Wednesday, November 18, 1998
Invention Promoters May Only Be Promoting Themselves
GREGORY, Special to The Times
Patrick Corcoran and his son John know
all too well the old adage: Too good to be true.
The Walnut residents paid a Costa Mesa invention-promotion
company $995 to trumpet John's creation of a water-cooled vest
for workers who toil in high temperatures. The pair were
especially impressed with claims that National Invention
Services Inc., or NISI, could help them realize a six-figure
return from mass production and marketing of the Cool-U-Vest.
Ultimately, however, the Corcorans learned that New
Jersey-based NISI, with 12 offices nationwide, really had no
expertise in successful invention promotion. According to
documents included in a Federal Trade Commission
against the company months later, NISI
had not helped a single
client earn more money than he or she had paid the company in
"We thought we were getting a fair shake, and we
weren't," said Patrick Corcoran, who ended his dealings
after it failed to respond to his questions.
"How many people out there are like myself and my
With applications to patent new inventions heading to record
highs this year, more and more Americans are looking to turn
ingenuity into income. But scores of would-be Edisons are
likely to fall prey to a small number of invention-promotion
companies that focus on landing fee-paying clients rather than
finding manufacturers and distributors for the ones they
Southern California is fertile ground for these companies. The
Los Angeles metropolitan area last year posted the
fourth-highest number of patent applications, behind San Jose,
Boston and Chicago, according to the U.S. Patent and Trademark
Office. Orange County ranked 14th.
This year Southern Californians are expected to file more than
6,300 applications for the most common type of patent, which
protects an invention's inner workings and function.
'Anything to Hitch Their Dream To'
These local inventors are helping to fuel a nationwide
movement to capitalize on innovation. Officials say the number
of patent applications this year is likely to far exceed the
120,445 filed by Americans in 1997. Of those, more than 37,000
came from small businesses and individuals, about 560 of them
from Southern Californians.
Never mind that roughly one of every two patent applications
is rejected and that of those accepted, only 1% to 3% result
in commercial success. However, most inventors are convinced
they've created the better mousetrap.
"There are just tons of people out there who think they
are inventors and are just looking for anything to hitch their
dream to," said David
Fix, a Federal Trade Commission
attorney who oversaw the lawsuit against NISI.
Joanne Hayes-Rines, editor of Inventors' Digest
years of high consumer demand, coupled with corporate
downsizing and shrinking job security, have spurred tinkerers
across the country to begin eyeing their hobbies and
after-hours creations as a potential ticket to financial
"The economy is good and people want more stuff. The
stuff has to come from somewhere," Hayes-Rines said.
"People aren't sure their job is going to be there in six
months. They're learning to depend on themselves again."
But consumer advocates fear an increase in inventors means
that more will fall in with unscrupulous promoters. Though the
majority of companies are legitimate and do provide a useful
service, many are not.
Rusty Ruscetta, chief operating officer of Glendale-based
Inventors Assistance League International, estimates there are
roughly 80 suspect invention promotion businesses in the
United States, more than 15 operating in Southern California.
Ruscetta's group is among a handful of support organizations
for inventors across the country that act as watchdogs against
shady promotion schemes.
"Inventors got this child of theirs and they are very
attached to it," Ruscetta said. "Anybody that tells
them they are in for tons of money because of it has got them
in a trap."
Lawsuits and Regulation
The hundreds of legitimate product promotion businesses across
the country provide such services to inventors as prototype
creation, patenting and marketing, Hayes-Rines said. These
companies are especially helpful for neophyte inventors with
no experience in product development, she said.
But that inexperience can also leave inventors vulnerable to
fraud, Fix said. Last year he helped lead a crackdown on
suspect invention-promotion firms in which five companies,
including NISI, were charged with intentionally misleading
clients into thinking their inventions stood a good chance of
making money. In the end, the lawsuits alleged, most if not
all money changing hands at these companies came from
"upfront fees," supposedly to cover legal, research
and marketing costs.
Of the five, only NISI
had offices in California. In July, the
company settled the suit by agreeing to refund $441,250 to
clients, though it denied any wrongdoing.
