Determining whether your invention will be successful or not is an integral part of being an entrepreneur. Here are three reasons inventors are outsourcing the review process to increase efficiency.
When entrepreneurs and companies invent new products or technologies, they are understandably reticent to share their ideas with outsiders. After all, the business landscape is cut throat. They do not want to risk giving away their competitive edge. Still, most entrepreneurs are aware they need some feedback to ensure that their ideas are viable. They may form an internal review team to analyze their prototypes and conduct a market analysis.
While this choice may seem logical, internal invention reviews can be a waste of time and money. External reviews are a smarter choice. For instance, consider independent taste testers, who food companies outsource sensory testing of their products to in order to capture a broad and objective range of preferences. Beware of in-house reviewers, who are often incapable of delivering the objective analysis and insights you need to make sure your product does not fail.
We will come back to the point about internal reviews inherently being nonobjective. There are additional reasons to outsource the invention review process. For starters, internal reviews can require significant time and money. Since the team members tasked with the review are employees, they may have to balance this assignment with their other responsibilities.
Generally speaking, internal reviews can take up to 30 hours at minimum, although they can take up to 30 days at larger companies. If you are paying employees over $75,000 per year (and, in the case of an attorney, far more) and you assign several people to the task, you are looking at thousands of hours and potentially hundreds of thousands of dollars to conduct your internal reviews, when they could be working on developing the top ideas and technologies instead. Be aware of where you’re spening money, as very little of your review expenses should be on the front end.
In addition, internal reviewers are not necessarily trained to conduct these types of analyses. A quality product study includes thorough research into your market, competitors and patent prospects. Someone who is not trained to vet ideas for commercial potential will not be able to generate the level of insights and recommendations you need to screen a technology. By comparison, external teams specialize in product analyses.
Privacy can be a concern when inviting outsiders to review your ideas. However, a non-disclosure agreement or confidentiality clause can prohibit external reviewers from revealing any sensitive and proprietary information. There are both legal and business incentives to adhere to these guidelines as the reviewers want to build a reputable business and are not in the business of stealing ideas for themselves. If the right safeguards are in place, you can trust that the review process will not expose your business’s important competitive information.
Here are three ways in which an outside review is more advantageous than an internal report.
Unlike your team members, review agencies focus solely on compiling invention reports. They can turn around an analysis much faster than your internal staff, and it will include a SWOT analysis, competitive research and intellectual property (IP) research – all the information you need to decide whether to move forward.
While some consultants charge high rates, many third-party vendors offer fast and affordable services. Instead of paying salaried employees to produce a lackluster review, you can secure a top-quality analysis at a fraction of the cost, freeing up your employees to concentrate on the development of your best ideas and IP assets.
I promised we would come back to this and saved it for last because I cannot stress it enough. When it comes to evaluating your commercial prospects, objectivity is everything. You need input from professionals who have no stake in the product’s performance. A third-party team is solely concerned with getting you informed answers and giving them to you with no pretense. Their jobs and egos do not depend on your product’s success. Those are the people you want reviewing your invention because then you will have solid feedback and perhaps fresh insight into whether your idea can be successful.
The worst thing you can do for your company is go to market blindly or with misinformation. Sourcing high-quality evaluations from professional invention reviewers will provide you with the necessary knowledge to help your company succeed. Whatever the reports contain, it will give you the knowledge to make informed decisions and develop ideas the world really needs and wants.
Action News Investigates has learned a lawsuit accuses a Pittsburgh-based invention promotion company of running a deceptive and fraudulent scam.
The class-action lawsuit says InventHelp and its affiliates took millions of dollars from inventors, who got virtually nothing in return. The company disputes the allegations.
Court records show InventHelp has convinced thousands of people to part with thousands of dollars to market their inventions. But the lawsuit says only a handful of inventors have made money.
After she saw an InventHelp ad featuring a caveman, Sherry Porter contacted the company about her idea.
“It was a pet collar with an LED light that went all the way around,” Porter said.
When Porter met with an InventHelp official at their office in Rochester, New York, she says the response was enthusiastic.
“She told me that it was a great idea. She said to me this invention could go as far as bigger animals, cows, horses, and she said possibly even to children,” Porter said.
Porter said she was skeptical.
But according to a class-action lawsuit filed in New York, InventHelp eventually convinced her to pay $700 and then another $9,000 to market her invention.
