the help of patent application software or with the help of a book.
Hire a Patent Attorney
Our recommendation is to hire a patent attorney to do it for you, if you can. We were really “shoe-stringing” it when we first invented Ghostline® and we considered writing our patent application ourselves. Our plan was to find the existing patent that was closest to ours and use it as a sort of template to go by. In our case that would have been a huge mistake. Our patent attorney was able to write the claims in such a way that made our patent much stronger than it would have been if we had done it ourselves. Scrimping on the attorney fees would have cost us dearly in the value of our final patent (assuming that we would have been able to navigate our way through the process at all!)
When people hear that having a patent attorney file for a utility patent costs $8,000-$10,000, it can discourage them. That is a lot of money to come up with. What most people don’t understand is that you do not have to come up with the total amount at the start. We paid around $2,500 to start and then paid other fees as they came due. It is our understanding that most patent attorneys allow clients to pay fees as they come due and as work progresses on the patent. Many patent attorneys do not charge at all for the first visit when they evaluate the patentability of your invention. Check to be certain that this is their policy, however, before scheduling an appointment.
Use a Patent Agent
The second way to file for a patent is to use a patent agent. They are as qualified as patent attorneys to draw up and file your patent application. Patent agents and patent attorneys have to pass the same competency test in order to be allowed to practice before the USPTO. Patent agents are not attorneys, however, and could not represent you in court, should your patent be or infringed, or if your product turned out to be infringing another patent. Patent agents are usually substantially less expensive than patent attorneys.
On our Resources page you can find referral links to both patent attorneys and patent agents.
Do it yourself
The third way to file for your patent is to do it yourself. You could check out the patent writing software. There are a couple of user-friendly software programs that guide you through the steps and one of them even has a patent attorney look over your application before you submit it to the USPTO. You can find a couple of them listed on our Resources page.
Finally, you may choose to write and file for your patent with the help of a book. If you choose this last option we would encourage you to get the book Patent It Yourself by David Pressman. This book is widely regarded as the book to use by the Pro Se inventor (inventor who writes their own patent without the help of a patent attorney or patent agent). If you choose to go this route we would suggest that you have an attorney look over your application before you submit it. They will often do that for a reasonable fee and it would be well worth it to have a professional look over your wording. Patent wording is an art form and patent professionals are pros at using the broadest possible wording so as to not limit the coverage granted in patents. We novices are not skilled in the same way and even though we may be able to write a patent and get it patented our choice of words may cause the patent to have more limited coverage than it would have if it had been written by a professional.
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|Provisional Patent Application|
If your purpose in filing for a patent is to obtain patent pending status you may want to file a provisional patent application instead of filing an application for a regular utility patent. It costs only $125 to file a Provisional Patent Application and the format is much looser than it is for filing for a regular utility patent. Basically a provisional patent application will “hold your place in line” at the patent office by allowing you the earliest filing date possible and allowing you to describe your product as patent pending. It will never result in an actual patent.
Within one year after you file your Provisional Patent Application (PPA), you must file for a utility patent or lose the advantage of the earlier filing date. Provisional Patent Applications are not even looked at by the examiners at the patent office until they are referred to in your utility patent application.
Another advantage of the PPA is that you can include multiple invention ideas in one PPA. It is always best to include every possible detail (including all possible applications) in your PPA.
Provisional Patent Applications are very attractive to some independent inventors because they allow the inventor to have as early a filing date as possible and it allows them to list their product as patent pending. That gives the inventor one year in which to find a licensee without going to the expense of filing for a utility patent. For inventors who wish to build a business around their invention it gives them one year in which to test the viability of their product.
If the inventor is successful in finding a licensee during the one-year PPA period then the licensee would be responsible for all the costs of filing for the regular utility patent but the inventor would still be listed as the owner of the patent.
Rates vary widely for writing Provisional Patent Applications. Most attorneys and agents charge $800-$2,400 to write the provisional patent application.
Writing a Provisional Patent Application is something that an independent inventor can do himself with the help of the book Patent Pending in 24 Hours by Pressman and Stim. It leads you through the process step-by-step.Provisional Patent Applications are not available to those filing Design Patents.
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This is an excellent article written by patent attorney, Alan Thiele. You would be wise to take the time to read it before engaging a patent attorney.
GETTING THE MOST OUT OF A RELATIONSHIP WITH A PATENT ATTORNEY
Those unfamiliar with the process of applying for and obtaining a patent in the United States often believe that all U.S. Patents are the same and that once obtained a U.S. Patent is the key to riches. Neither of these two ideas are correct.
The quality of a U.S. Patent and thus, its value is ultimately the responsibility of the inventor…NOT the patent attorney, and NOT the United States Patent and Trademark Office. Most new inventors have no understanding that there are many low quality or low value patents and that there are fewer high quality or high value patents. If the intent of the inventor is either to license or sell the rights to their invention, then a patent closer to the high value end of the scale is extremely important. On the other hand, if the inventor simply wants to associate his or her name with an invention, then a low quality patent may suffice. Thus, before ever contacting a patent attorney, the inventor should think through the ultimate need for a patent.
At this point in the article, it may be helpful to the reader to briefly describe what characterizes a high quality or high value patent and what characterizes a low quality or low value patent. For most first time inventors, the answer is the breadth of the claim coverage. The claims are the strangely worded numbered paragraphs at the end of an issued U.S. Patent. While not always literally true, a general rule of thumb is that short claims (think number of words) with simple words are high quality or high value claims. The opposite is generally true. Long claims with complex words or phrases often characterize low quality or low value claims. The best way to predict the type of claims that may be available is to do a patentability search. If a search reveals that other inventors have made the same or similar inventions, then only low quality or low value claims will be obtainable now matter how well a patent application is written.
For most inventors, the question should be how to obtain high quality or high value claims. The answer to this question is the relationship between the inventor and his or her patent attorney – something which every new inventor should work carefully to establish. This article is written to set new inventors on the right path.
The first step is selecting a patent attorney. The selected patent attorney should either have an educational background or experience writing patent applications describing inventions generally the same as the invention to be protected. Since most patent attorneys do not advertise their technical specialties or experience, plan to interview a variety of different patent attorneys. Choose one with the needed experience and one with whom one can easily communicate.
