So, you have a good idea, and you want to make some money off of it. Beware! You are in danger of being taken in by scammers! Unfortunately, there are many “Invention Marketing Companies” out there who’s sole purpose is to defraud inventors (or would-be inventors) of their hard-earned money. They’ll make all sorts of promises and provide absolutely nothing in return.
These nefarious companies can defraud inventors out of thousands or even tens of thousands of dollars, promising to market your idea or your invention to big-name retailers and manufacturers. They might even tell you they will file a patent for you, or that they will do a patent search. What they will actually do is maybe file a provisional application with the USPTO and nothing else. A provisional application by itself is of no value and is a simple and inexpensive thing to file, but they will charge you thousands of dollars and load you up with empty promises.
Of course, there are legitimate companies out there who do honest business helping inventors bring their products to market — Cad Crowd is one of them! So how do you tell the good ones from the bad? Well, there are a few clear signs that will indicate whether you’re dealing with a legitimate invention licensing firm or with a fraudulent company.
You Can’t Sell Ideas
The first thing to be aware of is that you cannot monetize ideas. No reputable or legitimate business or firm is going to pay you just for an idea You can make money from inventions, but inventions are quite a bit more than just ideas.
People will often approach a company or an invention licensing firm with some great idea they’ve had. They don’t want to pay for patenting or developing the idea, they just want to sell it to a company and let them handle all of that stuff. In effect, they just want a finders fee for coming up with the idea.
Unfortunately, there is no way to sell an idea. Ideas have no monetary value, what’s valuable is an invention. At the very least, you need to have a pending utility patent if you want a company to take your idea seriously, because this indicates that the idea has been developed with enough specificity and rigor to be of potential value to them. And, more importantly, having a patent will show a company that the idea is something which they could pursue without getting sued by someone else.
Getting a patent is costly. And part of the patenting process involves what’s called a ‘reduction to practice‘, which is patentese for ‘you actually have built the thing’. This is why inventions are sellable and ideas are not: inventions require investment and work to be inventions. Ideas are always free.
Any company which offers to take your idea and sell it is lying to you, because no company will buy an idea. Ideas are free. Inventions are valuable because they aren’t.
Not All Inventions Are Created Equal
Unfortunately, not all inventions are destined to become successful products. Even some inventions which are genuinely great ideas simply won’t be commercially viable product for one reason or another. Part of being an inventor is that you sometimes have to hear the brutal and honest truth about your invention’s potential for success.
Fraudulent invention marketing firms will never tell anyone the brutal and honest truth. These companies have no incentive to tell an inventor when their idea isn’t viable because they make all their money upfront. This is how they operate:
- An inventor sees an ad on TV or online and approaches the invention marketing company with their idea
- The invention marketing company will tell them that their idea is great and is sure to make tons of money REGARDLESS OF the actual viability of the invention. No one is turned down, because…
- The invention marketing company will offer to do a patent search or file a patent application and to take promote your invention to retailers and manufacturers for an upfront fee of several thousand dollars. On top of this, they may charge some small royalty rate which will seem like a great deal — but of course, there will never be any royalties to pay.
- The inventor forks over their hard-earned cash, and never sees a return on that investment.
What went wrong? How do you avoid that scam? The first thing to know is that there are nearly 8 million patents on file at the USPTO. If anyone ever does a patent search and tells you that they turned up nothing, then they are lying to you. A professional patent search by qualified patent attorneys will always turn up prior art. So there’s your first warning sign: beware of promises that seem too good to be true.
The next thing to beware of is any firm that offers you the “great deal” of providing their marketing services for an upfront cost, rather than by commission. Legitimate licensing firms like Cad Crowd will almost always work on a commission basis, which means they get paid only when you get paid. Not having to pay a percentage may seem like a great deal at first, but then you have to remember that by getting paid upfront, there is no incentive whatsoever for the marketing firm to actually deliver on any of their promises. They’ve already got your money.
Legitimate licensing companies will always be upfront and realistic with inventors, because we only make money from inventions which are actually viable. Our success is tied in with your success. If anyone ever offers to cut their royalty rates in exchange for thousands of dollars upfront, beware!
The best you can hope for from a fraudulent invention promotion company is that they will send unsolicited mail to manufacturers or retailers with a brochure for your invention (and probably the inventions of a dozen other hopeful inventors). You can bet your bottom dollar that this mail will be discarded without even being opened.
To make matters worse, this scam could actually prevent you from filing the utility patent you will need to protect your invention. Those junk mail brochures they might send off for you? Even if no one reads them, that’s considered publication. That will make it impossible for you to file for foreign patents. If they end up filing a design patent or a provisional application, it could jeopardize the utility patent application you will need to make if you actually want to protect your intellectual property.
How to Avoid The Scam
The easiest way to avoid the scam, as advised by the USPTO, is to use the Federal Trade Commission’s website to do a search for the company you are considering. The USPTO also keeps a list of published complaints. If there have been any complaints against them, stay away!
When performing a professional patent search or doing any patent filing, work only with trusted patent attorneys. Always make sure that anyone filing a patent for your invention is filing a utility patent, and not a design patent or a provisional patent application. You can take a look at our Patent FAQ for more information on the differences between types of patents.
Be wary of companies that offer to “evaluate” your invention idea for a fee. While there are some legitimate firms who specialize in evaluating the commercial viability of inventions, this is often a hook used to reel over-eager inventors into the trap.
Unscrupulous invention promotion firms will often offer to evaluate your invention for you in exchange for a fee of several hundred dollars. They will then either perform a worthless search or do no search at all. They will always come back telling you that your invention will be the next big thing and that you’ll make tons of money, if only you pay them as much as $13,000 for services.
So What Should You Do?
These fraudulent invention marketing companies are basically offering two services which would actually be quite useful for many people — if that’s what they were actually getting for their money. Lots of inventors need help with patents. And, keeping in mind that you can’t sell an idea, licensing is a completely legitimate and realistic way for inventors to make money from their inventions without putting forward the considerable investment of capital and time required to manufacture and sell a product themselves.
Invention licensing (which we offer at Cad Crowd) is a service in which a company will work on behalf of the inventor to promote their invention to distributors. The goal is to find a firm willing to license the rights to produce and sell the product, in exchange for which the inventor will receive a royalty of all profits. Sounds a bit like what the invention marketing firms above are offering, right? The difference is invention licensing companies work on commission — they take a cut of your cut, rather than charging you thousands of dollars upfront and leaving you with nothing but false hope.
To license your invention, you’ll still need to have a patent, or at least have a utility patent pending with the USPTO. You can expect to have to invest in your invention to get it to the stage where it will be appealing for firms to want to license it. If you’re considering about licensing, you can read our piece on choosing between licensing and manufacturing.
If you’re looking for honest and realistic invention licensing services, look no further! We’re here to help. Check out our product design services. We don’t charge upfront, so we only get paid if you get paid.