The lawsuit says InventHelp promised to send Porter’s invention to numerous companies. But when she followed up with those companies, she said, “they would write back and say they had already seen this product, that it had been on the market for years.”
She also got a book describing her invention.
“What Sherry received for that $10,000 was a hard-bound book very generally describing her invention that probably a third-grader could have put together,” said her attorney, Julie Plitt.
Earlier this year, the lawsuit says, an official at InventHelp’s Pittsburgh headquarters contacted Porter and said a company based in New York City called Abrams Gentile Entertainment was interested in licensing her invention.
But when investigators for Sherry’s attorney went to the office of Abrams Gentile, they found it vacant — nothing but empty boxes. The company’s name not even listed.
“As it turned out this company didn’t exist. The name of the company on the contract occupied vacant New York City space and to date that company hasn’t even answered the complaint,” Plitt said.
Porter did eventually receive a $500 check from another company affiliated with InventHelp.
“We believe that this $500 was a ruse in order to suck her into spending even more money with InventHelp,” Plitt said.
In their complaint, Porter and two other inventors accuse InventHelp and affiliated companies of running a “deceptive and fraudulent invention promotion scam that has bilked thousands of aspiring inventors and entrepreneurs into paying millions of dollars to Defendants for invention promotion services that Defendants do not and never intend to provide.”
When Action News Investigates called InventHelp’s PR office for comment, the voicemail was full. An email to the PR office bounced back as undeliverable.
Eventually, company spokesperson Lark Blasi responded, calling the lawsuit allegations “empty and frivolous” and saying, “We very much stand by our efforts on behalf of all of our clients, are pleased that a third party has shown interest in this individual’s idea, and are puzzled by the various inaccuracies in the amended complaint.”
In a letter to the court, InventHelp says it plans to file a motion to dismiss the lawsuit.
On its website, InventHelp says from 2015 to 2017 it signed submission agreements with 6,564 clients. But it says just 166 clients have gotten license agreements for their products, and only 49 clients — less than 1 percent — received more money than they paid InventHelp.
“In fact, all these people got was a large debt and dashed dreams,” Plitt said.
“I don’t take throwing money away lightly and that’s exactly how I feel, that I just threw that money right out the window,” Porter said.
In addition to the case filed by Porter in New York, a lawsuit making similar claims about InventHelp has been filed in Philadelphia. The company said it has not yet had a chance to review the allegations in the Philadelphia case.
When a company copied their invention, Natasha and Fred Ruckel began investigating — and got an inside look into how products are ripped off.
On Valentine’s Day in 2015, Natasha Ruckel and her husband, Fred, were sitting in their living room in Gilboa, N.Y. Natasha was improvising on the piano, and Fred was listening while messing around with the couple’s cat, Yoda. Fred noticed a ripple in the living room rug, forming a half circle on one side. Again and again he tossed toys into the ripple and a delighted Yoda darted in and out. Natasha looked up from her playing. “That’s when we came up with the idea for the Ripple Rug,” she says.
The Ruckels, who had spent around 25 years earning their living in marketing and advertising for brands from PepsiCo to ESPN to Hasbro, were already in the midst of creating their first venture: an app that provided a way for amateur photographers to monetize online images. But they both agreed that the Ripple Rug was a better bet.
A couple of days later, Fred went to Home Depot and bought some cheap pieces of carpet, and they got to work on a prototype. When they had that, they launched a Kickstartercampaign in May 2015, pricing the American-made product at $39.95, to test the market. Within 30 days, they received $15,000 in backing. They had the products made in Georgia for $15 each, and filled the orders.
The Ruckels were weighing their next step when, that fall, the opportunity of a lifetime hit. QVC, in conjunction with the Today show, hosted an ongoing competition called the “Next Big Thing” for entrepreneurs with new retail products. Participants presented their offerings on the TV program, and the winning products received an order from QVC.
Following an arduous vetting process — including proof of a multimillion-dollar insurance policy, a guarantee of having 1,500 items available for sale and sample videos of the Ruckels in pitch mode — Ripple Rug made the cut. “We drove into New York City, and at every exit, we practiced the pitch,” Fred remembers. “We were there by 5 a.m. and hardly slept the night before.”
They sold a few hundred units immediately. QVC bought 1,500 more and Ripple Rug became a top seller. “It was pretty damned amazing,” says Fred. “We were profitable out of the gate, which is virtually unheard of. It felt like a great moment.”
