You’ve no doubt been exposed to the ads for various inventor services; you have an idea, and they want to help you commercialize it and get the money you deserve. Whether it’s helping you file legal paperwork, defending your idea, developing it into a product, or selling it, there’s a company out there that wants to help. So which ones are legit, which ones are scams, and what do you really need to make your millions?
In 1999, the US passed the American Inventors Protection Act, acknowledging that the vast majority of inventor services companies were ineffective or fraudulent, and putting in place reporting requirements that ensure people are well informed when engaging with these companies. They are required to disclose how many inventions they’ve evaluated and accepted, their total number of clients, the number that have received a net profit after their expenses to the company, and their licensing success rate. Go to any inventor services web site and look for their numbers. After an extensive search, though, we only found a couple that actually listed the data, and it wasn’t good.
| # Clients | # License Agreements | # Net Profit | % profitable |
|---|---|---|---|
| 6564 | 166 | 49 | 0.75% |
| 3974 | 66 | 29 | 0.73% |
The biggest takeaway of this article should be this; as an entrepreneur you have limited resources available, and nearly unlimited ways to spend them. You should choose to spend those resources only on the things that will get you to the next step, not things that are way out in the future, and not on things that you can do yourself. Don’t pay for a fancy trade show booth if you don’t have a product to show. Don’t pay someone to develop a proof of concept if you can hack something together with an Arduino and cardboard. Be absolutely certain you know what you’re getting for your money, and that you need it in order to get where you want to go.
Patents and Trademarks
Every time I’ve gotten a trademark or patent, I’ve discovered that it was issued when the flood of advertisements came in. A few weeks later, the USPTO delivers official notice, along with a flyer warning of official-looking scams that try to solicit my money. If you decide to register a trademark, you get the benefit of using the R symbol instead of the TM symbol. Nice, but make sure it adds value to the business.
The solicitors will be of two varieties; those wanting you to register for their special listing service, and those wanting you to buy their trademark maintenance services. The former means that you would give them a large sum of money, and they put your trademark in their database. Their database isn’t really used for anything, and you don’t get any additional protection by paying for inclusion; it’s just a way to give someone else your money.
The other solicitation is mildly valuable; they’ll monitor new applications for similarity to yours, then notify you or file objections during the public listing period. Every trademark application must be listed in a public forum for a period of time for public review before it is accepted. If there aren’t any complaints, it is accepted. If someone files a trademark application that makes it past the review clerks and is publicly listed but similar to yours, you can file a complaint and they’ll do some more review of the new application before it’s issued or rejected. In addition, five years after receiving your trademark, you must file additional paperwork with the USPTO letting them know that you’re still using it. Some companies offer to help with this, but it’s a quick and easy form; if you filed the trademark yourself then you don’t need help renewing it.
Registering a patent is tricky, and pretty much requires help from a lawyer, who will take your documentation and turn it into a jumble of legalese that you barely recognize. This is an unfortunate state of affairs in our patent system, but it’s the way it is. You can file a provisional patent, however, with very little assistance, which buys you a year of protection until you can file a formal patent if you decide your idea is really worth protecting.
Market Research and Business Plan Development
Before you dedicate the next few years of your life to pursuing your idea, you should figure out if there’s a real business potential, and decide on your plan for making it happen. This is where the market research and business plan come in. Yes, you can pay someone else to do this, but why would you? Is the company you’re hiring to do this just putting together a proposal in which you give them more money to execute on their plan? If so, you’re just paying them to pitch to you, and of course they’re going to say the market is huge. This is a process that should be done by you, even if there are other people you can pay to do it. Find a template that you use to fill in the blanks without overlooking something, but the exercise of doing the market research and business plan development is a very personal process that requires a lot of introspection about how you plan to be involved, and how you plan to execute your vision. It’s probably best that you do this yourself.
Media Generation
Explainer videos are popular. Take a concept, throw some kitschy music, a voice actor overlay, and some nice animation together, and you’ve got yourself a video that helps people understand what your product is. It’s cheaper and easier to produce than a live action video or commercial, and more trendy. For some products that are new and complicated, it might make sense to create a simplistic video to train potential customers.
