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UNSCRUPULOUS FIRMS PREY ON UNWARY INVENTORS

Sun Sentinel; Fort Lauderdale; Nov 8, 1998; MARCIA HEROUX POUNDS Business Writer;

Abstract:
American Invention Associates was supposed to be marketing Charles Wollins' back-scratching invention at trade shows. Its marketing consisted of setting up a computer that had information about his invention, Wollins said. Eventually, his patent application was abandoned.

Wollins, of North Miami Beach, still believes in his invention and is pursuing a new prototype. But his eyes are wide open now: "It teaches you a lesson to be careful in the future. I'll try again in a safer manner."

Bob Buchner, assistant attorney general, said fraudulent invention promotion companies tend to use the same approach. "They're looking to make money from the inventor, not the invention," he said.

Full Text:
Copyright Sun-Sentinel Co. Nov 8, 1998

American Invention Associates was supposed to be marketing Charles Wollins' back-scratching invention at trade shows. Its marketing consisted of setting up a computer that had information about his invention, Wollins said. Eventually, his patent application was abandoned.

So for the more than $6,000 Wollins paid to American Invention Associates, he received nothing of value in return.

Wollins, of North Miami Beach, still believes in his invention and is pursuing a new prototype. But his eyes are wide open now: "It teaches you a lesson to be careful in the future. I'll try again in a safer manner."

American Invention Associates settled with the Florida Attorney General's Office and Wollins has been told to expect a partial refund by year-end.

Bob Buchner, assistant attorney general, said fraudulent invention promotion companies tend to use the same approach. "They're looking to make money from the inventor, not the invention," he said.

Unscrupulous invention promotion companies have become savvy about how they advertise and the paper trail they leave.

"They're very careful about what they put in writing. If you read their ads, hear their solicitations, they never make any promises," Buchner said.

Invention promotion companies "have come to know where they can be challenged. Not only do they not promise anything, but they have disclaimers as well."

As inventors hand over their money up front, such companies often require inventors to sign papers stating the venture is highly speculative.

Yet over the telephone or in person they tell the inventor they have a wonderful invention and can probably make big money from it.

"They're not nearly as careful in what they say as what they put in writing," he said.

After these companies get as much money as they can from you, "they start ignoring your calls," Buchner said. That's when victims finally realize they've lost their money.

Pamela H. Riddle, who has counseled thousands of inventors and entrepreneurs during the past decade and has helped uncover some fraudulent firms, said unscrupulous invention firms tend to target the independent inventor.

Riddle, chief executive officer of Innovative Product Technologies in Gainesville, said some clients have come to her after throwing $395 to $795 away for a supposed "market potential report," from a fraudulent invention promotion firm, she said. "That's basically Internet research."

Such companies may fool clients with a beautiful database report, but they "don't offer an honest appraisal of the merit, the technical feasibility or of the market potential," Riddle said.

"Then they offer you a contract to help you license the product to manufacturers for several thousands of dollars up front," she said. "The more money you pay them up front}, the smaller the royalty they'll take."

These fraudulent companies will even offer to finance the up-front fee for you. But more than likely, you will never see your product on the market or any royalties when dealing with such firms.

Fraudulent companies tend to give clients all good news about their inventions: They see a potential $42 million market for it, for example.

So Riddle suggests using this strategy to test the company or consultant. "Tell them you don't have any money. Then see if they're going to pass up a $42 million potential market. Tell them, 'Instead of me paying you $7,000, I'll give you 95 percent and I'll keep only 5 percent,'" Riddle said. "Watch them run.'"

Reputable invention development firms and consultants do charge fees, but more often than not they tell the potential client not to waste his, or their, time.

Riddle said an inventor recently was referred to her who had been taken for $4,400 by an unscrupulous firm to register her product with the U.S. Patent & Trademark Office. "That only costs $10," Riddle said.

Inventors can even do their own patent search for free at the larger public libraries including Broward County's main library in downtown Fort Lauderdale. This search is more limited in scope and doesn't go as far back as what a patent lawyer or experienced consultant can do, but it gives the inventor an idea of his competition and potential obstacles to his claim.

Another red flag: "Questionable invention companies refuse to disclose their success rate or the names and phone numbers of their clients," Riddle said. "Ask for its rejection rate. If they're legitimate, they have a high rejection rate."

"I always tell my clients: The odds are 99 percent against you. One out of 100 patent products makes money and 1 percent are licensed," Riddle said.

To check out an invention company or consultant, contact the Florida Attorney General's Office or the Federal Trade Commission in Boston.

"Make sure your contract contains all the terms written you've agreed to verbally. Then ask that your attorney review the agreement -- that will scare a lot of them off," Riddle said.

Sic:8748
Sub Title:
     [Broward Metro Edition]
Start Page:
     6G

Subject Terms:
     Industrial research
     Inventions
     Patents
     Settlements & damages
     Fraud

Geographic Names:
     Ft Lauderdale
     FL
     US
     South Atlantic

Companies:
     American Invention Associates Sic:8748

Reproduced with permission of the copyright owner.

 
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