Do not expect your patent attorney to ask all the right questions to prepare the best patent application for your invention. Rather, do your homework. First, endeavor to think about all the ways your invention can be used. For many inventors, this is difficult because once an inventor has solved a problem with an invention, oftentimes after spending a lot of time and doing a lot of experiments, thinking of the invention in another context is not easy as more thinking and experimentation will be required. For those who just cannot take this next step – GET HELP! There are money professional researchers and college students who can provide a new inventor with excellent information about an invention or suggestions regarding how an invention can be used. It cannot be over-emphasized how important it is to know as much as possible about one’s invention and the work of others before ever meeting with a patent attorney to begin the process of preparing a patent application. Many patent attorneys begin their work by doing their own search to learn more about an invention.
Many inventors learn about their inventions by asking others what they think or what can be done to improve an invention. Some new inventors are fearful that the process of talking about their invention will lead to a theft of their invention. The beginning inventor should realize that this rarely happens. If theft of an invention is a realistic concern, consider the filing of a Provisional U.S. Patent Application or the use of a confidentiality agreement. Since research and gathering information can be a long process, experienced inventors typically keep one or more inventor’s notebooks full of their own thoughts and questions, the thoughts and questions of others, and the results of their research. Not only will such a notebook serve to improve one’s relationship with a patent attorney, but it may also be the source of reliable business contacts when the time comes to license or sell an invention. And, because many inventors don’t know what they don’t know, asking questions leads to more questions which improves one’s knowledge about an invention and the chances that an invention can become a product which provides income for an inventor. Once all of this information has been gathered, the time has come to begin working with a selected patent attorney.
A quality patent attorney should conduct a thorough interview full of questions about the problem solved by the invention, the preferred construction of the invention along with other ways to construct the invention, as well as probing questions about how the invention is used. A quality patent attorney should be receptive to learning all that there is to know about an invention. Some patent attorneys will also request additional information heretofore not considered by the inventor. The more that a patent attorney understands an invention, its environment of use, ways of constructing or using an invention, the better will be the quality of the resulting patent application.
Despite the preparation for and the meeting with a selected patent attorney to initiate the process of filing a patent application, the patent attorney rarely gets the description of the invention exactly right. This is because only the inventor knows and understands the subtleties of an invention.
Once a patent attorney has prepared a draft patent application for review, take advantage of this opportunity. Do a hyper-critical review! Ask questions about anything that appears to be uncertain or may be in error. If you don’t get an answer that you understand, ask again. Remember that the ultimate responsibility for the quality of a patent resides with the inventor. Some patent attorneys will actually ask that an inventor come in to review a patent application together with the inventor. If a patent attorney does not offer this service – ask for it! Such joint review of a patent application often produces new features of an invention or crystallizes ideas about an invention in addition to clearing up inadvertent misunderstandings. Some patent attorneys are reluctant to do a joint review of the claims at the end of a draft patent application. Ask for an explanation of the patent attorney’s strategy in building the set of claims and the patent attorney’s strategy in selecting the words and phrases used in the claims. Discuss alternatives ways the claims could be written. Never, ever let a patent application be filed without assuring that everything is as it should be. Once a patent application has been filed, some corrections are very difficult to make under the Patent Office Rules of Practice.
Every inventor should ask to be kept informed and consulted regarding all communication from the United States Patent and Trademark Office. Similarly, the inventor should keep his or her patent attorney informed about all major changes affecting an invention. Communication between an inventor and his or her patent attorney should be a continuous process – NOT a set it and forget it arrangement.
Second in importance to the preparation of the original patent application is the preparation of a response (often called an Amendment) to the First Office Action. Insist on receiving the First Office Action as soon as it is received. If you don’t understand what is contained in the First Office Action ask that it be explained to you. The First Office Action and the response thereto set the tone for the remainder of the prosecution of a U.S. Patent Application. Understand each Objection, Rejection or Requirement contained in the First Office Action and ask your patent attorney how each Objection, Rejection or Requirement will be met. Ask to review a draft of the Response to the First Office Action. Again, be hypercritical! Do not let a response to a First Office Action be submitted until its contents have been reviewed and understood. Concessions made to a Patent Examiner in a response to a First Office Action are difficult to undo.
In the prosecution of many patent applications there will be a Second (sometimes designated as Final) Office Action. Again, this Second Office Action may contain Objections, Rejections and Claims; however, the rules regarding responses are more restrictive than the rules which govern the responses to First Office Actions. Again, be sure to understand the contents of a Second Office Action and the response that your patent attorney plans to submit to the Second Office Action.
Until a Notice of Allowance is received to one or more of the pending claims, stay involved in the prosecution of your patent application and ask for an explanation of what is happening and why. If there is not a meeting of the minds with your patent attorney on how to prosecute your patent application and how to argue for an allowance of the pending claims, the time may have come for the inventor to find another patent attorney. The Rules of Practice which govern the prosecution of patent applications provide alternative routes through the patent application prosecution process. Ask your patent attorney for an explanation of the options available to you and the costs associated with each choice.
When the patent application process is complete (when all of the desired claims in a patent application have been allowed by a Patent Examiner), it is important to review the allowed claims in great detail. Understand the reasons supporting the use of the words and phrases in the allowed claims. Sometimes, conditions may have changed and the words and phrases in an allowed claim may no longer provide any value to the inventor. Remember that the quality and the value of an issued patent are determined by words and phrases which appear in the allowed claims. All of the rest of an issued patent provides support and explanation for the words and phrases used in the allowed claims. If you do not understand the foregoing sentence, read it again or be sure to have someone explain it to you. Not understanding the importance of the claims in a U.S. Patent can cost you a lot of money.
If others show an interest in an invention described in a U.S. Patent, the amount of money to be paid relates directly to the quality or the value of the U.S. Patent – or as you should have learned above, the quality of the claims appearing at the end of the U.S. Patent. If there is an issued U.S. Patent on an invention, an inventor can expect that the claims will be reviewed in great detail by a prospective assignee or licensee. Expect the need to defend the quality or the value of the claims appearing at the end of a patent counsel for a prospective assignee or licensee. Remember that all of the Office Actions and the responses thereto which resulted in a U.S. Patent become part of a publicly available record called the prosecution history. Whenever a U.S. Patent is reviewed by counsel for a prospective assignee or licensee, each document in the prosecution history will be reviewed in great detail.