It was, and it wasn’t. Over the next 14 months, the Ruckels learned that coming up with a truly original innovation attracts not only devoted customers but also the kind of highly organized, deep-pocketed bootleggers who rip off products and systematically grind their inventors into the ground — both financially and emotionally. “It creates so much discord that you are willing to give up the dream of entrepreneurship and go back to your day job,” says Fred.
In the thick of battle, however, the Ruckels learned critical lessons: the importance of copyrighting assets before launching; the reality that people will steal everything from your marketing pitch to your product to your advertising photos; the need to continually patrol for ripoffs and take action. They also got a darkly fascinating glimpse of how ruthless, well-funded, deeply sophisticated bootlegging operations work — and how, with tenacity, vigilance, a good lawyer and the right strategy, they can be beaten.
To read how they won, here is the rest of the article:
Earlier today, iPEL, Inc., launched its new website and a brand-new model of patent monetization, which offers free and paid licensing options to operating companies. iPEL has also defined a set of business practices that a Non-Practicing Entity can follow in order to call itself an Ethical NPETM.
iPEL was formed with $100 Million in initial capital, in May of 2017, by Brian Yates, a well-known patent monetizer, and Rasheed McWilliams, a respected patent trial attorney. For the last year, iPEL has been actively building its worldwide patent portfolio, which currently includes more than 1,000 distinct patent families.
iPEL announced its Initial License Offering, available only through the end of 2018, which provides all companies an opportunity to secure a license to iPEL’s entire worldwide patent portfolio, through one of two licensing programs: (1) free licenses for small businesses and startups, and (2) paid licenses for larger businesses.
Both categories of licenses should be a welcomed change for operating companies, who historically learned of patents owned by one of Mr. Yates’ companies by being sued. Indeed, the dozens of NPEs that Mr. Yates has owned were often amongst the most active patent plaintiffs in the US and were responsible for more than 1,000 patent infringement lawsuits, against a majority of the companies on the Fortune 1000.
With iPEL, it seems clear Mr. Yates is intent on pursuing a very different monetization model. “It’s pretty funny,” said Mr. Yates. “Several people thought I retired or left the patent monetization business, because during the last year, I have not created dozens of new NPEs or filed hundreds of new patent lawsuits. But, I just turned 43 years old, and I have no desire to retire anytime soon. I love what I do and am incredibly proud of what we are doing with iPEL. And, even though it has been fun keeping the details of iPEL a secret, it’s going to be a lot more fun watching iPEL impact the entire innovation ecosystem.”
Although Mr. Yates and Mr. McWilliams would not share the full scope of what iPEL has planned, it is clear that they want to change the NPE narrative. Providing a defined list of best practices and clearly defined pre-litigation licensing options are definitely new talking points for NPEs.
Even the most vigilant anti-NPEs, however, will have a hard time criticizing iPEL’s offer to grant small businesses and startups a completely free, no strings license to its entire patent portfolio.
iPEL’s free license is available to any company whose gross annual revenues do not exceed $5 Million USD (or the equivalent in any other national currency) and is for a one-year term. Although the license is renewable, it is not available to affiliates or subsidiaries of larger entities that do not meet the revenue restrictions.
“We know that small businesses and startups are the most likely to engage in paradigm-shifting innovation” said Mr. Yates, CEO of iPEL. “Those companies are not afraid to take risk, to ask big questions, or to dream. Unfortunately, in almost all instances, those same companies cannot afford to buy all of the patent licenses they need in order to implement their new technologies. iPEL wants to help these companies succeed, by giving them a large portfolio of patented technologies, upon which they can freely build.”
“There is no reason patent licensing cannot and should not be a celebrated exchange of innovation and technology between those with rights and those who need to leverage those rights in order to produce and distribute products,” said Mr. McWilliams, President of iPEL. “Patent and technology licensing has been a part of the fabric of American culture since the earliest days of our history as a nation.”
“Regrettably, patent licensing has become a maligned practice over the last decade in the United States,” said Mr. Yates. “This has allowed the many benefits of patent licensing to lay unrealized, and for innovation to stagnate. My hope is that by giving free, non-exclusive rights to iPEL’s valuable patent portfolio, startups and small businesses will create more jobs and create exciting new technologies.”
Of course, there is a self-serving piece to what iPEL is doing as well. If startups and small businesses do successfully build on the patents in iPEL’s portfolio, then they will at some point becoming paying licensees. “Sure, it just makes good business sense really,” said Mr. McWilliams. “These small companies don’t have the ability to pay for patent licenses, and a patent infringement lawsuit could cripple them before they even get started. We’d love for them to build on our valuable technologies without worry, and once they can afford it, purchase an ongoing license. It is a win-win for everyone.”
