It has come to my attention that some inventors here are not aware of a common type of fraudulent invention "marketing," "development" or "promotion" company. There are many of these around the US, and I assume many elsewhere, too. I worked for one such company in Pittsbugh PA in the 1970s, and helped in blowing the whistle on them, and assumed they had long ago dried up. Unfortunately, they have not. The same company is apparently now bigger than ever, running under new names. And I am sure there are many others now.
The way that companies like this work is based on the fact that inventors are already sold on their own ideas, so if you can appeal to egos and greed you can milk them for large amounts of money while doing very, very little work. When I worked for such a company, it was in very early days of word processing (and easy boilerplating), and I produced evaluation reports first as a free lancer, then as a staffer (where I learned how the business really works). The stages in the process can go by various names, but you'll get the idea, I hope.
Stage 1:
The company sells the inventor an initial contract to research or evaluate the idea. Typically the report simply further sells the inventor on his own idea, and in my day required about 5-8 pages of original writing, and 20 pages of boiler plate, which was quickly selected to more or less fit the idea (trends, statistics, etc.) Adjusting for inflation, I was paid about $100 for the report, and it was sold to the inventor for $1000. Overhead was very low, so that even after the "consultant" (sales guy) commission was paid, the company still made $600 on the deal so far. These "consultants" actually came from used car sales, Florida land sales, etc.: good at sales, clueless re inventions, and slippery as can be.
As I became more involved in the company, I found that every idea was to be evaluated in the same way, with essentially the same market projections all the time: large enough to be interesting (in terms of potential royalties) but no so large as to scare the inventor off or make him think (the truth) that the company was simply selling him on his own idea, to get him to commit to stage 2. (Typically the pitch might start: "John, I've got great news – the team thinks your idea has some real potential…" )
Stage 2:
Representation: In my day, this phase cost $6000 (adjusted dollars). A surprisingly large number of the people who paid for the first report paid for this stage too: I think the "turnover rate" was over 30%. The "consultant" earned a nice commission for the sale (although much of the sales pitch was actually done by the writer of the original report). The "idea" of representation was that the company would present the inventor's idea to industry. What really happened is that the minimum wage "marketing staff" would simply copy a little blurb out of the original report, ad a cover letter and send it off to 6-10 companies they would find in Thomas's Register. Half the time, the ideas would be sent to very unlikely manufacturers, (because the staff was clueless, typically just out of high school) but it didn't really matter… because the intent was not to really market the invention, it was simply to get the inventor's money and move onto the next inventor. At this point the process is usually done. The inventor might be sent an occasional letter to let him know the company was working on his idea, etc. But what on earth would be the point in the company actually doing any work whatsoever? Much better business to go on the next "inventor".
But, you might ask, didn't they actually get anything to market? Yes, exactly the minimum to keep people thinking they were legit. Where I worked, they tended to be plastic things that could easily be injection or blow molded, because plastics manufacturers, especially one working with toys (which can come and go quickly) often have excess capacity. Better to invest in the small cost of a mold, and have the machines produce something, than to sit idle. We didn't have a single product that was successful in any realistic way – and I think when I was there they'd been in business at least 5 years.
Sadly, the biggest fear investors had was that the company would "steal" their idea and get all the royalties. The company didn't even have such an idea in the backs of their tricky little minds. Why? They'd already made $7,000 for writing a report and sending out a couple letters. Getting a few things on the market was a nuisance, not an opportunity to make more money.
Don't use companies like these, some of which are very slick. Check out this one, sued by the Federal Trade Commission in 1997. They must have this disclaimer on the website, showing there lack of success. But thousands still use them. Cruise their site, and you'll see why. But realize that out of the 261,697 ideas submitted to Davison in the last 5 years just 8 (in 5 years!) made more money than the fees paid to Davison.
This link goes to a site that looks a little whacky – but I can assure you that it's accurate. Martin Berger was the guy who owned the company I worked for.
See part two: What's an inventor to do? in comment #1 below.
Inventors Beware
Re: Inventors Beware
