Ask The Inventors

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.

Dear Inventor,

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.

Please read the following!

Inventors Beware!

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.

Acknowledgements:
www.Ftc.gov
www.Uspto.gov

Also, the USPTO also has a list of companies who have had complaints lodges against them. You can find that list at: http://www.uspto.gov/web/offices/com/iip/complaints.htm . Please take a look at it.

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, 1-877-FTC-HELP (1-877-382-4357), 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.