What to do with an idea

By Thomas R. Vigil

The individual with an idea is presented with the problem of how to make money from it. However, before any money can be made, the inventor must determine if a saleable property interest, e.g., patent right, can be established in the idea. The commercial value of the idea must also be assessed. Precise answers to these questions are not always available, and experts will differ on the value ( or worthlessness ) of an idea. Because of this, the individual can fall prey to unscrupulous individuals and companies which purport to be in the business of helping people with ideas, but which actually are confidence operations that sell services of little or no value for exorbitant fees.

The reason an individual is such easy prey is that he or she often loses objectivity. After eating, sleeping. And living with the idea for years, the individual develops an absolute faith in the idea and will refuse to consider or accept a critical comment on its value. Since sometimes this undaunted faith has been rewarded, an individual ‘s tenacity is understandable. But without objectivity, the individual will shop for attorneys and companies in order to hear what he wants to hear. The invention development are in business of telling people what they want to hear ( for a fee, of course ), hence their success.

Fraudulent Invention Development Companies

Over the years a large number of companies ( as many as 250 at one time ) have held themselves out as being in the business of helping individuals develop their ideas and introduce them to industry. These companies either directly or imply that they have expertise in this area. They will suggest that they have contacts with manufacturers and that their services will facilitate the sale of the idea. These companies charge from $1000 to $5000 for their services.

Since the companies have not placed any ideas or inventions with a manufacturer, it is the author’s opinion that they are committing a fraud. They have virtually a zero percent success ratio in placing ideas. Their business is not the placing of ideas or inventions with manufacturers but the selling of their services to individuals for an unreasonable fee. These services are valueless and therefore, the company’s indication that their services will be of value in placing ideas with manufacturers is also a fraud.

Identifying Fraudulent Invention Development Companies

It is a simple matter to identify a fraudulent invention development company since all use a time – honored approach to the individual. The first stage of this approach, the “ hook “ is the recommendation to the individual that the company evaluate the idea and prepare an “ Evaluation Report .” the second stage of this approach, the “ sting “ is the presentation to the individual of a glowing Evaluation Report and the suggestion that the company enter into a Representation Agreement with the individual. This agreement calls for the payment of a substantial retainer fee to the company. In return, the company promises to help the individual place his idea with a manufacturer.

The Evaluation Report

The fraudulent invention company will provide the individual, free of charge or at a fee of up to $400, with an evaluation report on the idea. Commonly, an invention development company will purport to charge the individual only half of their “usual fee “ as an inducement to a hasty agreement. The evaluation report is then prepared and presented to the individual.

Generally, such reports present statistics showing that the individual should be able to profit from the idea. However, almost every report fails to adequately address, if it address at all, the four most important questions confronting the inventor or individual with an idea. These are:

1. Can a saleable property interest such as a patent right be established in the idea?

2. Is the idea technically feasible, i.e., can it work the way the individual intends it to work, and is his or her initial conception the most practical?

3. What is the costing for the idea, i.e., is the cost, relative to its market potential and to the cost of competitive products, such that it would be economically feasible to manufacture the products?

4. Is the product marketable, i.e., does the product have any advantage or benefits that will appeal to the purchasing public?

Another feature of these Evaluation of these Evaluation Reports is that each is substantially the same for every client excepts for a few references tailored to the client’s specific idea.

The Representation Agreement

After the client is presented with the glowing evaluation report on the idea, the invention development company then suggests that the individual enter into a Representation Agreement with it. The agreement calls for large retainer fee from the individual to secure representation of the idea to industry. In return for this fee, the company will promise to do some or all of the following:

1. use its best efforts to promote and place the idea with manufacturers.

2. Prepare descriptive material and perhaps drawings of the idea.

3. File a disclosure documents with the United states patent and Trademark Office.

4. Submit the disclosure and drawings of the idea with letters to manufacturers.

5. Contact the manufacturers by phone or in person ( although sometimes promised, it is almost never done ).

6. Conduct a patent search ( giving an opinion on patentability, of course, would be engaging in the unauthorized practice of law ).

7. Prepare a patent application for the individual ( again this is engaging in the unauthorized practice of law ).

Nowhere does the company promise, nor can promise that these services will results in sale or license of the idea to a manufacturer. Since the success ratio of these companies is essentially zero, they are selling the client services which are of no value whatsoever. In fact, such services are often detrimental because the individual’s property right in the idea can be jeopardized.

A Reputable Company

It must be borne in mind that many individuals do need help in promoting their ideas, even if the possibility of a manufacturer purchasing or licensing rights to the idea are very remote. Without this need, invention development companies would not have prospered as they have.

