Beware. A significant number of firms in the invention promotion industry are committing a massive fraud on American consumers by claiming they have the resources and corporate connections to successfully develop and market individuals’ inventions. The Federal Trade Commission (FTC) has issued a message of extreme caution to consumers about using the very expensive, but almost always fruitless, services of an invention promotion firm.

To help combat this fraud, the FTC has instituted “Project Mousetrap,” a law-enforcement sweep that has leveled federal and state charges against several companies and their principals who are involved in schemes claiming they will help independent inventors who tinker away in their garages late into the night in the hope of “building a better mousetrap.”

Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection, said, “It is a fact that less than one percent of all new product concepts succeed in the marketplace, yet the fraudulent firms in this industry conclude, after a ‘professional’ evaluation, that virtually every new idea or product crossing their desks is patentable and has ‘tremendous market potential.’ They promise enthusiastic inventors that they can provide professional assistance in getting a patent and securing licensing and manufacturing agreements with manufacturers.

Time after time, however, these firms lie to consumers about the sincerity of their belief in an idea and its marketability. Virtually no consumers have even made back their investment, let alone any profit, from these companies’ services.”

The organizations currently being investigated by the FTC for fraud include

• International Product Design, Inc., The Innovation Center, Inc., and the National Idea Center, Inc., all headquartered in Washington, D.C.
• National Idea Network, Inc., doing business as The Concept Network out of Indiana and Wexford, Pennsylvania
• Davison & Associates, Inc., of Oakmont and Indianola, Pennsylvania
• Eureka Solutions International, Inc. and OEM Communications, both doing business out of the West Pittsburgh Expo Mart in Monroeville, Pennsylvania

All of these organizations made false claims about their potential for helping inventors generate substantial profits. Too many inventors, who thought they could turn a good idea into reality, ended up with nothing more than their own canceled check.
The U.S Patent Office is particularly concerned about the impact these disreputable firms have on independent inventors’ confidence in the patent system. As a result of their dealings with unscrupulous invention developers, consumers could come to see the system as frustrating rather than promoting the recognition and protection of their inventions.
Most of the organizations charged offer services in two stages, according to the FTC. First, there is a promise of a free initial evaluation of the inventor’s idea. The evaluation is virtually always highly favorable, which sets the stage for phase one, a more extensive study of the idea and its patentability and market potential. These appraisals are not honest evaluations of the merit, technical feasibility, or market potential of the inventor’s idea, but these reports generally cost several hundred dollars or more, although the price is not mentioned until after the customer is taken through a series of calculations about the costs associated with manufacturing and marketing the product and its ultimate retail price.

The phase one report serves as a marketing tool for phase two services, which include patenting and marketing the idea. Invention promotion firms might mention trade shows at which they purportedly will display an idea, or special relationships they have with manufacturers who might be interested in producing it. Unscrupulous promoters often require the consumer to pay a fee of several thousand dollars in advance for phase two services, the FTC says. Legitimate companies usually rely on royalties from the successful licensing of their clients’ ideas, rather than asking for large advance fees.

A long-term campaign has been established by the Federal Trade Commission to provide consumers with important information about invention promotion. The FTC offers the following warnings:

• Reputable companies are choosy about which ideas they pursue, and typically work on a contingency basis. If a firm is enthusiastic about your idea, but insists on a substantial up-front fee, take your business elsewhere.
• A firm that claims you need to hurry and patent your idea quickly before someone else does is engaging in high-pressure sales tactics, a red flag for fraud.
• Many firms claim to have a great record licensing their clients’ inventions. Ask the firm to disclose its success rate, the number of clients who made more money from their inventions than they paid to the firm for its services. Also ask for the names and telephone numbers of recent clients. Check the references, and check with your state Attorney General’s office to determine whether state law requires success rate disclosure.
• Many unscrupulous firms agree in their contracts to identify manufacturers by coding your idea with the U.S. Bureau of Standard Industrial Code (SIC). Lists of manufacturers that come from classifying your idea with the SIC usually are of limited value.

For more information about invention scams, visit the Federal Trade Commission’s website at www.ftc.gov or the United States Patent and Trademark Office’s website at: www.uspto,gov