Do you want to save yourself $10,000?  That is about how much you will be paying those "invention assistance companies" you see on TV.  Be very careful when dealing with them and the promises they make.  I have read a number of agreements offered by these companies to inventors and all of them have many terms that are not in favor of the inventor.  Yet every year many inventors will hand over thousands of their hard earned money to these "invention assistance companies" and get very little as a result.  So what should you be looking for when you approach one of these companies?  I would say body armor, but seriously here are some pointers:

1. Offers of a free review of your invention.  What did you mother tell you about free things in life?  Listen to your mother.  "Free" is their hook to bring you in contact with their professional sales person who will then do what professional sales people do - make a nice commission off of you.
   
2. Market evaluation report.  The first thing their professional sales person will do is tell you that a market evaluation report needs to be performed.  Very likely that report will indicate that the market potential for your invention is great.  Of course their market evaluation report will say that because it is a lead in for the big dollar items that come next.  The purpose of the report is to get you excited enough to take the plunge.
3. "Poor Man's Patent".  Some of these companies will tell you to protect your idea by writing it down, putting it into an envelope, mailing the envelope to yourself, and then not opening it.  You will gain no legal protection by this process and your idea remains open to copycats who see it.
4. Agreements.  Once they have excited you with their market evaluation report they will offer you marketing services with brochures, TV ads, and phone banks.  But they will need to get you to sign an agreement first.  The agreement is key because the agreement will protect the invention assistance company from being sued by you!  Always have an attorney review the agreement and explain the risks you are taking by signing the agreement.

Because of the number of inventors being taken by invention assistance companies the US government has written 35 USC 297 to protect inventors.  35 USC 297 is nice but it is best to talk with an attorney first before signing the agreement.  

35 USC 297 allows you to ask the invention promoter the following:
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1. The total number of inventions evaluated by the invention promoter for commercial potential in the past five years, the number of those inventions that received positive evaluations, and the number of those inventions that received negative evaluations.
2. The total number of customers who have contracted with the invention promoter in the past five years, excluding those who have purchased trade show services, research, advertising, or other non-marketing services from the invention promoter, or who have defaulted in their payment to the invention promoter.
   
3. The total number of customers known by the invention promoter to have received a net financial profit as a direct result of the invention promotion services provided by the invention promoter.
   
4. The total number of customers known by the invention promoter to have received license agreements for their inventions as a direct result of the invention promotion services provided by the invention promoter.
   
5. The names and addresses of all previous invention promotion companies with which the invention promoter or its officers have collectively or individually been affiliated in the previous 10 years.
   

Finally an attorney has certain ethical duties owed to their inventors.  An invention promotion company owes no such ethical duties.  An attorney who breaches their ethical duties to a client may lose their license to practice law in their state and to represent inventors before the patent office.  Those licenses are very hard to get and represents years of hard work in school.

Basically a business may hire two types of individuals.  These two types of individuals are employees and independent contractors.  If you hire an employee here in California, the law favors the employer being the owner of any intellectual property created by the employee, even intellectual property created by the employee while "off the clock" as long as it is related to the work the employee is performing for their employer.  However if an employee signs an intellectual property agreement with their employer then the intellectual property agreement will prevail.  If you are an engineer or computer programmer, in most cases, when hired you were asked to sign an agreement whereby you agree to release to your employer all intellectual property that was created during the period of your employment.  Refusing the sign the agreement will likely not grant you any intellectual property rights as by law you are required to turn over your intellectual property to your employer.  However, if you sign an intellectual property agreement that states you may keep any intellectual property you develop during the period of your employment then the agreement will prevail against the law and you will retain your rights to IP that you create.  This situation is, for the most part, reversed when it comes to independent contractors.  Unless the independent contractors signs an agreement to turn over any intellectual property that is created in the course of working for the company the independent contractors retains all rights to the created intellectual property.  There are exceptions to these general rules and you should talk with an attorney to get an answer for your specific case but what sets an independent contractor apart from an employee?  

The Internal Revenue Service (IRS) states that "The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done."  Here the word "payer" is the company that is paying the individual doing the work.  The IRS also provides the following details:

There are many considerations to take into account when licensing your intellectual property.  Adding to the complexity of the agreement is that each type of intellectual property, whether it be patents, trademarks, or copyrights, have different concerns and problems that you need to pay attention to.  For example with trademarks you will want to pay attention as to how your mark will be treated by the licensee.  How will they be displaying your mark?  What sort of training will they provide their employees?  However here are some general guidelines for you to consider when licensing your intellectual property.

• Don't download and reuse a license agreement you found on the internet.  Although such an agreement may look great and cover everything it is not the agreement for you.  Each license has special needs and many factors to consider.  Reusing an existing license agreement and just changing the names will very likely cause you lots of heartache and worse a loss of rights.
• Remember that in a licensing agreement you are giving someone the right to infringe on your intellectual property.  Make sure that in the terms of the agreement that the licensee will use the same level of care as you would use to protect your intellectual property.
• Pay special attention to the terms in the agreement related to royalties, termination, confidentiality, and transferability.  Many times problems in these agreements are in these clauses.  Review them carefully and run them through as many scenarios as possible to find possible problems and weak points.
• Many times when licensing one intellectual property you may be also licensing another.  For example, say that you are licensing a patent to a formula for paint and the agreement is to transfer the rights to the formula to a distributor so they may bring the paint to market.  What may also need to be transferred is any know how or trade secret as to the manufacture of the paint and it needs to be included in the agreement.

• Consider who is to retain the rights to any improvements or derivatives in the intellectual property.  Say the intellectual property is a musical score and the licensee has modified the musical score.  Who owns the rights to the newly modified musical score?  What royalties will you, the licensor, have to the new musical score?

Success in these five areas will enable both you and your licensee to focus on what is really important about the agreement - allowing both of you to profit financially from the agreement.