There are some inventors who are not so lucky when it comes to owning their products and gaining the necessary income and praise because of manipulators and false advertisers. Paula Brillson Phillips, a managing partner of Digital Law Group, has built her career advising start-up companies and mentoring hundreds of individual inventors worldwide to navigate the complex process of getting a business or product off the ground as well as helping them make effective decisions to protect their intellectual property, meet their business goals, and leverage the value of what they have already created. Her book, As Stolen On TV, arms the inventor with useful information on how to avoid being swindled in the invention industry.
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I am super excited to introduce you to someone who I’ve gotten to know and who has written a book that you are going to love, As Stolen On TV: Stealing The American Dream One Invention At A Time. You inventors out there, I know who you are because you emailed me, you messaged me and you send messages through LinkedIn. You listened carefully to the show that you know that that’s the only place I will respond to you. I have Paula Brillson Phillips here and I’m excited for you to talk to her. She is an attorney and she has some amazing stories and experiences. We met at an event and we hit it off because we had so much similar experiences with all of you out there, with our own personal journey, and how things go.
She has built her career advising startup companies and mentoring hundreds of individual inventors worldwide. She helps you navigate the complex processes of getting a business or product off the ground, which is very complex. She also works directly with companies and executives to help them make effective decisions on protecting their IP and meeting their business goals. If you’re going to build a business around a product, you’ve got to make the intellectual property part of that strategic process. In the end, you want to leverage the value of what you’ve already created. You don’t want to just patent and then keep patenting and not leveraging and use what you have. We talk about this book Rembrandts In the Attic. You don’t need that. You need to use it and make money from it.
For many years, Paula has successfully navigated hundreds of small businesses through the legal hurdles they face in starting and running their businesses. She represents clients in investigative and enforcement proceedings, which is something totally new here, by the Federal Trade Commission, state attorney general and district attorneys, other federal state agencies with jurisdiction over advertising and marketing practices. These are some of what you’re going to deal a whole lot more with, not just the US Patent and Trademark Office and the proceedings related to that. I’m excited to have her here and talk with you. I’m excited to write up an article about this because it has been one of the missing links in my column. Before we start and before I totally introduce her, I want to read something because this sets the tone for how Paula is and feels about all of you creators and inventors out there.
She says, “You see, inventors, like children, are vulnerable. Their products are like their babies and they have a sense of true emotion and pride in them. They want to be told that their baby is beautiful. It just so happens that after toiling for hours to perfect an invention, the emotions that often make the beliefs heartfelt and strong that a particular product will be a huge success is a primal feeling of hope. Hope after all is one of the strongest feelings humans have, powering us to great heights and remarkable lows as we swing like a pendulum between hope and it’s opposite pole, despair. Hope can also turn us into suckers.” As you know here on this show our mantra is, “Hope is not a plan.” If you can point out an episode where I didn’t say it in, I will give you a free strategy session. Paula, welcome to the show. I’m excited to talk to you.
Thank you, Tracy. It’s great to be on your show. I’ve watched many episodes and you’re a wonderful probing interviewer. You bring in compelling speakers that add value to the whole learning process or inventors. Thank you for all that you do.
Thank you. Product Launch Hazzards is about those hazards and you’re talking about a lot of them. Those pitfalls, those things that make us suckers as inventors, the things we all fall into. I have fallen into hundreds of stories of people who have. There’s been written in the book here some brilliant stories and things that I hadn’t even thought about that go wrong and are devious and I can see someone falling into easily. Tell me what compelled you to write this book.
Working with inventors for many years and when they come to me with a struggle or a problem that they’re facing, I quickly get to work to help them. In many instances, they don’t have the resources needed to protect their rights. I sometimes feel like a doctor where a patient comes and I say, “I have this life-saving strategy for you, which is going to cost you hundreds of thousands of dollars or sorry, I can’t help you.” In that way I have this feeling of being powerless and so I realized there is a common thread of problems that I’ve been dealing with for many years and I compiled them. In some instances I’d say, “Don’t let this happen to you,” and hopefully help inventors avoid if not mitigate some of the issues. I also felt like I wanted those stories to be told. I wanted the inventors and the entrepreneurs to have a voice. The ones that didn’t have the resources to pursue their wrongdoers, that they would at least be able to be heard and have their story told. I was glad that I could provide a vehicle for that.