Some patent attorneys understand the process of writing and negotiating an agreement transferring the rights to an invention. Many do not. Before asking your patent attorney for help in writing or negotiating a agreement transferring the rights to an invention, ask if the attorney has experience in writing and negotiating such agreements. And, just like in the preparation and prosecution of a patent application, stay deeply involved and question whatever is not understood.
Many inventors are happy to just think up and new ideas and play with building and testing new products. These inventors usually expect others to do all of the paperwork for them. It is these same inventors who are disappointed when they obtain patents of questionable value and have difficulty in obtaining a contract to transfer their invention to a manufacturer and/or marketing company. Get help if you need it! Inventing and turning an invention into income is a serious and complex business.
It is NOT the purpose of this article to discourage beginning inventors from pursuing their creative ideas and dreams of success. Rather, the purpose of this article is just the opposite. Many inventors swear off inventing because of not getting off to the right start and not taking the proper steps between and an idea and income from their idea. Be Careful! Stay Informed! Keep Asking Questions! Insist on Getting Answers!
It is very important NOT to divulge your invention to anyone (without first having had them sign a non-disclosure agreement) because the USPTO has very strict regulations about when you can file for a patent. You have ONE YEAR from the time that you first make your invention public either by showing it to someone without a non-disclosure agreement or by offering it for sale or public use. The USPTO is VERY STRICT about that. The one-year clock starts running the moment you make your invention public and if you apply for the patent one year and one day after that they will disallow it. DON’T LET THE CLOCK RUN OUT ON YOUR INVENTION!Note: If you are interested in filing for an international patent (PCT) on your product the one year grace period after public disclosure does not apply. Check with a patent professional before making any public disclosure of your invention if you want to market it internationally.
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|Join An Inventor Club|
We strongly recommend that you get in touch with your closest inventors association or club. They can be your most important resource for they are filled with people who have been there and done that and can tell you about valuable local resources as well as being a source of inspiration and encouragement. Find a list of inventor clubs organized by state and country on our Resources page.
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|Criteria For Success|
If your invention meets all or most of the following criteria, you probably have a winner!
- The chances of obtaining a good, strong patent are excellent.
- There is a HUGE market for it. Millions and millions of people will want to buy this product.
- The benefit of your product is obvious, thereby minimizing advertising cost to educate the public about your product.
- It will be inexpensive to produce. The company to whom you license your invention would already, ideally, have everything they need already in place. It would not require a lot of tooling up expenses.
- The spread between the manufacturing cost and the selling price is great. The rule of thumb is that your product must be able to sell for at least four to five times the cost of manufacturing. For example, if it costs $1 to manufacture your invention, it should sell retail for, at least, $4-$5.
- The item gets used up. That will increase your market dramatically if it is something that has to be purchased again and again.
- The manufacturer already has the distribution channels in place. Their sale personnel already have shelf space allotted to their company and can easily add you product to their planogram (map of the shelf space in a store).
The more of the above listed criteria your invention meets, the greater your chances of success. This does not mean that it cannot be successful if it does not meet all of these criteria; it just means it is not as likely. For example, an expensive item that is a one-time purchase can be a successful invention if the potential market is large enough.This is intended to help you determine whether or not you should proceed in developing your Great Idea. It is not a substitute for a thorough invention evaluation (by a legitimate source) to determine the marketability of your invention.
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|7 Things Every Inventor Should Know|
- Stay within your area of expertise
Too often first time inventors confuse an idea with an invention. For example, I may think that it would really be neat to have cars that hovered above the road on jets of air, eliminating the need for tires and making for a very smooth ride. That is an interesting idea but I would not have a clue as to how to actually make such an invention. Or, I might think wouldn’t it be great to have a machine that you could just walk into and be transported to any time or place in the history or future of the world? Those are just ideas! Way out of my area of expertise. Inventions like those will have to be left to the scientists or, more likely, to the science fiction writers.
Your “area of expertise” does NOT mean that you have to know everything about how to make your invention right now. It just means that you have the ability to find out what you need to know in order to proceed with your invention. When we were first working on our invention, Ghostline®, we did not know all that we eventually learned, but we did know that we could find out what we needed to know. Or, we could find the people who knew the information we needed to learn in order to figure out how to do what we wanted to do.
We often hear from people who have an idea (a “wouldn’t it be nice if…” idea) but they don’t know how to do it themselves and they don’t know how to find an expert in the appropriate field to help them either. By the way, the expert you hire to help you develop your invention may turn out to be the actual inventor, not you, if you are not cautious. You must know of a way to make your invention work to be the inventor. At the very least, your expert may have to be listed as a co-inventor. (See Contractor’s NDA on the Resources page)
The chances of success for a first time inventor are greatly enhanced when the inventor stays within his/her area of knowledge. Don’t try to invent a complicated device on your first time out. There are many simple, yet useful, items that will make life easier for all of us yet to be invented.
- How do I make sure my idea is unique and it is mine to pursue?
In order to make sure that your idea is unique, it takes a little “detective work”. First, visit all of the stores that might carry merchandise similar to your idea. For example, if your idea is a new kitchen gadget, go to kitchen specialty stores, department stores, discount stores, etc. (any store that might possibly carry your type of product) and check to make sure that you do not see your idea. Then, check catalogs that carry similar merchandise. You can probably do most of the catalog research online as almost all catalog outlets are online now. If, after looking in all of these places, you still have not found your idea, it is time to do a patent search. You can do a preliminary patent search online. The reason you need to do a patent search, even if you have not found your idea, is because over 97% of the patents that are issued to independent inventors never make it to the marketplace. But, if they are patented, and the patent is still active, then it would be an infringement if you were to create that product.
We joke that new idea product and patent searches are the only ones we know of where you hope you don’t find what you are looking for! The United States Patent and Trademark Office (USPTO.gov) has the same database online that is available to you at the patent libraries around the country and it is free! The catch is that, even though online patent searching is not difficult, there are some things you need to know in order to make sure that you check thoroughly. The people who work in your nearest patent library can give you tips, or if you decide you need a bit more help, we offer a free step-by-step guide to online preliminary patent searching. It can be found on our Resources page. This e-book a pretty large document that is about 40-50 pages in length. Have plenty of paper in your printer.