Generating good media is important. You need hero images that show off your product in a good light, that can be used by sales, marketing, and published in magazines. If you don’t have attractive pictures or video, you won’t get attention. Sometimes it does make sense to hire someone local with good equipment and skills that can make your product shine, but always be thinking about what you are getting this media for and how it will be used, and don’t pay for more than you need. Your slightly improved mousetrap isn’t going to benefit from a Superbowl-caliber ad.
Product Development
Developing an idea from concept to production takes a lot of time and work and expertise and investment, and there are a lot of product development companies, of various size and quality. They won’t all get you to the same place, though. Some focus on generating a proof of concept so you can take it somewhere to get investment. Others are development firms for Fortune 100 companies and don’t have time for the little guys. If you don’t have the skills to take your concept to a manufacturable product, you’ll need to either develop them yourself, or hire someone who does. There’s a great argument for developing it yourself; you’ll become an expert on your product. You’ll be able to experiment with every aspect of its design and assembly. You’ll be able to take it to a factory and know exactly what needs to be done. And you’ll be able to iterate many times and test it for far less expense than if you hired a firm.
It may also take you a lot longer to learn and develop than it would a team of seasoned experts capable of developing your project in a matter of weeks and spitting out all of the files necessary for tooling and assembly, confident that it will be manufacturable using standard machinery. You can burn a lot of money going this route, too, especially if you only have a concept and the firm needs to do experiments with a variety of designs and features. The best bet is a combination, in which you’ve experimented with most of the feature sets, have a solid idea of the product, and just need them to draft it for production. Also, beware of the buzz-off quote; if a company doesn’t want to deal with you, they won’t say no, but they’ll give you a really high quote that represents the pain of them having to work with you. Acknowledge that this is what it is, and that you probably aren’t the right fit for them, and move on to someone else.
Conclusions
From invention assistance companies, to law firms, to product development companies, there are lots of people willing to take your money on the promise that you will be getting something of value that will help propel your idea into the big leagues. Your job is to sift through it all and decide whether the service being offered is one you really need, and if it will get you where you want to go. The world isn’t a place where you can just have an idea and sell it for millions; ideas are a dime a dozen. The value is in the execution, and the more you can control that execution, and rein in spending so that it can be directed efficiently, the more likely that your execution will be successful. This means doing a lot of things on your own, hiring experts when necessary to do things of limited scope, and devoting your energy to just the things that will move you forward.
“I’m tired of good ideas. The world is full of people who think they have a really good idea, and they can’t even rake a leaf. I’m tired of good ideas.”–Andy Rooney
B^)
One of the best articles I’ve seen on Hackaday in a long time…including the one claiming that Elon Musk was one of the greatest persons ever.
Trademarks and Patents only offer a way to legally enforce you ownership of IP. If you can’t afford to sue people, than it is a waste of operating capital.
Conversely, there is little else one CAN DO to prevent the ecosystem of sleazeballs that tend to glom onto anything that might be lucrative in the future. We have seen everything from 3rd world cow-dung engineering, to domestic competitors with intelligence resources under the guise of security. China is just as predatory as the US companies, but doesn’t have the political protection of the domestic competitors. The part that I find amusing is when investors act surprised that their knockoff of Amazon services or Apple products fail in the markets, or simply degrade the market sector altogether.
It really boils down to consumer behavior that is complicit with products made by poor people, virtue signaling hypocrites, and the fact small companies are easier targets to pillage with minimum risks.
The fact Microsoft is selling a paid-version of WLinux now, is proof they are out of ideas — and are now competing with “Free”…
MAGA (sarcasm tag)
“Trademarks and Patents only offer a way to legally enforce you ownership of IP. If you can’t afford to sue people, than it is a waste of operating capital”
I don’t think it’s quite that simple. They also offer deterrence. The other company has to know that you don’t, and won’t ever have, the resources to sue before they can act with impunity. Without they knowledge a patent will make them tread carefully.