You point out many ways that we fall into these traps as inventors because it’s the advisors and the circles and the people we’re around. It’s not like some of this stuff would occur to us because people are naturally good. There are a lot of scam artists out there and a lot of convoluted scams that are going on that go after many inventors. We thought we were protected. You talk about 1999, there was an act passed that required disclosure from all these invention agencies. When they start disclosing their numbers, it was shocking to me. I say here on the show a lot, seven out of ten consumer products fail. That’s the numbers that we work with most in the mass market. I have various particular industries that we work on. Yet these invention groups have 0.01% success rates and 0.5% success rates by their own numbers that they post on their sites. The odds are truly stacked against you from success if you’re using what appears in front of you, what’s being pushed out to you in TV commercials, the people that are sponsoring events for inventors. That’s scary. I’m glad you’re raising awareness for it. Are these numbers real? Are they still as prevalent as they were when you started writing the book?
These companies that advertise are master manipulators. If you think about the resources they put into these advertising and their very sleek marketing kits and something’s got to support that whole machine. The stats are worse than what has been reported simply because of two facts. One is that a company is measuring its success by how many licensing agreements they got for an inventor. Those licensing agreements, some of them are test agreements, which are no commitment and no understanding of whether or not royalties are ever going to result. If these invention submission companies are considering that as part of their success record, that’s misleading.
Secondly, anyone pretty much can get a licensing deal. Whether or not it’s a good licensing deal is another thing. That’s when we talk about this primal feeling of hope. My product is going to be on Target.” “Are they giving it away? Are you going to make money off of this product?” Not just invention submission companies but consultants are rolling them out on their website as their big success story and fast forward, was there a success? Did that inventor ever make any money? That’s why these stats I’m fairly certain or even better, if you’re talking about a point percent, are better than what actually exists.
Licensing deals are something that I’d love to talk about because we get a lot of questions there. You have a whole chapter that is brilliant on contracts. Buy the book just for that section because this is stuff that you will not read or you will not hear anywhere else. This is a practical experience of how a licensing deal, a contract for royalties and all of those things work. About how it actually works are just not apparent out there. There’s no templated language you should follow, but it’s not out there in some way that it works this way. There’s always all these tricks and sell off clauses and how royalties are calculated. There’s so much complexity to it.
This is not something that you can do without an experienced lawyer. I’m here to tell many stories and I probably told them on the show already. Many stories of I thought I had great attorneys. I paid a lot of money. It turns out when we went to enforce contracts or go through an audit because we had audit rights built in, it’s impractical and it can’t be done because it was not written properly. Knowing someone who knows what it’s like on the other side is critically important in the process. Paula, share some of those things that are typical hazards or traps that they fall into when they get these licensing contracts.
I will start with the money clause. Unless we’re here to change the world in an altruistic way, we’re hoping to make a living off of our inventions. When it comes to the royalty clause, the inventor may be offered 3% or 5% royalty but when you read the fine print and see all of the deductions, which is the difference between the actual royalties and based on net revenues, which is revenues less cost. When I see a contract that lists out costs that’s more than three lines, that’s already a red flag for me. There’s something wrong with it.
A lawyer who doesn’t want to see a lot of languages here, I love it.
If a company is attempting to deduct costs for which you could never have any insight into or have any control over how they spend that money. For example, if a company wants to write off the website development costs, but there’s no budget in there for how much they’re going to spend on your website, then we don’t know what that number is. Even more concerning is a company that offers a licensing deal to the inventor and they say, “We’re going to offer you this percentage.” We assume that license is savvy enough that when they offer that rate to you, they’ve taken the costs into consideration and they’ve worked in reasonable compensation for themselves. When I see that the other cost that will be deducted as commissions for their salespeople, it should have already been accounted for.