Good patent searching is not hard (just time consuming and tedious), but you need to know a few tricks to make sure that you do not overlook some places where it might be listed. A professional patent search usually costs around $400-$700 (depending on the complexity of your invention), but if you do a good preliminary search, you could save yourself that money if your idea is already patented. If you do not find your product in your preliminary patent search then it is a good idea to have a professional search done before proceeding with patent protection.
- What is a non-disclosure agreement and why is it important?
A non-disclosure agreement or confidentiality agreement (they are the same thing) is extremely important in the protection of your idea and allowing you the time you need to develop your product. It is a simple statement that you should have signed by anyone to whom you show your invention. It states that they have seen your invention and agree not to use the idea themselves or tell or show it to anyone else.
The United States Patent and Trademark Office (USPTO) has a very strict rule. You have exactly one year in which to file for your patent from the first time you disclose your invention by telling someone about it, showing it to someone, or promoting or selling your product without having first had them sign a non-disclosure agreement. If you allow the one-year period to elapse without filing for the patent you forfeit all rights to ever file for a patent on that invention.
We provide sample non-disclosure documents that may be printed from our website (on the Resources page). The basic non-disclosure agreement on our website was prepared by our Texas patent attorney. If you are in a state other than Texas we would encourage you to have an attorney in your state approve it before relying on it for protection. Your local inventors club will undoubtedly have sample non-disclosure agreements that are approved in your state. Check with them. The NDA is for your files. The person who signs it does not need a copy but it is okay to give them a copy if you wish to.
- Manufacturing and Distributing vs. Licensing
The problems related to manufacturing and distributing a product by independent inventors are daunting. Most retail outlets will NOT buy from a manufacturer (even if it is you) who has only one product to sell them. They almost universally say that they will not buy any product, no matter how great it is, from a single product vendor.
Stores have maps of their shelf space that are called planograms. Shelf space is very valuable and companies vie for inches of space on the shelves. Every inch is allotted to a specific company. These companies place their most profitable items in their allotted space. Generally retailers do not have any unassigned space to give to an independent inventor. (A relatively new exception to this rule is that some Target stores have a small amount of shelf space that the manager of that specific store is allowed to use for local independent inventor’s products, if he likes your product.) Otherwise you may be limited to small independent retailers. Occasionally they will place products from an independent inventor but, if your goal is wide distribution, the small independent retailers will not do you much good.
When we were still patent pending with Ghostline ® we were able to sell it to independent teacher supply stores and independent office supply stores. We were moderately successful doing that. When, however, we were able to license Ghostline ®, our licensee immediately placed it into all the large chain stores that we, as independent inventors, had no success in doing ourselves. Our income increased dramatically overnight. Our licensee, Carolina Pad & Paper International, already had the distribution channels in place to make our product available nationwide. We would never have been able to approach the success we now enjoy had we been manufacturing and selling it ourselves.
It is important for you the independent inventor to remember that if you license your product to a manufacturer that already has other products placed with the retailers, it is a simple matter to add your invention to their line of products and get it on the store shelves.
Not many independent inventors have the expertise or the resources to manufacture and distribute their product themselves. Licensing, on the other hand, is perfect for the independent inventor. As the inventor, you have had the joy of creating a new product for the market place and you will have the thrill of seeing your great idea on store shelves. Now, as the licensor, you will receive a royalty for your ingenuity and creativity and you are free to create more and more great products. Welcome to the great world of product developers! You can now embark on the most exciting, challenging and rewarding career ever.
The percentage of royalty paid to an inventor varies. The most common percentage is 5%. That is not a hard and fast rule, however. Some royalty rates can be as low as 1%-2% or as high as 15%-20% or more. It all depends on the item, the industry, the size of the potential market and the competition for your agreement between potential licensees.
- Enforcing the patent. Do you really want to do that?
Congratulations! You have a patent! Many independent inventors may not realize that they are responsible for enforcing it. That means that the independent inventor must keep a diligent watch for possible infringers. The United States government does not care if your patent is infringed. They will do absolutely nothing to stop it. Your patent gives you the right to sue infringers. Furthermore, if there is an infringer and you do not sue them you are, in effect, giving up the protection the patent offers. You must stop any infringers in order to continue enjoying the exclusivity offered by the patent.
If a large company decides to rip-off your product it is up to you, and your pocketbook, to stop them. That can be very costly. It is estimated by patent attorneys that the average cost of a patent infringement lawsuit is $1,000,000 or more! A large company may correctly assume that even though they are clearly in the wrong they can deplete your financial resources and you will give up.
As bleak as that sounds, there is a way for independent inventors to protect their patents. The answer is licensing! When you give an exclusive license to a manufacturer for your product it is important to write into the contract that the licensee will enforce the patent. This is a BIGGIE for independent inventors. It relieves them of a potential tremendous financial burden that most independent inventors can ill afford.
Usually only exclusive licensees will agree to this provision. If you choose to license to more than one manufacturer the responsibility to enforce the patent remains your responsibility. On the other hand, if you license to several different companies and are raking in the money, perhaps you can afford to enforce the patent yourself. That is a judgment call that only you can make.
Another option is to buy patent insurance. This insurance is available in some cases.
- Pricing your product
Before you proceed with your invention it is important to determine how much it will cost to manufacture it and what the eventual retail selling price is likely to be. Many independent inventors drop the ball at this point. They have no idea how much it will cost to manufacture their product but they often have a wildly exaggerated idea of the retail selling price. Now it is time to do your homework. Go to the library or get on the Internet and do some research on what the cost will be to manufacture the components of your invention. Make some calls! Go see some companies that make the raw materials you require. Get as accurate an estimate of the cost of manufacturing as you possibly can. Any potential licensee will want to know that you know your business.
If it is absolutely impossible to track down this information, then there is another, but less accurate, way to “guestimate” the manufacturing cost of your invention. Go to the stores that would be likely to sell your invention. Look at the products that are closest to your invention, or look at products that are made of similar materials and with similar processes. Divide the retail selling price by four. The rule of thumb is that most products sell for four to five times the manufacturing, packaging and distributing costs. Use that figure as an approximate manufacturing cost of your item.
