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Within six months of borrowing the money, Mahaffey began to feel frustrated. His first inkling that ISC's promised patent search wasn't as thorough as it told him was a simple Internet search, which turned up several similar devices that were already on the market. As for the advertised promotion efforts, those consisted of "a few brochures and a couple of lines of advertising on the Web," Mahaffey says, calling the promise "a lot of baloney." With no money coming in from the invention, the loan payments to the ISC subsidiary became a burden. "We really struggled for a while, but I was afraid to back out," he says. Last February he finally paid off the loan.
SO MANY IDEAS, SO LITTLE SUCCESS
"It's a tough industry," Melinda Miller, ISC's publicity manager, explains. "It is a disappointment, but it is the nature of the industry. Mahaffey's case was not unusual. Consumers have to do their homework." She says that of the 5,324 clients the company represented from 1997 to 1999, only 11 had made more money than they invested. Consumer advocates say even that number is inflated. While no one questions the risks inherent in developing a new invention, experts say the odds shouldn't be that low. In 1996 federal authorities forced ISC, which has more than 70 offices worldwide, to return $1.2 million to clients for allegedly making false claims to them. The firm is also facing a class action by former clients, charging the company regularly breached the contracts it signed and failed to live up to its promises.
ISC's treatment of Mahaffey wasn't illegal. However, experts say it is among the nicer things that happen to naive inventors who rely on any one of the dozen or so major players in the industry. Richard Apley, director of the Independent Inventor Programs for the U.S. Patent and Trademark Office, says flatly that the majority of companies now advertising these inventor services, which generate about $200 million a year, are scams. "They offer a service of sorts but don't really do what they say they will do," says Apley. Nearly every one of their patent searches comes back with favorable results, often raising the hopes of inventors by estimating a huge market potential. After that hook is set, the rest is easy: clients are then quickly lured into paying huge amounts (the average inventor loses $20,000) for services that are either useless or available elsewhere for far less money. The companies' "marketing" consists mainly of blind-mail brochures to manufacturers that never look at them. Most of the patents obtained by these companies, he argues, are also worthless. And most important, virtually no invention backed by these firms ever gets to the market.
"I learned one thing," says Mahaffey, who only too late began to do some research on the industry. "These companies don't do what they promise. They just make sure they get the money and you don't." Or, as Todd Dickinson, director of the Patent and Trademark Office, says, "Their best invention is themselves."