If the inventor is only getting 3% it’s like, “I’m handing it off all to you. You’re going to get the rest. I’m going to trust that you’re going to negotiate good deals and make sure you’re taken care of.” Do not add into the deduction clauses an 8% for your overhead or commissions for your sales agent or the budget from marketing because that’s already assumed when you’ve offered what many inventors might consider being a pittance of a 3%. I will say a pittance because usually, inventors in many instances are weighing, “Do I do this product business and handle the vertical myself, everything from manufacturing to getting the distribution into the big box stores? Am I going to hand it off to somebody as my partner who’s got all of this infrastructure in place?” I might want to run this as a business so I will take 3%. As far as I’m concerned, that 3% should be the difference between what it cost to make and what you’re selling it. With some reasonable deductions for maybe, there’s returns or faulty goods, the cost that everyone should share.
It wasn’t a product that was sold at the end of the day. It was the product that was returned.
That clause should not read like a pharmaceutical label.
I want to point it out from practical experience. I’m a designer. We typically have royalty arrangements which are a little bit different than licensing because they’re earlier on. When we structure our licensing deals, we have done the same thing at the end of the day. We based it because we know our cost of goods deeply and that’s part of what we do is we plan them in. We already know all of the details on that. When we calculate and figure out what a reasonable royalty should be or what reasonable rates should be, we calculate it based on the cost of goods and what the margins typically are in the retail market.
We look at that and we can say it’s this dollar amount. Very few people do fixed dollar amounts, but you recommend that. I love that because now it doesn’t matter where it is. The other thing we do is we tie it to shipments and not to when it gets into retail, because that moves it all out of the world of did stuff get returned and all these things. If the shipment left the port, then we get paid. That’s how we shortened up terms. Sometimes they make you wait 120 days so they get paid before they calculate. The calculation side of it is also a problem as well. We always do net shipments and that way we have an audit ability to be able to check the factory and say how many shipments went out. I guarantee you, if you have a good relationship with the factory, they will tell you even if they’re not supposed to.
I love that you brought up the audit clause because that’s another provision that I discussed in the book. The provision usually provides that the company will agree to maybe a six-month look back and only if there are some glaring discrepancies can you look back further. Normally, there is nothing in there that says, “What happens if I found out this company inadvertently cheated me? Is there a penalty?” I think that there’s nothing better than a financial penalty to keep people on the up and up. Who’s going to pay for the cost of that auditor? These are things that are expensive. If you have an inventor who is getting 3%, who might have had seen a dime of their royalties as of yet and is questioning the audit clause and then they’ve got to pay for the auditor on top of that. Where’s that money coming from? That’s why I always say to keep it real. Even starting with the idea of an inventor who was always cautious about sharing their idea and there were many consultants that say, “Sign an NDA.” An NDA is only as good as the paper it’s written on and your ability to enforce it.An NDA is only as good as the paper it's written on and your ability to enforce it. Click To Tweet
I all want you to hear that because I did a whole entire episode that said the same thing that Paula said and she’s an attorney. This is exactly how we feel about nondisclosure. While we have nondisclosures like when someone submits an idea to me, I’m accepting that automatically by them even having a phone call. Even if they haven’t paid me to make them comfortable because we don’t compete here. That’s not what we do here but the reality is that I know and they know that it’s not enforceable.
It’s not enforceable and your ability to enforce it and that requires resources.
I point that out a lot. There are a lot of resources required. I’ve heard this before and I said this before is that we have patents all over our wall. I think we have close to 42 or something. I don’t even watch them anymore, but we have a 95% issuance rate and we have an 86% commercialization rate. Those are real numbers there. When I say that we have an 86% success in commercialization rates, nine out of ten products make it to market. Our patents are in use. That’s the term that we use. I have proof of all my numbers. This is different but the reason it is different is because of the companies I work with. They’re not all solo entrepreneurs. They’re not all solo inventors. They’re big companies who we do multiple products with who already have a channel and who are already selling into the marketplace. When we bring the products, they already have a brand that has power and resources. There’s a big difference there. What you’re mentioning is that those resources make a huge difference. We find too many of these inventors’ groups that are all about the patents. I can’t tell you how many people where I’m like, “I have this binder.” It’s a binder with drawings, patent and market research study that could be debunked by going on in Google. You’ve seen it.