There is at least one company that the author believes is reputable. It is business of writing descriptive materials on ideas for individuals and submitting such materials to manufacturers. This company is the kessler sales corporation.

Kessler has been in business for 26 years and has never been sued by a dissatisfied by any governmental agency, state or federal.

For a fee of just under $300 this company will prepare descriptive materials on an idea, either on their own stationery or on plain, white stationery. These are sent to the individual for submission to manufacturers. Kessler also supplies the client with a list of manufacturers to which the materials should be sent. But, at the individual’s request, they will submit the materials directly to the manufacturers. The company provides follow – up service with the individuals and the manufacturers. Clients are kept well – posted on any inquiries by manufacturers for more details on the idea.

The moderate fee covers only their writing and submission services. Kessler Sales Corporation does not provide evaluation of ideas. Moreover, they strongly advise their clients to seek patent counsel with respect to whether a saleable property interest ( a patent right ) in the idea can be established and with respect to the ramifications of the company’s services.

Kessler Sales Corporation has had a “ success “ ratio of roughly 1 out of 1000. This means approximately 1 out of 1000 of their clients have entered into an agreement with a manufacturer. But kessler has not been privy to all negotiations between their clients and manufacturers so these statistics may not represented the true picture.

The Fraud committed By Invention Development

Companies

The fraud committed by invention development companies resides not only in their services have value to an inventor or an individual with an idea but also in their offer to represent the client. This offer is made without a determination being made as to whether the individual can establish a saleable property interest (a patent right) in his or her idea. A reputable company, such as Kessler Sales corporation, urges the client to seek counsel on this matter from a patent attorney. The attorney will also determine whether any of the unexpired patents located in the search read on the idea so as to raise the question of infringement. The author believes that, since the invention development company does not advise the individual to seek legal counsel, it is committing a fraud. The fraud lies in the offer to sell something for someone without a determination ever being made of whether he or she has something of value to sell or whether there are any questions of infringement.

Another fraud perpetrated by invention development companies lies their or implication to a client that they have technical expertise in evaluating developing, and marketing ideas. In facts, they do not have such expertise. Also, these companies often represent that they have contacts with manufacturers though they have none. In sum, the most serious frauds perpetrated by invention development companies are as follows:

1. Representing they are in the business of placing ideas with manufacturers when in fact they have placed none.

2. Providing an Evaluation Report that states that the idea has merit without adequately addressing the question of:
   1st Is it patentable?
   2nd Is it technically feasible?
   3rd What is the costing for the idea?
   4th Is it marketable?

3. Offering to help the individual sell the idea without determining if he or she can establish a saleable property interest ( a patent right ).

4. Representing it has technical expertise when in fact it does not.

5. Representing it has contacts with manufacturers ( particularly contacts with companies that are looking for new products ) when it does not.

The Unauthorized Practice of Law 

In the author’s opinion an invention development company’s attempt to address the question of whether a saleable property interest can be established in the idea is the unauthorized practice of law. This involves having a patent search made and giving an opinion on patentability or infringement. Typically, the invention development company will not render an opinion in writing on patentability but will imply through its correspondence with the individual that the idea is patentable.

This is achieved by referring to the fact that some patents have been located in a search which have a relationship to the individual’s idea. Then, the company remarks on the importance of getting a patent and on the value of the company’s services in preparing a patent application for the individual.

People By Lefkowitz v. Lawrence Peska & Associates, Inc.

Held that when an invention development company accepts money for assisting the individual in preparing a patent application this constitutes the unauthorized practice law. This is true regardless of whether it obtains an assignment of a part interest in the idea, or whether it hires a registered patent attorney or agent.

The Disservice to the Individual

Notwithstanding the issue of fraud, the invention development company disserves the individual even where it performs as promised. The company’s act of sending descriptions and factures to sell the idea, and filling of a Disclosure Document may have prejudicial for the unwitting inventor.

35 U.S.C§102 (b) 
35 U.S.C§102 (b) provides that an application for a patent on an invention must be filed within one year from the first sale or offer to sell the invention and within one year from the date the invention was described in a printed publication. This statute has important implication for the mark of the invention development companies for two reasons. First, the company’s act of sending out printed description and drawing of ideas to manufacturers without limitation on their use possibly could be construed to constitute a disclosure in a “ printed publication.” This would start the one year tine period running, unknown to the individual.

