Companies Allegedly Scam Aspiring Inventors
May 19, 2006 — -- The government approved approximately 167,000 patents last year. But some inventors missed out on opportunities after falling victim to some original alleged scams.
The United States Patent and Trademark Office estimates there are about 100 invention promotion companies. Some legitimately help inventors develop and market their products but others just rip them off in inventive ways. The alleged scam artists know just what buttons to push, telling people their ideas can be big money makers and urging them to send thousands of dollars as soon as possible to help develop their products.
Michelle Padula, a resident of upstate New York, saw a TV commercial for Inventor's Helpline, a Web site tied to a private business called the Patent and Trademark Institute of America. Padula thought PTI could help her develop her long-held vision, a disposable toilet bowl brush.
"It was time for a disposable toilet bowl brush," Padula said.
Padula paid for PTI's assessment of the brush. A salesman, she said, told her she had a real moneymaker, that she could earn $250,000 every four months in royalties. So Padula sent PTI more than $5,000.
"I feel as though I just threw away $5,000," she said.
"Good Morning America" obtained an audiotape of a phone call between an aspiring inventor and PTI sales person.
"This is the kind of product that could make half a million a year," the PTI salesperson said. "What will it take to put together the, uh, $15,000?"
When the inventor said it would take three or four days to come up with the money, the salesperson replied, "Three or four days? Do it today."
Patent Cams Big Business
Bob Hutchinson fell for the hard sell. He had an idea for a board game about managing credit card debt. He called PTI for help and then sent them more than $11,000.
"After I paid my money, I heard nothing from them," Hutchinson said. "Absolutely nothing."
The U.S. patent office, which won't comment on PTI, said overall invention promotion scams are a big problem.
"We've seen estimates that it's up to a $200 million-a-year business of invention scam companies," said Jon Dudas, director, U.S. Patent and Trademark Office.
PTI is run by Julian Gumpel, who was sued, along with the he invention promotion company he worked for, by the Federal Trade Commission back in 1997. Gumpel never admitted wrongdoing. But in a settlement, he agreed not to make any false statements in business dealings with inventors.
Gumpel declined "Good Morning America's" request for an on-camera interview. But in a phone interview, he said that his company rectifies mistakes and that "our licensing staff attends invention trade shows throughout the world."
"I personally have nothing to hide," he said.
However, when asked to identify one PTI customer who has made a profit, Gumpel said, "I'd have to do a great deal of research."
PTI said it lived up to its deal with Hutchinson and Padula. But the New York State Consumer Protection Board has become involved in their complaint and is asking the FTC to investigate Gumpel and PTI and whether the PTI owner violated the terms of his previous settlement.
"PTI's business behavior is not acceptable. It's deceptive," said Theresa Santiago, executive director of the New York State Consumer Protection Board. "They're not telling consumers exactly what it is that they're gonna get."
How Inventors Can Avoid Scams
If you're thinking of signing up with an invention promotion company, check its complaint record on the U.S. patent office Web site: http://www.uspto.gov/
Don't go with a company that uses a high-pressure sales pitch or demands a bunch of money right away.
Consider pursuing your invention on your own by hiring a reputable patent attorney who will research whether your invention is unique enough to be patented.
ABC News' Elisabeth Leamy reported this story for "Good Morning America."