- Presenting your product to potential licensees
Before you call the manufacturer to make an appointment to show them your invention you must prepare a professional presentation that explains what your invention is and why it makes good business sense for them to be the exclusive licensee. An important fact that many independent inventors tend to overlook is that the manufacturer is their customer, not the final purchaser of the product. You must sell them on why your product will be beneficial to them. If you convince them, it will be their job to sell the consumers.
If at all possible, call and make an appointment to meet with the head of the appropriate department at your target manufacturer. You are the inventor. You know your product and why it is needed more than anyone else. Who is better to present your product than you? No one! Your enthusiasm for your product is contagious. Infect them!
If, however, it is not possible to present your product in person then it is doubly important that your written presentation be first rate. The written presentation should be given both to those you meet in person and those that only receive the presentation.
The presentation should anticipate all their questions. For example, explain what your product is, why it is needed, how it works, how much it will cost to manufacture it, and why it would be a profitable item for them, etc. Design your presentation to speak for you. If you are able to meet with them in person give them the written presentation after you have completed the oral presentation. You do not want them looking at the presentation rather than at you while you are presenting your product.
It is important to give them a copy or a few copies of the presentation for them to have to show to other decision makers within the company. A dynamite presentation will ensure that all your terrific selling points will be made to those who did not attend the meeting rather than relying on your contact to sell your product for you.
After completing your presentation, proofread it. Then proofread it again and again! You must not send out a presentation with even one typo. Also, go over each page to be certain that it looks perfect. Make sure all the margins and indentations are exactly the same. It will defeat the purpose of making a professional looking presentation if it does not look absolutely perfect.
Once you have finished the presentation get it bound in a professional looking binder. (We always choose black with a clear cover.) Prepare one or two presentations for each company you target as potential licensees. It is really not expensive to have them professionally bound (FedEX Office, Office Depot, Office Max and Staples provide this service) and makes a big difference in how the presentation looks.
If you are not meeting with the company in person do not simply send the presentation. It must be accompanied with a personal letter. In the letter explain who you are and how you happened to invent this very neat product. Make it a personal story. Everyone can relate to a personal story that tells how you solved a common problem.
For the presentations that will not be delivered in person we suggest that you send them by FedEX or Express U.S. Mail. It will cost a little to do this but it will be well worth it. Those who receive it are much more likely to treat it with the respect it deserves if it arrives by FedEX or Express U.S. Mail rather than regular first class mail. They will be much more likely to open it and pay attention to it when they might easily dismiss a letter.
If you are dealing with a small to mid-sized company that does not have a research and development (R & D) department you could send the presentation directly to the president or vice-president of the company. If the company does not have an actual R & D department but there is a new products person you may want to try to contact them first. You can always try contacting the president or vice-president if you get no response from the new products person. This is a personal judgment call. Even small to mid-sized companies sometimes suffer from “Not Invented Here” Disease (NIH Disease) so beware! If you are dealing with a large manufacturer that does have an R & D department it is very important to submit your product through them.
We offer a free e-book on preparing your product presentation as our gift to you. It can be found on our Resources page. All we ask in return is that you perform acts of kindness for others. This website and our e-books are part of a kindness chain. Please pay it forward.
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|Develop A Prototype|
After you have completed a patent search and have satisfied yourself that your idea is unique, it is time to make a prototype (working model). It does not have to be elaborate or expensive. It does not have to be made of the materials that the final product would be made of. Just make it out of any material you can find. It only needs to demonstrate what your invention is, how it works and that it DOES work. If your invention is something that you cannot make even a rough prototype of yourself there are companies that specialize in making prototypes. Their fees, however, can sometimes be quite expensive so if you are able to make it yourself you are often better off to do so.
If your prototype is something that needs to have a plastic injection mold they are extremely expensive. Now, however, there are less expensive alternatives. A process called rapid prototyping is an alternative to plastic injection molding for a prototype. The machines that do the rapid prototyping are basically 3-D printing machines. The machines take a drawing and build a model, microscopic layer by microscopic layer. There are several different machines that are able to build prototypes in the manner. You can find listings for companies all over the world that provide rapid prototyping services by using the keywords, rapid prototyping or by going to www.additive3d.com. On this site, page down to the heading “Commercial Service Providers” and you will be able to find the rapid prototyping service closest to you.
The rapid prototyping machines are now widespread and can even be found at many colleges and universities. If you have a school that can make your rapid prototype it will probably be less expensive than if you go through a commercial service that provides rapid prototyping.
Rapid Prototyping does not replace plastic injection molding for durability. It is, however able to make a prototype that will clearly demonstrate what will be needed to manufacture your invention. A prototype made with the rapid prototyping process is usually more than sufficient for an inventor to show to a prospective licensee. And, the cost is dramatically less expensive. It is not unusual for a plastic injection mold to cost tens of thousands of dollars. Rapid prototyping can cost a few hundred dollars.
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Before you spend a lot of money on a patent for your invention it is a good idea to get it evaluated by a professional firm. They can analyze the competition, the market acceptance and the cost of manufacturing your product among other things. There are several places you can go for legitimate invention evaluations. The costs for their services vary generally from around $50.00 (for a very limited study of your invention) to around $900 for a very thorough and useful evaluation. You can find a list of the evaluation sources we recommend on our Resources page.
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|Presenting To Manufacturers|
Before you call the manufacturer to make an appointment to show them your invention, prepare a professional-looking presentation that explains what your invention is and why it is important. Even if you are going to meet with them personally, it is important to leave a presentation with them that they can have to refer back to or to show to other key decision-makers.
It is always best to meet with potential licensees in person but that is not always possible. There are times when distance, time and money constraints prevent a face-to-face meeting. When we were trying to license Ghostline® we were operating on a tight budget and we could not afford to go to the various far-flung locations of the manufacturers of poster board. That was why it was doubly important that our presentation be first class.
Make your presentation as complete and self-explanatory as possible. Try to answer all the questions the potential licensee might have about your product. For example, explain exactly what your invention is and how it works. Also, explain why it will be a money-maker for the manufacturer. When we made our presentation following these guidelines, we were able to inspire three large manufacturers to either come to us to visit about Ghostline® (one company did!) or to pay for us to come to them (one company did!).If you feel that you need a little more guidance in preparing the best presentation possible, we offer the ultimate Guide to Preparing a Compelling Presentation free of charge. It provides you with the format, the step-by-step instructions on tailoring it to your invention, the questions to ask and answer and a sample successful presentation. You have worked hard to get your invention ready to show to potential licensees; don’t drop the ball at this critical point. This guide could make the difference between having your product licensed or not. You can find the link to this free guide on our Resources page.
