I am a general practice attorney in Austin, Texas. Today I was visited by a young man who had a concept for a landscape lighting product. He had contacted Invent-Tech. He sent them a preliminary payment of $910, then he later was induced to send them another $9,000.
He wasn't in my office five minutes before I was certain he had been scammed. The first red flag was when he couldn't show me a signed contract that explained what Invent-Tech would do, and what it would cost. Lots of documents explaining the process, but no contract that says "we'll do this, you'll pay this." He had lots of leather-bound binders, and a CD-ROM with a slick 3-D representation of his product, and a document that purported to be a disclosure registration from the USPTO. I had to explain to him that this was neither a patent, nor a patent application.
He had asked Invent-Tech for references, and was given a list of some groups to whom the company had paid a membership fee — chambers of commerce, mostly — and he'd also been told that Invent-Tech couldn't give him the names of their other inventors for reasons of confidentiality. I had to point out to the young man that if there WERE any inventors out there who were manufacturing their widgets and making money thanks to Invent-Tech, they'd never want to pass up an opportunity to tell anyone who would listen what great widgets they had or how much dough they were rolling in. They'd want to tell the entire world about their widgets and about what great people those Invent-Tech fellows are.
The manufacturers this guy was mailing packages to were all real manufacturers, not shills, but the packages themselves were garbage. Strangely, all the manufacturers were in the Midwest, although Invent-Tech is in Florida and my guy is in Texas.
I explained to this young man that my gut feeling was that he had thrown away ten thousand dollars, that he'd never get it back, and that he'd never get anything for it besides the slick CD-ROM and the $10 USPTO disclosure registration.
That doesn't mean that Invent-Tech is crooked. Maybe they are. But maybe they really do try to close deals, and just can't, never have and never will. If you go hunting for venture capital in this world, you'll find a lot of crooks, but you'll also find a lot of people who will take your money and try very hard and simply fail because they never really had a chance in the first place.
Maybe Invent-Tech really does go to all these trade shows. I saw a lot of glossy color photographs of people shaking hands with each other, which was nice. But what HAPPENS at these trade shows? The details of all that are very fuzzy.
Here is some free legal advice. If you have an invention, first, get a little bit of business savvy. Go to the U.S. Small Business Administration and let them teach you what a business plan is, and how to write one. Making money on your invention isn't simple, but it is straightforward. You have to figure out where and how to produce it, and where and how to sell it. You don't necessarily need a patent.
Don't make it any more complicated than it needs to be. Figure out where and how you will manufacture it, what that will cost, where and how you will sell it, what that will cost, and research the market to get an idea of how many of them you will be able to sell in a given time period. Figure out how much money you need to get started, how much it will cost to keep operating, how much money will be coming in, and when and how you or your investor will recover their investment and earn a return on that investment. Put all of that information in a business plan.
Try not to be doing business with people all over the planet. Look for manufacturers or licensors in your own city or state. Someone you can get into your car and visit. Someone with whom you can develop a personal relationship.
The SBA may even guarantee a bank loan for the money you need, but they will not lend you your first dollar. If you are putting up a good chunk of your own money, or have other investors, you can get an SBA-backed loan with a spiffy and well-thought-out business plan. If you strike out with the SBA, don't panic.
Look for "business incubators" in your community, and talk to your city and state governments' economic development people. Your most likely investors, besides yourself and your rich uncle Louis, are the manufacturers who will make your widgets, and the store owners or sales people who are going to sell your widgets.
Use the Internet, people! Do thorough research on invention promotion companies and manufacturers and licensors! Call the FTC, the BBB, your state attorney general. Surely the whole invention promotion industry can't ALL be crooks and flakes, there must be some good ones out there. Use the Internet to communicate with other inventors. Learn from their successes and their failures.
Remember that anything that SOUNDS too good to be true, IS too good to be true. Ask a lot of questions. And if you ask questions and don't get straight answers, run for your life and hold onto your wallet with both hands.
I felt so sorry for this young guy, but he was soooo naive. When you see an infomercial on TV, don't buy anything more expensive than a George Foreman grill without doing your own research!
Donald
Austin, Texas
U.S.A.
0 comments