At the end of the day, iPEL hopes this new, startup-friendly model becomes an industry standard. “Despite the false narrative that has been spread by many willful infringers, NPEs are a vital part of innovation and the global economy. And, at iPEL, we are holding ourselves to the highest professional standards, by giving all companies an opportunity to secure licenses on reasonable, pre-litigation terms. And, small businesses and startups should never be afraid of an NPE jeopardizing their company. For those reasons, we challenge the rest of the industry to follow our lead,” Mr. Yates said. “It is time for NPEs to stop allowing infringers to define us as a bunch of heartless monsters. Everyone should abide by the Ethical NPETM practices and support small businesses and startups. It’s simply the right thing to do.”
More information about iPEL’s Ethical NPETM criteria, its worldwide patent portfolio, and its free and paid licensing programs, is available at www.ipel.com.
Read the Fine Print before you sign.
It all sounds so good, and easy. You have spent hours and perhaps years creating your product. You have spent money making prototypes and patents. We know those are not cheap and can take years to get. You see an ad on TV and it sounds great! They can do it all! You meet with someone and they love your idea as much as you do, or so they say.
Here is the kicker. They are in it for the money. I am not saying they aren’t entitled to be paid for their work. The problem is, they rarely do work. Inventors do not ask enough questions or talk to enough people about the company they are choosing. It is based on pure emotion. They sign a contract to pay and they don’t know what they are getting in return.
Inventors are easy pickings for a lot of companies. They tell the inventor what they want to hear and the inventor jumps at the chance. Their credit card is out so fast, they forgot to read the fine print.
Here is another inventor who fell into the trap:
Don’t be the next one to get burned. If you have questions, or need help, email us at email@example.com
Josh Malone, the inventor of Bunch O Balloons, won a $12.3 million judgement against Telebrands’ recently. Josh’s patents were challenged at the Patent Trial and Appeal Board (PTAB) and were found to be invalid. However, the Eastern District of Texas found that the patents were valid and also found Telebrands’ and others had willfully infringed the patents owned by Tinnus Enterprises and Zuru that cover the toy, Bunch O Balloons. Zulu and Tinnus are now looking forward to enhanced damages since the jury found willful infringement by Telebrands’.
Another patent used to protect the invention of Malone was challenged by Telebrands’, but the PTAB did not grant the petition for hearing since the same issues and the same prior art had been reviewed by the examiner in the application for patent. This may show that the tide is starting to turn in favor of the inventor in further reviews of patents in this on-going battle.
Fed up with what he perceived as bureaucracy run amok at the U.S. Patent and Trademark Office, Paul Morinville staged a striking protest this summer, with inventors marching on the agency’s Alexandria headquarters, holding signs and burning their patents.
He said too many patents approved by the agency had been revoked by administrative law judges at the Patent Trial and Appeal Board, which he said tends to side with major technology companies in disputes with independent inventors.
“If you like to steal other inventors’ stuff, then you must love PTAB,” said Mr. Morinville, managing director of U.S. Inventor Inc., an organization advocating for stronger patent protections for startups.
One judge, for example, represented Apple Inc. in private practice and then ruled in favor of the tech giant 17 times after joining the court. Another judge represented AT&T Inc. as a private lawyer and later presided over a case involving the telecommunications company.
Mr. Morinville estimates that the review board has invalidated patents in 92 percent of the cases it has resolved.
Eyebrows were raised this summer when a lawyer representing the patent office in a federal court appeal of a board decision acknowledged that the agency had added extra judges to reviews in order to achieve the desired outcome. The patent office attorney said the move was necessary to “ensure the [director’s] policy positions are being enforced.”
The Supreme Court will take up the issue in a case that asks the justices to declare the appeals board process unconstitutional.
Oral arguments in the case, Oil States Energy Services v. Greene’s Energy Group, are scheduled for Nov. 27.
Congress created the Patent Trial and Appeal Board to address complaints that the patent office was approving too many applications that were vague or overly broad. The board was expected to be cheaper and more efficient than courts to resolve patent disputes.
It handles contested patent cases through administrative proceedings known as inter partes reviews. All cases are managed by panels of three to five administrative law judges.