They also give you as the entrepreneur something to sell 5 years down the line so that you can afford to go and sit on a beach. Try making an exit from a company if your buyer has no confidence that you won’t immediately take the pay off and start a new competitor with the same technology.
But yes, the patent system is a steaming pile of mess, particularly in the USA where the level of scrutiny of applications is a joke and the system relies on a “grant everything and let the courts work it out” premise.
Then again, patents allow your competitors to know exactly what you’ve done, so they can skirt around your patents. It’s public information about your product that they can use, unless you make a troll patent that is so wide it covers the moon in the sky – but those take clever patent lawyers and lots of money to make.
The worst situation is that you patent your invention and make your patent just too narrow, which means your product is round, theirs is a cube – boom, you just wasted money and gave away your IP.
Sort of .. but there are some subtleties.
* While you have a provisional patent, you have some latitude to discuss the invention. Any prospective copy-cats may learn roughly what you have (say, via demos), but they don’t know what will be granted in the end, and they probably don’t know how you implemented it .. the latter makes it a little tougher to reverse engineer, and the former makes for a big zone to work around.
* Then, as the patent is pending prosecution (which can take years). The know what you did, and how you did it, but they don’t know which claims will ultimately be granted. Again, it raises the risk, since your patent at this point is apt to be much broader than its final form. To this point .. write as broadly as you can, try to anticipate workarounds, and claim those methods as well — even if you never plan to use them.
* Even after the patent is granted, you can get continuations in part. From Google: A “continuation-in-part” application (“CIP” or “CIP application”) is one in which the applicant adds subject matter not disclosed in the parent, but repeats substantial portion of the parent’s specification, and shares at least one inventor with the parent application.)
For the sorts of entities that can be chilled by these sorts of risks (deep pockets, you “know where they live” etc) , it’s cheaper and easier just buy the IP. For the sorts of folks apt to ignore IP rights, (e.g. low volume infringers, especially entities in other countries), there’s probably not much to be done .. and if these sorts of folks can significantly erode the value of your patent, then it’s probably best to skip the hassle of filing.
In the end, it all depends on the nature of the patent and a million other factors. I have a few patents, and I happen to like writing them, figuring out rebuttals to desk actions etc. .. but it’s a weird little universe, and it ain’t like money is falling from the skies in patent-land .. and there are a million reasons for that that have nothing to do with infringement.
“…The fact Microsoft is selling a paid-version of WLinux”
Not to be a sticker for facts, but WLinux is being sold through the Microsoft store by a 3rd party developer, which very different from what a quick reading of what you wrote would imply.
But I’m not suggesting Microsoft isn’t out of ideas either… ;)
It isn’t WLinux, it is GNU/kWindows. It doesn’t include any Linux.
Right on article. Most of us in HAD are smart, creative and able to build almost anything. From grammar school on I dreamed of being an inventor and having an patent. Having gone through that process I found out the real truth.
Ideas are not worth much, even a working model is a small percentage of what needs to happen. A patent may be needed but it delivers little.
The real money goes to the business guy the one that does the hard work of building a team and taking the idea to market. I am doing a startup, it is hard hard hard work. It cost money, you need to bring people around you. You need to sell your idea and most importantly the product.
Most of us HAD people are good engineers but very few of us can make the jump to bring a business to making a profit.
I have counseled people that had gone to one of these invention companies, their product would not work but the invention company certainly took their ,money. What a rip off of some fine people.
From what I’ve read, if it’s truly a big money maker, it’s the cost of DEFENDING your patent from unauthorized use by deep pocket corporations that’s the problem. Then there’s IP scumbag thief central – China. Good luck against that.
I was the CTO of a very small startup. Got the patent and then ended up selling the patents for many times that costs.
For my startup I did a patent so that somebody else couldn’t get the patent and had a harder time coming to me and saying “cease and desist”. also if you are going to sell your business it is worth a lot more to investors if you have a patent, it is an image thing.