The second implication of 35 U.S.C. §102 (b) for the client of an invention development company has the same unfortunate result. The language of the statute clearly states that if the invention was “ on sale ” more than one year prior to the filling of the application, the applicant to a patent. The phrase “ on sale ” in 35 U.S.C §102 (b) has been interpreted to mean an offer to sell, or sale of, a product embodying the invention. But, the invention development companies’ offer to sell the idea to a number of different manufacturers could be interpreted as placing the idea or invention “ on sale ” as defined in 35 U.S.C §102 (b). Thus, the one year time period could be triggered.

The Effect of the Disclosure Document

The filing of descriptions of drawings of the idea as a Disclosure Document at the United states Patent Office is another disservice to the client of the invention development company .In this respect, the filing of a Disclosure Document establishes a prima facie date of conception for the idea described. But, there is no assurance that what the company files is an adequate and complete disclosure of the idea sufficient to constitute a document evidencing conception.

Further, the client can be misled to believe that the Disclosure Document provides some protection to the inventor over his idea. The Disclosure Document is, at best, analogous to an evidence deposition. It constitutes evidence that, as the time it was filed at the United States Patent and Trademark Office, the individual had conceived what is disclosure therein. It does not prefect or protect rights to an idea, although it may help the individual to retain rights he or she already has.

Since the time the attorney needs to prepare an adequate disclosure document would be better spent preparing patent application, most attorneys do not file disclosure documents. But the inventor may wish to file a disclosure document independently of the attorney to establish a “ legal ” date of conception.

Non – Confidential Disclosures

Another disservice to the individual is the disclosure of his or her idea by the invention development company to manufacturers in an open and non – confidential manner. Most ideas of individuals are of such simplicity that a brief description of the idea is essentially a disclosure of the idea. If the idea is without patent protection and is not communicated in confidence, the manufacturers is usually under no legal duty to pay the individual if it uses it.

Clearly, fraudulent invention development companies are not concerned with protecting the rights of their clients since they do not concern themselves with the ramification of their unilateral, non – confidential submissions of their clients ideas to manufacturers.

The Role of The Patent Attorney

At the initial interview with the client, the patent attorney will explore the following areas: 

1. Is the something which can be patented or does it relate to a trademark or to an expression of an idea which can best be protected by a copyright?

2. If the idea is directed to patentable subject matter, is it of such a nature that it could be better to maintain it as a trade secret?

3. Does the idea fall within one of the excluded areas of patentability, e.g. (a) a mathematical formula and the algorithm therefore, (b) a naturally occurring phenomenon or law of nature, (c) a method of doing business, or (d) printed matter?

4. Did the idea originate with the individual or did he or she obtain the idea from someone else?

5. Has the idea been in public use, described in a printed publication, or on sale more than one year prior to the date of the client interview? if so, when ?

6. Was the individual employed at the time he or she created the invention ?

7. If so, did the employment contact contain provisions regarding rights to inventions by the individual?

8. If it did, then the attorney will want to examine the contract and determine (a) does the invention fall within the “ scope ” of the employment of the individual, (b) did he or she use any of the employer’s materials in conceiving the invention, and (c) did he or she make the invention on the employer’s time?

Once these questions have been investigated, the patent attorney may advise a patent search. The search will resolve the question of whether the same or similar idea has previously been patented and will serve to uncover questions of possible infringement. It must determined whether or not the idea can be patented at all. If it cannot, than the individual has nothing to sell.

After an evaluation of patentabilaity is made and it is decided that meaningful patent is available to the client, the patent attorney can prepare the application. After this is done, the patent attorney’s role is usually confined to advising the client on the effect of his submitting idea the idea to manufacturers. The individual with an idea then faces the question of what to do next?

Advising the Client with Respect to Nonlegal Considerations 

Once the individual has obtained an opinion on patentability from his or her attorney, these questions move to the forefront: (1) Is the idea technically feasible? (2) What is the costing of the idea? (3) Is the idea marketable?

The individual is advised to begin answering these questions by consulting with friends and relatives. He or she should look for someone who has some knowledge of the subject matter of the individual’s idea. For example, if the idea relates to carbuerators it is likely that the individual can find someone who is able to give him some information on carbuerators and to assess the idea.

The individual can also contact the Innovation center. For a nominal fee, $500 at last word, this organization will evaluate the three nonlegal considerations that confront the inventor.

More specifically the evaluation consists of ratings on 33 different variables.

Although this is an inexpensive evaluation and will provide the individual with some useful information center.

These people concede that evaluation of good idea will show that it is obviously good and bad idea obviously bad. But, they argue that for ideas in the middle range the validity of the ratings is questionable. The idea may score highly according to the one or two variables most relevant evaluation. Still the overall rating may not reflect an outstanding idea because of low scores on variables which are essentially meaningless to its appraisal.

