Clients sometimes ask us to suggest people who can assist them with locating manufacturers who might wish to buy their patented ideas or products. There are a number of companies who offer such assistance to inventors and small firms, and we have therefore prepared this information sheet to help clients decide whether they wish to employ the services of such companies.
Most individuals who take out a patent will receive circulars from two or three invention brokers when their patent application is published. It is not always apparent from the initial approach what services are being offered, and the initial approach may be couched in vague terms, e.g. expressing a "commercial interest" in the invention. Clients should therefore be aware of the following points.
Invention brokers do not buy inventions themselves. They promote inventions in return for a fee of some kind, with the aim of selling the invention.
Many brokers will ask for an up-front payment to cover general promotion costs together with a percentage of the proceeds if they are successful in selling the invention. (In this context a "sale" includes outright sale of an invention/patent or licensing of the invention in return for royalty payments.)
There will usually be an implicit duty of confidentiality on an invention broker who receives information about a new invention, but in general, brokers will be happy to sign confidentiality acknowledgements as it is in their interests to do so. It is certainly in the inventors interests to have the conditions set out in writing.
Most brokers will already have manufacturers on their books who are looking for ideas in certain fields. Although this is a potential benefit there is also a potential conflict of interests. Will the broker be negotiating to obtain the best deal for you or their company client?
Although reported instances of dishonesty are rare it is important to appreciate that brokers are offering a commercial service. The fact that a broker may appear keen to take on an idea does not necessarily mean that they are confident of selling it. Although they may take steps to "promote" an invention there is no guarantee of success, and inevitably they will devote more time to inventions which show a promise of making a return.
To summarise, clients should be very careful to ascertain the terms on which the broker is acting. The advice of other professionals such as accountants or solicitors may be appropriate.
© Craske & Co., 1998
Last updated: 27 December 2010