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Invention Promotion Organizations

The Patent Office recommends that you check on the reputation of so-called "invention promotion organizations" or "invention marketing companies" before making any commitments to them. You may do this by calling the Better Business Bureau responsible for maintaining records for businesses in the same telephone area code as that of the invention promotion organization. If other inventors have filed complaints against the organization, this is a good indication that the organization is not reputable. On the other hand, you should give no weight at all to the fact that no one has filed a complaint with the Better Business Bureau, unless the organization has operated out of the same location for more than four years. This is because, for their first few years of operation, invention promotion organizations are able to avoid formal complaints by telling their clients that they should not expect any concrete results for a period of three or four years. When this period expires, and clients begin to file complaints, the invention promotion organization changes its name and moves to another state.

The Patent Office also recommends that you ask your patent practitioner about invention promotion organizations. I have found that almost none of them are reputable. [One possible exception may be Kessler Sales Corporation in Fremont, Ohio. If anyone disagrees, please let me know]. In my opinion, if the Patent Office were to award patents to these organizations for each of their novel methods of extracting money from the pockets of independent inventors, these organizations would dominate the field! For example, when you ask the typical invention promotion organization to provide a quote for their services, this company quotes a basic fee which covers the cost of a patent search, a patentability opinion, and the preparation of a "handsome", bound, and engraved document which emphasizes the total value of the market in which your invention might be sold. The basic fee for these services is not excessive. However, despite the fact that a patent practitioner may supervise the work involved in their preparation, I question the validity of both the search and the opinion. The patent practitioner writes these opinions in light of the fact that the invention promotion organization is his client--not the inventor. Under these circumstances, most case law supports the proposition that the attorney owes no legal duty to you--rather, his sole duty is to his client, the invention promotion organization. Therefore, the invention promotion organization, as the practitioner's client, may instruct the practitioner to limit the scope of the patent search or to file only a design patent application or to file a utility patent application with claims so narrow as to assure obtaining a patent. In this case, the organization invariably asks the attorney to provide a written opinion as to whether or not you may obtain any type of patent at all (design or utility patent) on the invention. Both the organization and the practitioner know that the answer to this question will almost always be "yes", because, as I have already stated, design patents grant on about 80% of the applications which practitioners file and a narrow patent claim in a utility application is easy to obtain. However, the practitioner provides his opinion because he needs the money more than he needs a good reputation. The invention promotion organization pays for the opinion because it is sure to result in "good news" for you. [Be careful. If you ask the organization to review several inventions, they may attempt to disappoint you using one or two of your inventions, in order to set you up for the "good news" which they expect to deliver on another invention].

Once you receive (1) the bound search results, (2) a favorable patentability opinion which an attorney has prepared, and (3) market research emphasizing a very large potential market, everything appears to be legitimate, and you are beginning to see dollar signs next to six, seven, or eight figures! The invention promotion organization convinces you that they can sell or license your invention to a manufacturer. All you need to do is hire them, and, eventually, the checks will start rolling in. You are vulnerable at this point. Because the invention promotion organization knows this, they offer you a deal you cannot resist. For a fee of from $12,000 to $30,000, the organization will have a patent application prepared and filed for you. In addition, the organization agrees to market your invention for you, and help you get that million-dollar royalty contract which you surely deserve! In order to draw you away from your money, the organization tries to make you believe that they think your invention is a "sure hit". To "prove" this, they're willing to (1) accept a share of the future royalty earnings of the invention in lieu of a portion of their fee (the reduction is anywhere from $6,000 to $18,000), and (2) guarantee that if the Patent Office does not grant a patent to you, the organization will refund 100% of the fees you've paid them. In addition, if you don't have the cash, the organization will finance the fee for you. [Although the organization finances the fee, the organization sells the loan to a third party bank which is not associated with the organization. In this case, the law obligates you to pay the loan back in full, even when you can show that the organization committed a fraud against you]. By now, the organization has thoroughly convinced you that your invention will earn millions. When you run the math, it makes no sense to give the organization a portion of your future millions, just to save a few thousand dollars today. Therefore, you agree to the original fee. Unfortunately, you have played right into their hands.

What does the invention promotion organization really do for you? First, their fee (a minimum of about $6000) includes only the cost of preparing a design patent or a utility patent with very narrow claims. By filing a design patent application or a narrow utility patent application, the organization can afford to guarantee that a patent will grant, because, as you will recall, design patents grant on about 80% of the applications which inventors file and it's quite easy to get a utility patent with a narrow claim. This might be OK, if the patent that grants appropriately protects your invention. However, design patents are appropriate for only about ten percent of inventions and a utility patent with an excessively narrow claim is useless. In the case of design patents, if you were to randomly file design patent applications on inventions, chances are about 90% that you'll get a nearly worthless patent. In many cases in which organizations automatically file only design patent applications, the patent that eventually grants can actually harm you, when it becomes prior art which prevents you from obtaining the appropriate protection of a utility patent.

Let's say that you are still considering hiring an invention promotion organization, and that you believe, despite all that I've said, that the organization you have found is legitimate. However, you are willing to test them. In this case, I suggest that you call them and demand that they provide utility patent search results and a utility patentability opinion. Insist that you talk to the patent attorney directly and that he agree he represent you personally and not the invention promotion organization. Tell the attorney that you want his opinion to address the likelihood that the Patent Office will grant you a utility patent with claims of potential commercial value. Tell the organization that, in any quotation for services they provide, you expect the fee to include the cost of preparing, filing, and prosecuting a utility patent application. Demand that the organization provide all their guarantees in writing. If the organization is willing to guarantee that you will receive a patent, be sure that they guarantee that you will receive a utility patent having claims of potential commercial value, not just any patent. If you do all these things, you will increase your chances of getting something of value for your money. If the organization refuses to provide written guarantees or to follow your specific instructions, demand your money back. If they refuse to do this, immediately report them to the Better Business Bureau and the consumer protection division of your Attorney General's office!

In summary, you should be wary of doing business with professional service providers who have no ethical obligation to seek your best interest. Seek the advice of the Patent Office and of your patent attorney--these are the most reliable sources of information.

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