Another approach for the individual to follow is consult the various organization and agencies listed below. One of those agencies with the author has had contact is the Institute for Invention run by Mr. Richard Onanian. Mr. Onanian has provided a consulting services to people with ideas for a number of years, on technical feasibility, costing and marketability. He charges $25 per hour for his services. Mr. Onanian has success in improving an idea’s technical feasibility located in Boston, the author highly recommends this agency as a place where an individual can have the commercial value of his idea assessed.

Once patentability, technical feasibility, costing and marketability of the idea have been evaluated, the individual may desire assistance in submitting the idea manufacturers. The Kessler Sales corporation is a company which provides such assistance. Kessler believes that ideas or inventions sell themselves and if the idea has merit, it will be noted by a manufacturer. Accordingly. Kessler Sales Corporation does not provide evaluations of ideas and urges their clients to consult a patent attorney for advise as to the ramifications and implications of submitting an idea to a manufacturer.

Should the individual find a manufacturer interested in purchasing or licensing rights to the idea, the patent attorney can then assist the client negotiations. For aid in determining a reasonable royalty and a minimum royalty, payment publications of the Licensing Executive’s Society may be helpful. Additionally, Mr. Onanian of the Institute for Invention and Innovation will serve as a consultant to attorney and their clients in licensing matters particularly with to negotiation of royalties.

Conclusion

From the foregoing remarks, it is apparent that the individual with an idea is in predicament as to what he or she can do to protect and exploit his or her idea. On the one hand, the individual runs a risk of spending a lot of money for nothing by utilizing the services of an invention development company. On the other hand, an individual may not know exactly where to go to obtain help.

It is hoped that the attorneys who come in contact with this article and the information contained herein can keep it ready at hand so that they may pass it on to individuals with ideas who come to them seeking help.

The odds of an individual making money on his or her idea are very small, somewhere between 1 out of 10.000and 1 in 1.00.

Yet there are individuals who have succeeded I protecting, developing and exploiting their idea. They not only benefit themselves with a monetary reward but also benefit mankind by introducing a new product which improves our quality of life.

Right now we are faced with skyrocketing inflation in our country and many economists attribute this to fact that our productivity, defined either in terms of goods per man hour or goods per dollar spent, is lower than in other countries throughout the world. This is due in part to a decrease in the recent past of capital spending for new means of production. However, coupled with a new means for production are more efficient means for production and devices which function better and are cheaper than previous devices. With “ Yankee ingenuity, ” we can continue to compete economically with countries throughout the world and maintain a leadership position in technology and productivity. After all, the man who invented the “ LASER ” has not only benefited himself but also mankind by creating a whole new technology for which new uses are continually being found

In passing, this author has noted, as have other patent attorneys, that the individual who is most successful in protecting and exploiting his or his idea is one who has not only protected his or her idea by patenting it but also by forming a business, individually or with the help of others, to develop, perfect, market and exploit the idea.

Such individuals have been the most successful in exploiting an idea since, by perfecting it, building a product embodying it and manufacturing and selling that product, they have created an ongoing business which includes a number of property values. For example, not only does the individual have patent rights but also: blueprints and drawings; prototypes; an inventory of devices; some tooling, perhaps even machinery for marketing it; trademark rights in the name under which the device is sold; good will in the business; an existing and growing market, including a customer list; and most important, actual sales of the product. Such a package is much more attractive to a larger company which will be much more interested in buying a package than it would be in untried idea, even if it is patented.

Many patent law associations throughout the country such as the Boston Patent Law Association of Chicago of San Francisco, the American Patent Law association and the Patent Law Section of the American Bar Association, to mention a few, have been developing materials, brochures and pamphlets which will be of assistance to an individual who has an idea.

More specifically, reference is made to several pamphlets put out by the ABA which are entitled “ what is patent? ”, “ submitting am Idea, “ and ” considerations in selecting an invention Promoter. ” 

Also, this author, with the assistance of many other patent attorneys throughout the country, and under the auspices of the American Patent Law Association, has prepared a book, to be published shortly, addressing the question of what can be done to protect and exploit an idea or invention, which book will be made available to individuals at a nominal fee. This book will be offered in magazines such as “ Popular Science ” and “ Mechanics Illustrated ” together with a consultation service. Individuals will be invented to send in small fee to receive the book together with a form which they can send to the American Patent Law Association to obtain the name, address and phone number of a patent attorneys who will provide the individuals with a free one – half hour consultation. It is hoped that these efforts of the APLA and other organization will enable people with ideas to evaluate them wisely, to protect them, and to exploit them as best is possible in our free enterprise system.