I talked about credibility in my book in terms of having the resource to enforce your patent. There are a number of stories in there. First of all, from the product, Bunch O Balloons, Josh Malone who invented this amazing water balloon filler that fills multiple balloons at the same time. He has something like eight kids. You can imagine it would take hours to start a water balloon fight if you had to fill them each individually. That was an amazing effort on their part too. They had a Kickstarter campaign, they raised money, and they entered into a lucrative licensing deal, then one day a friend called them up and said, “I saw your commercial on TV.”
They’re like, “Did you change the name though?” It was a different name.
That’s one example and I want to point out that’s one of the reasons why the book is named As Stolen On TV because the product that’s seen on TV and we all know the As Seen on TV brand, but very few people know that once the product is shown, whether it’s on TV, social media, crowdfunding platforms, or QVC.
Instagram TV now and who knows where you see it.
It’s like the inventors are the lambs to the slaughter. It’s like they’re on TV, “Here’s my product and this is what it’s sold for.” The bad guys are like, “Let’s order this and we’ll change the name. Maybe we will tweak it a little differently.”
That’s one of the things that you point out well and this is what we see happened. I’ve never put a client through QVC or HSN. I advised them against it. We’ve never done it that way because I know there’s a high failure rate and high-cost rate and you make very little margin at the end of the day. It never occurred to me that it was also making them absolutely right. I’m glad I never advised them to do it, but also making them right for stealing it. These scam companies buy the products straight from the TV show, from whatever your ad is. It could be an online ad, direct response marketing, on Kickstarter or whatever it is. They get it and then they use it in the actual video that they create while they’re making it in some factory at the same time.
It gets even better. They will actually put a sticker. They’re using the actual product that they bought from QVC, the bootleggers. The actual products that they bought are being filmed in the short spot, the infomercial to test the market and see if there’s interest. They will test it at different price points and that was the product that they bought. Sometimes I’ve heard it three times in the last year. The inventor will say, “I sent that product. They were one of my first buyers,” and you can imagine that feeling.
You know their name when they’re one of your first buyers. You’ve seen their email come through. You’re paying attention to it. You know where you ship it to. I know it has to hurt even more because of that. There’s another one though. We did a test market which is an important thing to do. I don’t want to deter people from doing it, but you should put your protections in place first. Paula talks about that in the book, that you should have your copyrights or trademarks. You should use all forms of protection, not just patents because as we talked about, that’s a high enforcement rate. Resources are required to enforce that later, but some of the other things can allow quick takedown on sites so they may be more viable to you.
We did a test market on a new product to say, “Is this viable? Is this going to go well in the marketplace,” but it hadn’t occurred to me that the test market group might be vulnerable to that exact thing of where they don’t even care about receiving the product. They’re going to copy it straight from the video, the copy, the text, the name or the brand. They’re taking the images straight off that landing page. It never occurred to me that it could go that deep. This product is a little more complicated so I’m pretty sure they will have trouble figuring out how to make it. It took us about nine months to accomplish it. It’s a [00:22:06]. That’s a good barrier, but otherwise they could make a bad replica that doesn’t work.
There it is. The baby you’ve nurtured for all these months to get to market and finally, you have a licensing deal and because an inferior product may be launched at lightning speed and got to the market before you. Suddenly, your product is destroyed. It had been dead on arrival before you even gotten to sell your first unit.
There’s no area of the market that’s off limits as you pointed out in the book. You pointed out people who had issues with Amazon listings where they were so excited for Black Friday. It’s a big deal and their listings are all messed up because someone hijacked it. Amazon’s been putting a lot of things in place over the years and then a couple of years to fix some of those things. If it happens on a wrong day, you’ve lost a tremendous amount of sales. You point out Kickstarter problems. You point out someone who went to Kickstarter. They put their product in and then got turned down by Kickstarter. They go to Indiegogo and then a fake Kickstarter campaign starts with the same exact product. It’s crazy information. Tell us a little bit about that story because that one seems awful and that Kickstarter wouldn’t remove it.We have to be diligent. The bad guys are using social media and the internet to infiltrate some wrongdoings. Click To Tweet
I believe that was Dawn Sole with the Pluck N’ File and created a campaign. She was raising something like $25,000 and she was wondering why the progress was slow. What she did one day is go on Google and put her name in. I recommend that everyone Googles themselves on a regular basis to see what is out there.