Inventors say the rulings often seem arbitrary and are particularly irked by what they see as a pro-corporate bent among the administrative law judges. They say anyone can bring a challenge, and the judges can continue a case even if the complaint is withdrawn.
The appeals board is not subject to review by the regular court system, which the inventor community says leaves it with little recourse.
“There is no code of conduct for PTAB judges,” Mr. Morinville said. “There is no rule of law in the PTAB, and that is what really angers people in terms of the invalidation which should rely on the rule of law.”
The patent office’s chief information officer did not respond to multiple requests for comment.
The test case before the Supreme Court involves Houston-based Oil States, a company that provides equipment for the oil and gas industry. It received a patent for a tool that pumps fluid into an oil well without fluid making contact with the wellhead.
Greene’s Energy Group of Imperial, Pennsylvania, challenged that patent through a review, and the board invalidated it. Oil States asked the board if it could amend the patent, but that motion was denied. The company then filed an appeal with the U.S. Court of Appeals for the Federal Circuit.
Oil States said the review process is unconstitutional because a patent is a form of private property and the same agency that grants a property right can eliminate it without a jury trial in federal court.
The Federal Circuit rejected Oil States’ argument and affirmed the board’s decision. Oil States petitioned the Supreme Court, which agreed to hear the case.
The Supreme Court denied similar requests over the past few years to determine the constitutionality of the Patent Trial and Appeal Board’s reviews.
Some patent analysts said Justice Neil M. Gorsuch may be the reason the court chose to hear Oil States. Justice Gorsuch, who was confirmed to the court this year, has expressed concerns about administrative adjudication in judicial opinions.
“Clearly, the court took this on to not just leave things as status quo,” said Art Monk, vice president of patent transactions at TechInsights, a San Jose, California-based provider of patent data. “They could do something radical like invalidate the entire America Invents Act or do something more benign like provide guidance on how property rights need to he handled.”
If the Supreme Court decides the board’s reviews are unconstitutional, then the ruling could restrict other federal agencies’ uses of administrative tribunals to resolve disputes. The Federal Election Commission, Securities and Exchange Commission and Federal Communications Commission are among the agencies that rely on such systems, known as administrative adjudication.
“A ruling striking down PTAB would show the Supreme Court wants to tighten the constraints on administration adjudication and could lead to challenges over other well-established forms of adjudication,” said Greg Reilly, who teaches patent law at Chicago-Kent College of Law.
Small companies and independent inventors say patents are property rights and can be revoked only by a federal court. Several groups, including conservative organizations and a coalition of patent law professors, have filed briefs in support of Oil States.
“We have judicial opinions written over the past 150 years affirming patents as private property rights,” said Greg Dolin, a patent law professor at the University of Baltimore Law School who filed a brief in support of Oil States. “Court after court and justice after justice keep saying patents are private property rights that can only be adjudicated in courts.”
Large tech companies contend that patents are public property and the same government that recognizes them can regulate how they are adjudicated.
The Patent Trial and Appeal Board system gives challengers more leeway to invalidate a patent based on the portion of the technology used instead of the entire patent.
“The PTAB and its review process are constitutional,” Mr. Reilly said. “Patents are created by federal statute, which also gives Congress the right to specify administrative adjudication. Inter parties reviews are appealable to Federal Circuit which protects due process concerns.”
Even if the court finds the review process unconstitutional, it’s not clear what would happen to the patents the PTAB has already invalidated.
“I think we could have a situation in which changes to the law don’t apply retroactively. I think there is still a lot of uncertainty surrounding this case,” Mr. Reilly said.
The debate over the Patent Trial and Appeal Board has attracted attention on Capitol Hill. In June, Sen. Christopher A. Coons, Delaware Democrat, introduced legislation dubbed the Stronger Patents Act. Delaware is the nation’s busiest jurisdiction for patent disputes. More than 6,500 patent cases were filed in federal court in Delaware in 2014, according to the most recently available data from PwC, the brand name for PricewaterhouseCoopers.
Mr. Coons said the bill would bring more balance to the board’s reviews. If passed, the bill will attempt to bar patent challengers from seeking both a Patent Trial and Appeal Board review and a district court hearing, limit board reviews to one claim per patent, and ensure a challenger has a business or financial reason to attack a patent.
“The bill requires the PTAB to use the same standards that a district court applies when evaluating if a patent claims something truly new and nonobvious, standards that are fairer because they account for the fact that inventors have already had to prove to a patent examiner that they deserve a patent,” Mr. Coons said.