So, you’ve come up with the latest greatest flatulence powered toy rocket and you are all ready for people to start beating a path to your door. Sounds simple. You try to market it to a few manufacturers, but they apparently do not have the proper vision to see the boon to mankind your rocket really is. Just about that time, you get a letter from an invention promotion company. The pitch goes something “Pay us $10,000, we will market your product and take 50% of the profits. We really want the $10,000, but if you wish, you could pay us $500, but then we get 75% of the profit.”
You figure “Great. I will go with the second option. If they are going to put $10,000 of marketing behind me, they obviously feel that the only way they can recover their costs is to actually make a huge profit.” The problem is that all they want is your $500. Over the course of thousands of inventors, the $500 per inventor really starts to add up. Plus, once they have the inventor hooked, they can often squeeze a little more good money out to chase the bad. Now you are $500 or more in the whole and have wasted two years or more spinning your wheels.
Are there any good invention promotion companies? Well I am sure there are, but the odds that they would contact you, versus the other way around would be quite remote.
The first thing to do with any invention promotion company is to check them against the United States Patent and Trademark Office complaint list. As you can see, companies such as Davison & Associates Inc., Invent-Tech and Patent Trademark Institute of America have garnered quite a list of complaints. If your company is not on the list, that does not mean that they are reputable; it may just mean they are very new.
Recently a judge has ordered defendants in a lawsuit, which included Davison & Associates Inc. to pay $26 million back to consumers and has forbidden the company from making false claims to draw in inventors. Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection, noted “This outfit is typical of invention promotion scams . . .They touted their ability to turn inventors’ ideas into profitable products, but fewer than one percent of the customers who invested in their services got royalties from their patents that amounted to more than they paid the promoters.”
Invention promotion firms are notorious for scamming inventors. Iowa has even enacted specific laws relating to invention promotion companies “to safeguard the public against fraud, deceit, imposition, and financial hardship, and to foster and encourage competition, fair dealing, and prosperity in the field of invention development services by prohibiting or restricting deceptive practices, misleading advertising, onerous contract terms, harmful financial practices, and other unfair, dishonest, deceptive, destructive, unscrupulous, fraudulent, or discriminatory practices which threaten the public welfare.” Iowa Code Section 523G.2 (2005). The law mandates specific disclosures and warnings invention promotion firms must provide inventors when providing services in Iowa. Not surprisingly, I am not aware of any invention promotion firms providing services in Iowa. Tomorrow. How to spot a scam and turn a profit.