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|Licensing Your Product|
Licensing is a very personal decision and only you and your attorney can work out the specifics. Every situation is unique. There are a few things that you should consider. First, if you choose to offer an exclusive license, ( you will license to only one licensee), it is customary that the licensee assume the responsibility to enforce the patent. This is a biggie. No matter how great or strong your patent is it may be challenged. If it is challenged the legal fees can be enormous! It is very advantageous to the inventor to have a licensee assume that responsibility.
If you choose to offer non-exclusive licenses ( more than one company will be licensed to manufacture and distribute your product) it is customary that the responsibilities for enforcing the patent remain with the inventor. Not many inventors have the resources to assume this responsibility.
The percentage of royalty paid to an inventor varies. The most common percentage is 5%. That is not a hard and fast rule, however. Some royalty rates can be as low as 1 - 2 % or as high as 15-20% or more. It all depends on the item and the industry.
When drawing up your licensing agreement we would suggest that you include provisions that allow either party (you or the manufacturer) to terminate the contract after a specific number of years with adequate notice. In addition it would be ideal to include a provision that would allow you to renegotiate the contract after a specified number of years. We would also suggest that you include a provision that addresses what would happen if the company you licensed your product to filed for bankruptcy or went out of business. Finally, you should include a guaranteed minimum of royalty to be received each contract year and penalties for late payment of royalties.
Finding Potential Licensees
Once you have your patent in hand and have had your invention evaluated by a legitimate evaluation service (several are listed on our Resources page) it is time to concentrate on finding a licensee for your great invention.
At your local public library, the reference librarian can help you to find a list of manufacturers in the United States who manufacture items similar to or at least in the same category as your invention. Your library should also have online databases that you can access from your home computer that will list the companies that make products similar to your invention. These databases will also provide you with names and contact information for the key players in these companies. Look on the homepage of your library’s website for “databases” or “research”. You can also find a set of business directories called The Thomas Register Online.
Another way you may find just the right manufacturer is to go to stores and look at products that are similar to your invention. Most of the packaging should list the name and address of the manufacturer.
You can use the internet to locate potential manufacturers through the national Yellow Pages or by using keywords. For example, if you have invented a new type of baby swing, use keywords "baby swing," "baby furniture," "baby supplies," "child swing," etc. etc. etc.
You can find potential licensees by looking at the patents you found that were closest to your idea in your patent search. Check to see if any of those patents are listed as "Assigned" to a company. Any company that has assigned another patent is a company that may license inventions from independent inventors.
Trade Shows can be the shortcut to finding multiple potential licensing partners!
One of the best ways to locate potential licensees is to go to a trade show for that industry. There are LOTS of them. Just go to Google and type in "____________ (your category of invention ~ for example, ‘golf’) trade show" and it will bring up links to lots of trade shows that feature that category of products. At these shows the manufacturers of your type of product will have booths and they will be selling to the retailers who attend the show ordering products for their stores. We suggest that you join one of the associations that sponsor these trade shows. You can probably join as an associate member for a reasonable fee. Then go to one of the shows. The first couple of days you should just walk the show floor and make notes on the companies that look like potential licensees of your product (your item would fit right in with their existing line of products). On the last day of the show (when all the buying by the retailers is done) go to the booths you identified as potential licensees. Give them your business card and ask them if they ever license products from independent product developers. They will either say that they do, they do not, or they might. If they say that they do or they might explain that you are an independent product developer and you have a product that would fit right into their line of products and you would like to call them in a couple of weeks to set up an appointment to show it to them. Do not tell them exactly what your product is. Simply tell them that it is a product that solves such-and-such problem or an improvement on _____. Get their business card. In a couple of weeks call and remind them that you met them at the _________ show. Tell them that you are a member of that association and you will immediately be treated as a professional and someone who is familiar with their industry. Your chances of getting an appointment to show them your invention is dramatically increased when using this method. At that point make the appointment and go and pitch your product.Before going to a trade show, be sure to prepare a top notch presentation. Click here for the free guide to preparing your presentation. Take the presentation with you to refer to if you wish but don’t give it to them at the trade show. They may misplace it or even misunderstand the invention if you are not there to present it personally. This gives them an opportunity to turn you down on the spot without giving you an opportunity to present it as only you, the inventor, can. The presentation is for you to leave with them after you have made your pitch.
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|Toy & Game Inventing|
Toy and game inventing is a special category of inventing and operates a little differently than the rest of the inventing industry.
The approach for selling a toy or game to a toy company is different from selling an invention to a manufacturer. Before an inventor presents his product to a potential manufacturer or licensee it is important that he have some sort of protection for it. (i.e. utility patent or provisional patent application) but that is not the case when presenting toys or games. As a matter of fact, toys and games are almost never patented. The toy and game industry is very fast moving and they would be left behind the trends if they waited to receive patents for their products.
This does not mean that you should not conduct a patent and market search to be certain that a patent on your product does not already exist; you should. Because some toys and games are patented, you cannot assume that it isn’t and move forward without checking.
The toy and game industry is also different in that it is a very relationship-based industry. The players in the toy and game industry all know one another and they operate on a high level of personal trust. To be accepted as an insider takes years of developing personal relationships with the decision makers in the various toy companies. It is very difficult for an independent toy inventor to break into the club. This is not to say that an individual has not or cannot be the exception. There have been exceptions. This description is simply offered to inform toy inventors of the obstacles they may face.
It is not necessary that your prototype look exactly like it will look when it is on the toy store shelves. It is necessary that it look as good as you can make it look. For example, you may want to laminate cards, if your game includes cards. It is also important that you can actually play the game. Have all the parts there. The more polished your prototype is the most likely it will be to sell.
Test your prototype before you present it to anyone. And, test it with the target market to which you hope to appeal. If your game is for children be sure to have children play the game. Watch their reactions more than their words. Did they catch on to the point of the game quickly? Did they have fun? Did they want to play longer? Children will often tell you what you want to hear. They may say, “Oh, it was great!” because they do not want to hurt your feelings. Watch them! This is a case where their actions speak much more loudly than their words.