Set up a Google alert. This is a great tip. Thank you, Paula, for saying it. A Google alert for your name and your product’s name and set it up so it comes to you every week.
It’s no different than we check our bank statements to see if there are any fraud charges because if we wait a few months to go back to the bank, they’re going to say, “Sorry, you’ve waited too long.” We have to be diligent. The bad guys are using social media and the internet to infiltrate some wrongdoings. We need to use those same resources to monitor what’s going on. There is no excuse. It’s been around a long time now. We all pretty much know how to use these tools. Where Dawn is concerned, when she Googled herself, she saw another campaign that mirrored hers and that campaign raised more money than she did. When she reported this, the platform wouldn’t take it down. What they did instead was suspend the account and say that it was subject to an intellectual property dispute.
Naturally, anytime somebody Googles the Pluck N’ File, Dawn is concerned that because it’s not properly explained that it might shed a negative light on her and her product. This is a situation where she feels powerless over what to do. Does she have the resources to pursue an action? To use legal strategies like a subpoenaing the platform to find out who created this campaign and then go after that campaign, the provider and perhaps file an action against them for intellectual property fraud. These things cost money. If you’re an inventor on one of these platforms to raise money, you’re already saying, “I need some cash to develop my product,” and probably not a lot of cash is leftover to divert to enforcing nondisclosure agreements and going after these bootleggers.
I want to touch back on a little bit of some of the other contract things. Tom and I have always talked about on the show that there are usually three key components that mean things to the inventor. Getting a minimum guarantee, getting upfront money if you can and the percentage or dollar amount, whatever that is but there are also many other things. Out of those things, what do you seeing now out of minimum guarantee, upfront money and percentages or fixed dollar amounts? Are you seeing a trend going on where it’s getting harder and harder to get upfront money and percentages are getting smaller? What do you see ongoing in some of the contracts that you’ve been reviewing?
For the most part, when an inventor goes directly to negotiate a distribution deal, the contract that they give back does not include a minimum commitment. If they asked for it, they probably would be turned down simply because they see the inventor as someone who is desperate but wants to get a deal. The company feels that they can lean on them and not compromise or negotiate in the same way that they would negotiate with an advisor, an attorney or an inventor who has had repeat success products. These companies want to maintain relationships. They want to maintain their steady flow of supply with the partners that they work with.
If you’re an inventor going in there to represent yourself, you might as well go into a courtroom without a lawyer because you’re pretty much dealing with legal concepts that make the difference whether or not you see a dime of your royalties. The upfront or the advance is not always offered. Naturally, if you are a brand new inventor, if it’s a product that a company wants to test, they’re not sure about the success. My advice would be once you’re tested and we hit a certain score, the concepts of how a company determines whether or not they’re going to take your product is based on a test score which has to do with the number of sales that this company was able to make.
In our marketing terms, we call that conversion. It’s going to check leads, conversions, all that and then dollar actions that will be taken. Sometimes we’ll test price flexibility because that tests profitability. Those are some of the factors that go into the numbers Paula is referring to.
The company’s legitimate concern is, “I don’t know how well your product’s going to do.” It’s like, “How about if I get a test score of 2.1 and you take my product, then you give me an advance.” There are ways you might not get an advance in the beginning but negotiate it based on meeting milestones. There’s always a way to show that you’re a little savvier in the negotiation process and always be willing to walk away from a deal if you’re not satisfied with it. I’ve seen time and time again that while it’s difficult to walk away from the first deal, there might be another licensee right around the corner waiting to work with you and then you will say later, “Thank God, I didn’t sign that first deal.”
I love the attitude you have when you’re writing some of the stories because despite the fact that you’re not espousing hope here, the reality is that you do have hope that they have a good product, that there is future for them. You tell one of the stories. This is my absolute favorite in the book because I know you so I know how you are with people. I love that you walked up to a couple who was running a booth in a trade show event and said, “Pack up your stuff and go home because you can’t patent this. If you don’t go fast and get to market, you will never make money from this because everyone is going to steal your idea right now.” I love that attitude because it shows that you have their best interests at heart. There are 100 different ways to get to market and the unscrupulous are using some savvy ways that we wished the inventors would.