Representatives of NISI
did not return phone calls, but Philip
Farinacci, a South Carolina businessman, says the company no
Farinacci said he bought NISI's assets in
September and opened his own invention-promotion company
Product Development, which he added has no ties
and is not part of the lawsuit. "We provide a
NISI's former offices in Glendale and Costa Mesa now do
business as Advent
, although the Orange County office does
maintain a separate phone line that representatives answer as NISI.
Farinacci said he keeps the NISI
line because Advent acts as a
"service agent" for clients who signed up with NISI
before he purchased the company.
Farinacci said, none of Advent's clients has made
money on an invention, but he noted that the company is only 2
months old and too young to have a track record.
Invention-promotion services have been operating in California
at least since the 1970s, when complaints about fraudulent
practices prompted the state Legislature to pass a law
requiring product-promotion businesses to disclose to new
clients the number of existing clients who have made money
through their relationship with the company.
Warning Signs for Inventors to Heed
NISI, in fact, supplied that information to the Corcorans
among a sheaf of documents they received before making their
initial payment. But the statement--"No client has
received by virtue of the company's performance of invention
development services, an amount of money in excess of the
amount . . . paid by such clients to the company"--was
buried midway through a disclosure form that mostly discussed
the patent process. The Corcorans weren't aware of the
disclaimer until after they were contacted as witnesses in the
case against NISI.
John Corcoran, an air-conditioner repairman, now uses the
prototype of his Cool-U-Vest himself on hot days while he and
his father consider other ways to develop the invention
Consumer advocates say that more than anything else, inventors
need to make sure they have a company's success rate in
writing before they give any money to an invention-promotion
"Many of these scam artists actually have a zero success
rate, and you're dooming yourself to failure right off the bat
if you go with them," said Bob
Lougher, founder of
Massachusetts-based Inventors Awareness Group.
Lougher should know. He said he worked for a Massachusetts
promotion service for nearly two years, then quit when he
realized it was scamming clients. The company closed its doors
and is now the subject of a federal grand jury investigation
for tax and mail fraud.
"I was really embarrassed with myself that I could be so
stupid that I would believe what they were telling me," Lougher
said. "But the majority of the people on the
inside [of these companies] think they are doing something
good for people."
Along with a company's success rate, Lougher
inventors to ask for written information on the number of
inventions it has reviewed and the number it has accepted. He
advises steering clear of firms with high acceptance rates.
"A true invention-development company is very
selective," he said. "Most of the time, these bogus
companies have close to 100% acceptance rates. The more people
they accept, the more money they make."
Inventors, understandably, can get giddy over their creations
and the prospects of cashing in on them, but Alan Tratner,
president of Santa Barbara-based Inventors Workshop
International, urges them to step back and play devil's
advocate before handing money over to any product-promotion
company or agent.
"Keep in mind the standard consumer caveat," Tratner
said. "If something sounds too good to be true, it
probably is." * * *
How to avoid potentially fraudulent invention promotion
* If a firm is enthusiastic about your idea but insists on a
substantial upfront fee, take your business elsewhere.
Reputable companies are choosy about which ideas they pursue
and typically work on a contingency basis.
* Understand that many ideas can be patented but very few have
real commercial value.
* Ask the promotion firm you're considering for answers to
these questions in writing: How many clients have made as much
money back from their inventions as they have paid the firm
for services, how many inventions has the firm reviewed, and
how many has it accepted for promotion? (A high acceptance
rate is generally a red flag.) Also ask for the names and
telephone numbers of past clients and check the firm's
* Avoid firms that use high-pressure sales tactics, such as
claiming you need to hurry and patent your idea before someone
* Inventors can conduct their own search on the patentability
of their ideas free of charge at the Los Angeles Public
Library's patent and trademark section, 630 W. 5th St. Staff
members will explain how to conduct a search. Appointments are
necessary: (213) 228-7220.
* Fees listed by the U.S. Patent and Trademark Office for
filing a standard patent application are $790 for "large
entity" business submissions and $395 for small
businesses, nonprofit groups and individuals.
Sources: Federal Trade
Commission, U.S. Patent and Trademark
1998 Los Angeles Times. All Rights Reserved