If your toy or game is for children don’t make it too hard. When children play they want it to be fun, not work.
Professional Associations and Magazines
If you wish to be a toy or game inventor you should start by joining the professional associations for the industry (e.g. Women in Toys Association or American Specialty Toys Retail Association). Go to your local library and talk to the librarians. They can show you how to find the various professional associations. Subscribe to the magazines put out by the toy industry (e.g. Playthings Magazine). Study them from front to back, including the classified ads. As you become more and more familiar with them you will begin to see the same names appear over and over.
Toy Shows & Conventions
Attend toy shows and conventions. The largest, Toy Fair, is held each February in New York City at the Javitz Center. It is open to the public. The TGIF Conference is held in Las Vegas each year for adult or strategic games. If you have done your homework by studying the various publications you will recognize names as you walk the fair. Walk up and introduce yourself.
If you have a toy or game to show wait until the last day of the fair when the exhibitors have done most of their work before approaching them with your toy or game. By the last day they may be just passing the time until they can go home and they would be happy and available to visit with you. They may not buy your toy or game on the spot but get their card and write to them when you get home. Remind them that you met them at Toy Fair or TGIF, etc.
Presenting to Manufacturers
It is possible to present your toy or game to a manufacturer yourself. Choose the companies carefully. For example, if your toy is a board game made of cardboard and plastic choose a company that makes similar products. Don’t waste the time of a company that makes nothing even remotely similar to your toy or game. Use non-disclosure agreements. Most companies will sign yours but a few ask you to sign theirs.
There are a few guidelines if you go to the company yourself.
Even though you may be going in to show a toy or game that is meant to be played in a casual atmosphere, dress professionally for the appointment.
If they are interested, present your product quickly and succinctly. Don’t read them all the rules; just show them how the game plays. They do not have a lot of time to spend and will appreciate it if you do not waste their time. Also, when you do have a toy or game that might be a fit for them they will listen to you.
Leave them with a description or presentation of your product that they can take with them. Do not, however, leave your only prototype with them.
Don’t ever say, “All the kids in the neighborhood love it.” That is a dead giveaway that you are a novice in the toy industry. They may discount everything else you have said if you utter a statement similar to this one.
If your toy or game does not fit into their plan excuse yourself and leave. Do not insist on showing them your game if they are not interested. Ask them what they are looking for. If they have told you that your toy is not what they are looking for at this time, ask them what types of toys or games they ARE looking for. They will usually give you their wish list and you can go back to the drawing board.
The easiest way to break into the industry is to hire an agent. Toy companies like to deal with agents with whom they are familiar. Agents can get the ear of the decision makers when it is very difficult for you to do so.
The easiest way to find an agent is to call the company you wish to sell your idea to. Ask to speak to the inventor liaison. If they do not have someone by that title they will know to whom you should be directed. When you get them on the line ask them for names of the agents that they like to deal with. They will tell you! Then call that agent and see if they would be interested in representing your toy or game.
Agents are not cheap. They normally charge 50-60-% of your royalty. For example, if they negotiate a 5% royalty (that is the most common rate) then they would get 2 ½-3%and you would get 2%. Keep in mind that a small percentage of something is much better than all of nothing! That is steep but it is the going rate, and it gets you in the door. After you get a few of your toys or games licensed you may be able to approach the company directly.
We know of two legitimate toy agents. You can find them listed on our Resources page.
If you are lucky enough to find a company to license your toy it is crucially important that you get a good contract. Here are a few things to watch for:
- Always get an EXCLUSIVE, not non-exclusive contract
- Describe your invention completely.
- Get a lawyer to look it over and negotiate for you. You may be a great toy inventor, but it is unlikely that you are also a great legal negotiator. Get a professional to help you out.
- Be careful what the company is allowed to subtract before paying the royalty.
For example, it is common that they deduct promotion deals. You can, however, request a cap on how much that can add up to.
- Get the highest royalty you can!
- Try to get as big an advance on your royalties as you can. (There are a few companies that do not pay advances.) If they have given you a big advance they are much more likely to actually take your toy or game to market because they already have an investment in it.
- Protect yourself against lawsuits. Insist on being listed on their insurance policy as also insured. Require them to send you a certificate of insurance as proof that they have done this. Also, get a statement that says you are only liable if your actual product injures someone, not the packaging that it is in.
- Have an ending date to the contract and other criteria that could make the contract end.
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|Don't Be Scammed|
Don't Be Scammed!
The Office of the Independent Inventor of the United States Patent and Trademark Office has graciously granted their permission to reprint the following, their brochure, “Are You the Target?” on our site.
Every year thousands of Independent Inventors, like yourself, are targeted by unscrupulous invention promotion, marketing and licensing firms. These firms take advantage of an inventor’s enthusiasm for their product. They not only solicit inventors with exaggerated promises to obtain valuable patents but they make false claims about the potential market success of those inventions. These firms provide you with basic market research at a large fee and ultimately obtaining an overly narrow or useless patent that is worthless in the marketplace. Remember, if it sounds too good to be true, it probably is.
- DO write a letter to any promotion, marketing or licensing company that seeks to help you and ask for written answers to the TEN QUESTIONS listed here.
- DO use common sense in evaluating the answers. If they make sense, fine. If not, seek assistance from a patent attorney or agent or, contact the Office of Independent Inventor Programs at the United States Patent and Trademark Office.
- DO get information and answers in writing, signed by a company official before you pay any money or sign any document.
- DO be alert for the scam warning signs and hooks.
- DO NOT accept verbal promises, assurances or representations.
DO NOT be a victim of a scam
Ask Ten Questions and Save Thousands of Dollars$$
Get answers to these questions in writing from any promotional, marketing or licensing company wanting to help you. Helpful hints are given in the brackets.
- Total number of inventions evaluated for commercial potential in the past five years by the Company and how many of those evaluations were positive and accepted by the Company and how many were negative and rejected by the Company. [Legitimate firms have fairly low acceptance rates, usually under 5%].
- Total number of customers, known by the Company, who have received a net financial profit as a direct result of the Company’s promotion services and what is the Company’s success rate over the past five years [that is, the number of clients who have made more money from their invention than they have paid to the Company].
