Jill Gilbert Welytok is the managing attorney for Absolute Technology Law Group LLC, which is a team of Registered Patent, Trademark and Transactional attorneys.
Joint Meeting of the Mequon and West Bend Inventors Clubs
Brook Stevens Design in Grafton, WI
June 17, 2008
"Finding Funds to Bring an Invention to Market"
Dan Steininger "Ten Commandments of Venture Capital"
Dylan Morgan "Finding Funds to Fill a Purchase Order"
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860 Badger Circle
Grafton, WI 53024
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Hiring a Marketing Firm: Your Rights Under the Inventor’s Protection Act
By Jill Gilbert Welytok
Friday May 9, 2008
If you’re an inventor with a promising idea where do you turn? Many companies may offer to help you patent and market your invention. They sound very enthusiastic about your idea. It is tempting to hire an “experienced” company to get a patent, a prototype and do “everything” you need. Especially when the company all but promises to land you a lucrative licensing deal for your invention. Unfortunately, many aspiring inventors fall prey to consulting companies that charge large fees but don’t make a profit for anyone other than themselves. In 1999, Congress took action against invention promotion firms and enacted the American Inventor’s Protection Act.
What the American Inventor’s Protection Act requires
Under this law, invention marketing firms must disclose:
1. The total number of inventions they’ve evaluated and the number that have received either positive or negative evaluations;
2. The total number of customers who have hired them in the past five years;
3. The total number of customers known to have received, as a direct result of the particular invention promotion firm’s efforts, an amount of money in excess of the amount paid by the customer to that firm;
4. The number of customers that have received a royalty-paying license agreement for their inventions as a result of the efforts of the firm; and
5. The names of all previous invention promotion entities with which the present invention promotion firm has been affiliated within the past ten years.
The American Inventor’s Protection Act also permits you to recover for injuries, costs, and legal fees if you can prove a promoter has made any false or fraudulent statements or omissions of any material facts to you in connection with your contract.Tips for steering clear of marketing firms that never seem to close a deal
Here are a few tips to avoid getting involved with an invention marketing company that has a history of promising more than it delivers:
Don’t be taken in by television commercials and elaborate advertising. You’ve probably seen advertisements on late-night television. The invention promotion firms virtually assure your marketing success if you sign up with them. Usually they direct you to a phone number or web site to increase the chances you’ll sign up without shopping around and clarifying their services.
Beware of up-front fees. The Federal Trade Commission has published tips for consumers to avoid being victimized by invention promotion firms, the most blunt being:“If a firm is enthusiastic about the market potential of your idea – but wants to charge you a large fee in advance – take your business elsewhere.” The vast majority of reputable licensing agents and marketing firms rarely charge an up-front fee.
Question a single company’s ability to do it all. Firms that claim to provide a wide range of services ranging from patent protection, design, packaging, prototyping and presenting your invention to retailers probably don’t do these services themselves. They most likely send them out to other companies and charge a high mark-up for these services. It certainly will be more work for you to price these services separately, but you cannot be an informed business person and prepared for negotiations unless you do so.
Make sure you are getting an objective opinion about your invention. Many invention promotion firms prepare glowing reports about the novelty and market potential of every invention that is submitted to them. The company will tell every inventor their invention is going to be a blockbuster and take the consumer market by storm. This is so the inventor will continue to pay them large fees, rather than abandon even a very weak or unoriginal concept.
Speak with a registered patent attorney or agent. The United States Patent and Trademark Officepublishes a list of all Registered Patent Attorneys and Patent Agents throughout the United States. Simply visit https://oedci.uspto.gov/OEDCI/ for information about patent practitioners in your area.
Have an attorney review your contract before signing it. The contract an invention promotion firm asks you to sign may contain small print with large loopholes that allow the company to avoid taking any responsibility for the economic success of your invention. In particular, the company may be required to use its “best efforts” to market your invention, or to show it in a certain number of places. The problem is those places may not be ones where people are likely to license or purchase it. The trick is to review the contract before signing it, and take the following steps when services that you feel have been promised have not been delivered.
Check the U.S. Patent Office Website for Prior Complaints. Both the USPTO and FTC maintain sites, which list companies against whom complaints have been filed at http://www.uspto.gov/web/offices/com/iip/complaints.htm
In addition to consulting a Registered Patent Attorney or Patent Agent, there are a number of agencies that you can contact for further assistance.
· U.S. Patent and Trademark Office. The USPTO is not authorized to take action other than to publish the complaint and permit the firm an opportunity to respond.
· U.S. Federal Trade Commission. The Federal Trade Commission maintains an online database for complaints which is used by hundreds of civil and criminal law enforcement agencies. To file a complaint in English or Spanish call, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm.
· State Attorney General’s Office. Potentially your most useful resource is the office of Attorney General in your home stare or in the state that the invention promotion firm is located. Many states aggressively deal with unscrupulous invention promotion firms. Some states have specific laws on unfair trade practices or consumer protection statutes.