Let’s talk about another clause that I see frequently. The reality is there are wonderful attorneys, smarter than me in many ways but I have been in the trenches of the product launch and development business for many years. I have seen it all. I’ve seen everyone’s contract. I know where there are pressure points. I know where there are negotiations. I know to say, “Don’t work with those guys.” Let’s turn to a clause that is often overlooked and attorneys don’t understand the nuances of this sell-off clause.
This is so important because when a contract goes bad and I can tell you that they do. Things don’t happen on schedule. The product doesn’t do as well as anyone thinks they’re going to, a good contract prepares you for what’s the worst thing that’s going to happen and a sell-off clause is absolutely critical. I also want to say a sunset clause is also important for any time you sign some letter of intent. My lawyer forgot to put one in one of the very first contracts I had when we were reviewing a product and I almost got completely screwed out of it. Prepare for the worst.
We have a conversation that day about the sunset clause and I received a term sheet. I looked and the first thing that was on the top of my head, the first thing I look for is the sunset clause. The sunset clause is you need to do something in a certain amount of time as part of this term sheet or we walk away.
In other words, if you were doing that for this test license, they have a few months to do this test in and if they don’t, then they lose all rights and this contract is null. That might be a way to do it. In case, there are many inventors who are afraid of having their patents shelved, a sunset clause works to make sure that it can’t happen. They have to take action in a reasonable timeframe. Let’s talk sell-off clauses because this is important. What happens if you got your product, it’s been selling, maybe it’s not lighting the world on fire and part of the problem is your distributor. They’re having issues. You say, “You didn’t meet the guarantee. You didn’t meet the commitment. Now, we want to end our relationship.” What happens there?Always be willing to walk away from a deal if you're not satisfied with it. Click To Tweet
Imagine this is going on where the licensee has maybe 100,000 units of your product and they say, “Thanks, Tracy. We’re no longer going to be able to carry your product. We will get to exercise our right to terminate.” That’s when the sell-off clause kicks in. What happens to those 100,000 units? Frequently those contracts do not provide a provision that lets the inventor buy those units back at cost plus some small percentage. That needs to be in there. Here’s what happens though. The sell-off clause says, “I get to sell off the inventory I have,” but it doesn’t include at what price they are able to sell it off that. When you walk into a big box store and a dollar store and you see products being sold at $9.99 where that product might have been on sale for $29.99 the month before, those products are generally the product of a bad sell-off clause.
It happens all the time. I’m on the other side of that. They discontinued your products in this way very typically. They don’t think anything of it. It’s very common practice for them to move that inventory off their books and they don’t care how it happens. They do not care about your brand at the end of the day.
I had one client came to us. Their contract did not have a good sell-off clause. We called around to some auction houses in the area of where the distributor was based. My clients showed up for the auction. He was able to buy his own product package $0.10 on the dollar. Somebody else would have gotten those items at $0.10 on the dollar.
It’s a good thing they were savvy enough to have managed to do that. Because you know how the system works, you can help them figure out where it’s going to go next.
That’s important because if you do want to take your product back, fine. It might not have worked out with that particular distributor, but if you want to get that product back, give it to another distributor who might be more aligned in terms of their product mix to sell your product. If your product has been sold off in liquidation at such a low price, your product will never be able to be revived again if you don’t have a strong sell-off clause. That one, give me the right to first buy it back and to make sure that if the company is going to sell it, that they’re not undercutting it to where your product is never viable to sell again.
When Fred and Natasha Ruckel, the inventors of the Ripple Rug, which is a cat toy mat, while they’re not lawyers, they are quite the investigators. They dug deep and uncovered an entire ring of bad actors and understood the nuances of how they work together and come together as all these pieces of a puzzle to take your product to market under a different name. That’s pretty much it in a nutshell. That’s what happened with Randy Cooper. He was the inventor of the NoodleHead Sprinkler. I talked about some wonderful story of how that product was the mastermind and brought into the market. Before the one was soaked with water, their brand new sprinkler, there was the Thunderhead Sprinkler on the market and several others. Most often it’s an inferior product and it’s always the case where it’s being sold at a lower cost or with, “If you act now, you will not only get this, but you will get something else.”