Yeah, I actually use quite a bit of inventor services. Not really sure how many of them are legal, or how many violate local labor laws.
Is this some kind of joke?
“If a company doesn’t want to deal with you, they won’t say no, but they’ll give you a really high quote that represents the pain of them having to work with you”
A little background on that practice from the other side of the table in case anyone was curious…
I’ve done this at times (usually around 10x price), mainly to projects with poorly defined scope or timelines. Both are risky to take on as they eat up a lot of time and attention that could be better spent.
Once in a while someone agrees — usually because they’re in a mess and need the help that badly (or quickly). In these cases I have to reject other, more interesting work to get their job done. In the end, I don’t come out far ahead and miss out on projects and clients that would better benefit the portfolio of my company. That last thing is what the extra money is really for: the opportunity cost.
I never do this to people who know what they have, what they want, and when it needs to be done. If I’m too busy to take them on (or don’t know how to solve their problem), I’ll tell them very roughly what it would have cost, refer them to a competitor, and stay in touch.
I took an idea to one of those inventor’s help companies once. I sat down, explained the idea then listened to their sales pitch. For what amounted to tens of thousands of dollars, they would “present” my idea to a select few reps from unidentified companies in what amounted to a science fair-type show. Then for thousands more, they would display the idea in a special access area where they would do a fancier sales pitch of the idea. All with no guarantees and yes, their actual success rate for getting your idea to market was extremely low.
Then there’s the sales pitch for their product development services. More thousands of dollars.
For that kind of money I would recommend taking your idea direct to whomever you think your idea best fits their product strategy. If you have a great idea for a new tool, go direct to Bosch, Cooper Tools, Dewalt, etc. They do listen to outside ideas if you have a professional presentation and reasonable expectations going in. Think more professional than Shark Tank. For the kind of success rate the inventor’s help people have and the money involved you’re better off developing the product yourself including a professional sales presentation and going for it yourself. They’re not in it to help you, they’re in it to make a lot of money from you and point to their extremely low success rate when you complain about a lack of results.
No need to patent when you can just open source it all…..
Funny how the same people shoving Linux/KiCAD down my throat and demanding my design files are the same people asking for my advice on how to protect their business and ideas with things like patents.
If you’re just selling electronic trinkets that require minimal design effort (Sparkfun, Adafruit, etc) then you only need to focus on the distribution because that’s where your value is. If your value is in the design, then you need to protect that.
SImple.
I’ll just leave this here – our appointed AG: https://www.nytimes.com/2018/11/08/us/politics/whitaker-trump-attorney-general.html
Heh, if you have an invention you can call up our new attorney general, Matt Whitaker. Apparently he worked for a scam company that “helped” people with their inventions. You paid them and they did nothing, which is about the best you are going to get out of a politician. It sounds like he went a step further though, if you publicly complained he would threaten you.
https://www.forbes.com/sites/dianahembree/2018/11/09/scam-company-advised-by-matthew-whitaker-threatened-victims-but-many-filed-complaints-anyway/
This is a very US-centric view, but the general advice about being cautious of these inventor assistance firms is good. I am a UK and European patent attorney, and I would advise that inventors seek advice from a qualified attorney in their country on how to gain patent protection. In the UK, these can be found via the Chartered Institute of Patent Attorneys (www.cipa.org.uk). These people should also be able to provide some general advice on monetising your IP, although they will not likely be specialists in this field.
And there are often good reasons for filing a patent even if you can’t afford to sue an infringer. As has been said above, they act as a deterrent against people taking your IP. If that doesn’t work, then a letter informing any infringer of your IP can increase the deterrent effect (although you need to be careful regarding the law on threats to sue). You can license your IP to other parties, who will then pay you a royalty, or you can sell the IP. Having “Patented” on your products can also act as a sales tool for products (although it is of course not a guarantee of quality). Lastly, having a patent in the UK can give tax breaks (look up the “Patent Box”) on profits from sales of a patented item, so in that case it can provide benefits regardless of whether anyone is infringing the patent.