- Names and addresses of all previous invention promotion companies with which the Company or its officers have collectively or individually been affiliated in the previous 10 years and what other names has the Company used in this or other states.
- Total number of customers, known by the Company, to have received license agreements for their inventions as a direct result of the Company’s services. [If the success rate is too low, say less than 2-5%, then think about going elsewhere.]
- How many customers (inventors or their representatives) have contracted with the Company for promotional services in the past 5 years; excluding those who have purchased trade show services, research, advertising or other non-marketing services and excluding those who have defaulted on payments to the company.
- If there an up-front fee, if so, how much is it and what are you getting for it? How much will the complete process cost from submission of my invention to obtaining a patent and a licensing agreement? [Reputable firms have relatively small, if any, upfront or other fees because they make their real money from successful royalty arrangements for the inventions they accept.]
- Has the Company ever been investigated by or been in trouble with the Federal Trade Commission, Better Business Bureau, any consumer protection agency or Attorney General’s Office and if so, when and where?
- Who selects and pays for the patent attorney or agent to do the patent search, patent ability opinion and patent application preparation? [You should be able to select your own, because the attorney or agent represents you, not the Company.]
- Provide you with the names, addresses and phone numbers of five clients of the Company in your geographical area and copies of all contracts and forms to review [Do this before signing or paying any money].
- Does the Company provide a written opinion of the “marketability” (that is, potential success) of your invention? [If all you get is a market analysis, for example, the number of potential customers, it’s probably not worth much.
Top Ten Scam Warning Signs
- Slick ads on radio, TV and magazines [These are the first “hooks”].
- The Company’s refusal to respond to your questions in writing signed by a Company official [Legitimate Companies will provide the answers in writing.]
- Salespersons want money right away. . . upfront.
- You are told to describe your idea in writing, mail it to yourself and don’t open the envelope because that will prove your date of invention. [This is worthless advice.]
- You are promised a patent search but no patent ability opinion signed by a patent attorney or agent. [This should be provided to you.]
- You are guaranteed to get a patent or your money back. [No one can guarantee issuance of a useful patent]
- You are advised to apply for a design patent. [This type of patent has limited applicability to most inventions.]
- You can’t reach salespeople or company officials without leaving many messages. [Maybe there is no real office location or company.]
- You are told that your idea is a “sure-fire” hit! [Probably every client of this company is told that. Be skeptical!]
- The Company refuses to provide client references or copies of forms and agreements for your review. [Get at least five names in your area to contact and show the forms to an attorney before signing.]
Beware the Hooks that Lure you Into A Scam
Unscrupulous invention promotion, marketing or licensing companies use a series of “hooks” to lure you into the company’s web:
- 1st – the “free” inventor’s kit;
- 2nd – phone calls to get your money for an invention evaluation;
- 3rd – the evaluation then leads to a request for more money to create a report;
- 4th – the “report,” in a nicely bound book, says that your invention is patentable and marketable; and
- 5th – now there is need for more money to continue the process of getting a patent and marketing your invention.
Invention Promotion Swindlers Ordered to Pay $60 Million in Scheme that Defrauded 17,000 Consumers
FTC Press Release, September 6, 2007
The operators of an invention promotion business, which a judge called “one grand con game to take money away from consumers,” have been ordered to pay $60 million for violating a 1998 court order.
“By changing the name of their company, these individuals thought they could continue to make false promises and take inventors’ money, but they didn’t get away with it,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “This scam should also remind inventors to question the assurances of promotion firms. No one can guarantee an invention’s commercial success.”
Under the 1998 order, Julian Gumpel, Darrell Mormando, Michael Fleisher, and Greg Wilson were barred from misrepresenting the services they offered to amateur inventors, but they revived their scam under a new name, the Patent & Trademark Institute (PTI). For a fee of $895 to $1,295, PTI promised to evaluate the marketability and patentability of inventors’ ideas, but its evaluations were almost always positive and were not meaningful, according to the FTC. For a fee of $5,000 to $45,000, PTI’s clients were offered legal protection and assistance to obtain commercial licenses for their inventions. They also were told that PTI would help them earn substantial royalties from their inventions, but PTI did not help consumers license their inventions, and clients did not earn royalties.
In January 2007, the FTC charged the defendants with civil contempt and obtained a temporary asset freeze against PTI and its owner, Gumpel, and the appointment of a receiver over PTI. In March, the FTC added Fleisher, Mormando, and Wilson as contempt defendants, alleging that they participated in the order violations as managers and salesmen.
On May 3, 2007, after a four-day hearing, U.S. District Court Judge Gerald Bruce Lee held the defendants in contempt, finding, among other things, that PTI failed to disclose to consumers that none of its clients had successfully marketed an invention. The judge concluded that consumers were defrauded of $61 million through “lies and misstatements.”
On July 12, 2007, the court permanently banned Gumpel, Mormando, and Wilson from engaging, in any way, in the marketing of invention promotion services. The court did not enter a ban against Fleisher because he did not sign the original order, although the court found that he knew about it and was subject to it. On August 27, 2007, the court entered an order holding PTI and Gumpel jointly liable for a $61 million judgment, and holding Fleisher, Mormando, and Wilson jointly and severally liable for the judgment to the extent of $59,682,958.
PTI operated through several corporate entities, including original defendants Azure Communications, Inc. and London Communications, Inc., and through United Licensing Corp., International Patent Advisors, Inc., Datatech Consulting, Inc., International Product Marketing, Inc., and Unicorp Consulting, Inc. These companies also were held in contempt and ordered to pay $61 million.
The Commission appreciates the substantial assistance in this case provided by the U.S. Attorney's Office for the Eastern District of Virginia and the U.S. Patent & Trademark Office.
The FTC has established a phone line for consumers who may have been harmed by PTI's conduct. Consumers may call 202 326 2926 for more information.
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 in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 877-FTC-HELP (877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.
Sites to visit to be certain you are not dealing with a scam company:
- Federal Trade Commission
- National Inventor Fraud Center - Provides information to consumers about invention promotion companies and how people can market their ideas.
- InventorED, Inc. Watch dog list of scam companies. Be sure to check this out!
- IP Watchdog - Site run by Gene Quinn, patent attorney and law professor to help you avoid being scammed.
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