It’s hard for new inventors to come up against that. Randy Cooper began pursuing the bad guys and the response was threatening, “We’re going to sue you.” Sadly, Randy died from his illness, that he lost the battle with. His wife, Marlene, is convinced that the fight against the bad guys weakened his resolve in many ways or his resistance because of the stress. Anyhow, when I began to work with Fred and Natasha Ruckel to help them stand up for their rights against the bad guys in the case of the Ripple Rug where the bad guys or the bootleggers launched a product called Purr N Play. They uncovered information where they found out other inventors had been scammed in the same way. I listed a number of other products.
It was outstanding. They did some deep investigative work and they had other inventors in mind the whole time, which is wonderful.
We have the idea that inventors don’t have any resources. Where can they go and say, “Can you help me out here?” We know that law firms in many instances will take on a case on a contingency basis, but they have to have an assurance that this is going to be a slam dunk. If the company who bootlegged your product changed the name, then we don’t have a trademark infringement claim. If and in most instances the inventor didn’t file a copyright for their images, which is such low-cost protection, even take a picture of your own product and copyright it. If there’s no copyright protection, there is no statutory damage. Let’s say what we’re left with is a patent claim, “This was my patented product. I have a patent that was issued. That’s fine. I’m going to rely on my patent claim.” No, because we have a little division of the USPTO called the Patent Trial and Appeal Board. This Patent Trial and Appeal Board is a Mickey Mouse puppet organization that has been designed by big companies to give the death note to patents.
They have a 90% patent reversal rate. In other words, you lose your patent, which is crazy numbers. Either the Patent and Trademark Office is completely inept or this is corrupt. That’s where we’re at.
You got the one side of the House that’s reviewing a rigorous review of a patent.
It takes so long, it should be rigorous.
It’s a specialized people that award the patent. Here you are, “I have this patent and I’m going to go out and I might raise money off of that patent and bring in investors. I might invest in facilities and a lot of resources to bring this product to market that might change things and make things better, whatever it is.” A big company is like, “That’s cool. We’re going to make the same thing.” The little company thinks, “I have the patent, I’m going to go enforce my rights.” These big companies say, “You don’t have any rights. You should have never been given this patent.” They file what’s called an invalidation of proceeding at the PTAB who are people comprised of heads of large companies that are the ones to stand to gain from the invalidation of that patent. The system is rigged against inventors. You better believe it.Let's succeed in spite of the odds and in some instances because of the odds. Click To Tweet
This petition, the Inventor Rights Resolution, we are looking for signatures from as many inventors as possible. Go to your local representative and tell them that the PTAB needs to be eliminated, which would be the best case scenario but if not, to work in certain protections to ensure that once you were given a patent, you can rely on that patent. It’s like once you buy a house and you get a deed, you want to be able to rely that that’s your house and that land that you build your house on is yours. Not that somebody can come around and go, “You should have never been given that deed” and put in question as to whether or not you own that property that you’ve invested in and built the house on. It’s not dissimilar.
Paula, this has been such a fascinating conversation. There is so much more depth. There are lots of tips and lots of advice. This is a book you are going to read cover to cover and you’re going to highlight. I’ve already bookmarked my pages because I’m going to come back and highlight it later after I share it. What people don’t know because I didn’t mention it yet, I wrote a guest article for you. I wrote a guest chapter for you because we didn’t talk about Shark Tank. As many of you know, I’ve interviewed some of the people who have been through Shark Tank. I’ve had quite a few of them as my clients. They’re very honest on the show, wonderfully honest here, but when I write my articles I can’t talk about all those details.
You gave me an opportunity to be able to talk about that and I appreciate that. Thank you for that. There’s a secret chapter in here that was written by me that’s all about Shark Tank. Thank you for that. We appreciate that because we talk about Shark Tank frequently. The biggest message, which is that same message that’s in that chapter there, is that there are many things conspiring against you, things that you don’t understand how it works. Particularly in Shark Tank, we’re pointing out that the show is about publicity for the Sharks. It’s about them. It’s not about you. The inventors are in and out. The Sharks are there again and again. It’s the same thing. These big companies, the InventHelps, the Davisons, the resources like that, they’re there and they’re running business plans, business plays, practices and things that they’re running. You’re falling victim to them because you don’t know how it works. We all appreciate you for pulling back the curtains and sharing the pieces that you’ve picked up and the stories that you’ve heard and you’ve helped through. Thank you so much for being that champion, Paula.
