Some Words about Invention Promotion Firms
Invention Promotion Firms (IPFs) hold themselves out as providing a range of valuable services to novice inventors. For example, many of these firms offer to evaluate the patentability of inventions, file patent applications, present the invention to manufacturers, build prototypes, and market inventions. They often point out that most conventional services, i.e., law firms and marketing consultants, do not offer all of these services and that the IPF charges less than the conventional services.
However, IPFs have a discouraging reputation among their clientele, many of whom felt that they paid good money for services that were worth far less than they were lead to believe. For example, some one firm notoriously filed design patent applications for their clients’ inventions without telling them how minimal the resulting protection would be compared to a utility patent application, which would have cost much more to prepare and file properly. Also, the service of “presenting your idea to corporations” might mean including your invention in a catalog of ideas that is sent, unsolicited, to the corporations (and likely disregarded). In the 1990’s the volume of complaints to consumer advocates led to attempts to regulate such firms, but the resulting legislation seems to do very little to help the public distinguish between a bona fide promoter and a scam outfit.
A chief complaint against IPFs has been their promises of success when their success rates were actually quite low. A little effort at investigating such firms on the internet reveals a multitude of websites that offer warnings and reports of abuses, but few, if any, compliments.
The American Inventors Protection Act (AIPA) of 1999 included a provision intended to provide some protection to IPF customers. Under the AIPA, IPFs are required to disclose actual success rate and other information to potential clients. Specifically, before an invention promotion contract can be established between a customer and the firm, the IPF must disclose in writing each of the following items of information:
- The total number of inventions evaluated by the invention promoter for commercial potential in the past 5 years, the number of those inventions that received positive evaluations, and the number of those inventions that received negative evaluations;
- The total number of customers who have contracted with the invention promoter in the past 5 years, not including customers who have purchased trade show services, research, advertising, or other non-marketing services from the invention promoter, or who have defaulted in their payment to the invention promoter;
- The total number of customers known by the invention promoter to have received a net financial profit as a direct result of the invention promotion services provided by such invention promoter;
- The total number of customers known by the invention promoter to have received license agreements for their inventions as a direct result of the invention promotion services provided by such invention promoter; and
- The names and addresses of all previous invention promotion companies with which the invention promoter or its officers have collectively or individually been affiliated in the previous 10 years.
A customer who proves to a court that they were injured by any material misrepresentation or concealment of such information by the IPF may recover reasonable costs and attorneys’ fees in addition to (a) their actual damages, or (b) an award set by the court, up to $5,000 or, if the court finds that the IPF acted intentionally to deceive the customer, it may award up to $15,000 (“statutory damages”).
However, the AIPA falls short of providing full protection for customers. For example, the statutory damages are contingent upon the customer successfully proving the deception and resulting injury in court; so the AIPA may do little to help injured IPF customers who cannot find counsel to start a lawsuit for them to begin with. Also, the AIPA does not charge any government agency with enforcing the disclosure requirements or with auditing IPFs for truthfulness. Moreover, the AIPA does not apply to any entity involved in evaluating the commercial potential of, or offering to license or sell, a utility patent or a previously filed nonprovisional utility patent application, and the AIPA only applies to customers who are individuals.
The AIPA does give the United States Patent and Trademark Office (USPTO) authority to provide a public forum for the publication of complaints concerning invention promoters/promotion firms as well as the firms’ responses to the complaints. You can learn more at the USPTO’s site HERE.
The U.S. Fair Trade Commission (FTC) has also issued an informational circular about IFPs, which is published HERE.
There is even a Wikipedia article on IPFs, HERE.
Few legitimate advisors (lawyers, marketing consultants, accountants, etc.) will offer clients direct promises of success or will claim that they have achieved an unusually high success rate for their clients. Choose your business partners and advisors on the basis of recommendations from trustworthy people who have had direct dealings with the advisor whose services are being offered to you. Don’t engage their services unless you are confident that they will help you make the most of the opportunity that your invention provides and that you will be satisfied that in the end you got a fair deal, whatever the future brings.
This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.