Thank you, Tracy.
The other thing about Paula that you should know and understand is she bootstrapped and pulled herself up. She has an amazing story, which she shares in the book about how she’s built herself into the attorney that she is and into the champion that she is. That in and of itself is a sign that she understands you. She gets what you’re going through. She has a deep abiding love of people building businesses and developing them. You’re building your own business this way too. You know exactly how hard it is to be a business builder.
If there’s one last parting advice can say is surround yourself with the right people and don’t be too trusting. Get recommendations and word of mouth of who you work with because good people assume that other people are picky. We may do it in our personal relationships as we do in our business relationships. Learn from the mistakes of others. That’s pretty much what I tried to do in this book is to say, “Here are some mistakes. Here are also some great stories because it’s not all doom and gloom.” I want to give examples of where there was a very successful entrepreneur who achieved their goals in spite of the odds because there are the odds. Let’s succeed in spite of the odds and in some instances because of the odds. I know what happened to others and I’m going to be aware of these things. We don’t have to do this alone and that’s the beauty of it. Find inventors, organizations and meetups. Meet with other inventors and see what works for them, but don’t be so willing to over-share.
As Stolen On TV by Paula Brillson Phillips. Make sure you buy one. Go to Amazon, it’s available. Buy one and bring it to your inventors’ group. Talk about it and get other people interested in it. Make sure that they know about the Inventor Rights Resolution. Make sure you’re talking about that. We have a local small business congresswoman champion here in my town. I have Katie Porter who you may have heard on TV. She’s a big champion and I’ve been working hard to get her to comment on this. I’m hoping I will be able to get her to comment on it for the article because she is a big champion of small business rights, entrepreneurs, and consumers in general. I can’t imagine she has a negative reaction to this resolution, but I’d like to hear it from her.
One of the things that I recommend is bringing in this outside information, things that you haven’t heard before, resources like invite Paula to your group. She speaks all over the place. She might be in your area. Reach out and ask, because I rarely get asked to speak to an inventors group and yet I have hundreds of stories that I could be sharing and I share them on the show all the time. I find it’s the same way that they’re very closed off. Being open to, inviting in and understanding these pitfalls. Removing the hope for a little bit and say, “Let’s take a listen to what else is out there and the things that we can expose ourselves to.” The people that might be out there that we don’t know about yet would be so wonderful. We will create a higher success rate in your groups because we hear a lot about the inventor’s group usually have someone who is successful and then they leave the group because the group is not listening to how hard it was. We know that happens out there. Invite some new ideas in because this is information you all need to be armed with because they know exactly how you work. Paula, thank you so much for joining me. I appreciate you being on the show. As Stolen On TV: Stealing The American Dream One Invention At A Time is on Amazon.
You and we will be able to find it wherever you are looking for. If you have some stories, please reach out to us. We’d love to hear your story. Reach out on social @HazzDesign and I will be sure to tag Paula and let her know about your stories as we’re going through that. You can also find Paula on LinkedIn and other places on. As always, I’m available to you and you can reach out to me. I prefer LinkedIn, but you can also reach out to me straight through the website ProductLaunchHazzards.com and share your stories with us as well. I look forward to hearing your feedback on this episode. Paula, thank you for coming on and Product Launchers, keep going and don’t lose hope. Expand it to include a plan with your hope. Thank you.
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About Paula Brillson Phillips
Paula Brillson Phillips has built her career advising start-up companies and mentoring hundreds of individual inventors worldwide to navigate the complex process of getting a business or product off the ground.
She also works directly with executives to help them make effective decisions to protect their intellectual property, meet their business goals, and leverage the value of what they have already created.
For more than 20 years, she has successfully navigated hundreds of small businesses through the legal hurdles they face in starting and running their businesses. She represents clients in investigative and enforcement proceedings brought by the Federal Trade Commission, state attorneys general, district attorneys, and other federal and state agencies with jurisdiction over advertising and marketing practices.