Many people have likely seen or heard advertisements for companies that offer to help people develop or promote ideas they have for new products. The ads make claims like this: “Do you have an idea for an invention? We can help!” Minnesota’s Invention Services Act requires invention developers selling their services to, among other things: (1) make certain disclosures before entering contracts with Minnesota consumers; (2) include several terms in their contracts with Minnesota consumers; and (3) file a bond with the State before selling their services to Minnesota consumers. (See below for a list of companies that have filed a bond with the State.)
First, What Are “Invention Services?”
The Invention Services Act (see Minnesota Statutes, chapter 325A) provides the following definitions:
- An “invention” includes a process, machine, manufacture, composition of matter, improvement on the foregoing, or a concept (see Minn. Stat. § 325A.01, subd. 4);
- An “invention developer” means, in part, any person, firm, corporation or association and the agents, employees or representatives of the person, firm, corporation or association which develops or promotes or offers to develop or promote an invention of a customer in order that the customer’s invention may be patented, licensed or sold for manufacture or manufactured in large quantities…. (see Minn. Stat. § 325A.01, subd. 5); and
- “Invention development services” means undertaking to develop or promote an invention of a customer (see Minn. Stat. § 325A.01, subd. 6 and subd. 2).
Invention Developers Must Make Certain Disclosures Before Entering a Contract
The Invention Services Act requires an invention developer to make certain disclosures in writing, either in the first written communication from an invention developer to a specific customer or at the first personal meeting between the two. (See Minn. Stat. § 325A.05.) For example, an invention developer must disclose in writing:
- Median fee information: An invention developer must disclose the median fee charged to all of its customers who have signed contracts with the invention developer in the previous six months (except for customers who have signed up in the last 30 days);
- Total number of customers: An invention developer must disclose its total number of customers (again, except for those who signed up in the last 30 days); and
- Number of customers who came out “ahead”: An invention developer must disclose the number of its customers who have received more money as a result of the invention developer’s services than the amount the customer paid to the invention developer.
Failure to make the required disclosures shall render any contract voidable by the consumer. (See Minn. Stat. § 325A.09, subd. 6.)
Invention Developers Must Include Certain Terms in Their Contracts
The Invention Services Act requires invention developers to include certain terms in their contracts with Minnesota consumers. (See Minn. Stat. § 325A.04.) For example, an invention developer must include in its contract:
- Three-day right to cancel: The contract must state that the consumer may cancel the contract for any reason within three business days after signing the contract;
- Specific information: The contract must describe: (1) the specific acts or services to be performed; (2) whether the invention developer will construct a prototype; (3) any earnings estimate made; (4) other customer data; (5) the expected completion date; and (6) other information about the invention developer; and
- Compliance with the bond requirement: The contract must state that the invention developer has fully complied with the State’s bonding requirements.
With only one exception, any contract for invention development services that does not comply with the Invention Services Act is unenforceable. (See Minn. Stat. § 325A.09, subd. 2.)
Invention Developers Must File a Bond with the State Before Selling Their Services
The Invention Services Act requires invention developers to maintain a bond. (See Minn. Stat. 325A.06.) According to the Act:
- Bond requirements: The bond must be a continuous corporate surety bond issued by a surety admitted to do business in Minnesota, equal to ten percent of the invention developer’s gross income from the invention development business during the preceding fiscal year, or $50,000, whichever is larger;
- Bond must be filed with the State before selling: A copy of the bond must be filed with and approved by the Minnesota Attorney General’s Office before an invention developer renders, offers to render, or advertises invention development services in Minnesota; and
- Making a claim on the bond: Any person making a claim against the bond (due to an invention developer’s alleged violation of law) may bring an action against the invention developer and the surety company (the company that issued the bond).
List of Invention Developers that Filed a Bond with the State
The following invention developers have filed a bond with the Minnesota Attorney General’s Office:
- Davison Design & Development, Inc.
- Jacob Enterprises, Inc. d/b/a InventionHome
- Western Invention Submission Corporation
Please note that filing a bond with this Office does not mean that the State has approved the invention developer. Rather, it simply means that the entity has filed a bond with this Office that meets the statutory requirements.
For more information, please see the Invention Services Act (Minn. Stat. §§ 325A.01-10).
If you believe that an invention developer is advertising, offering to render, or rendering invention development services in Minnesota without following the above requirements, you may report the matter to the Minnesota Attorney General’s Office as follows:
Minnesota Attorney General's Office
445 Minnesota Street, Suite 1400
St. Paul, MN 55101
(651) 296-3353 (Twin Cities Calling Area)
(800) 657-3787 (Outside the Twin Cities)
TTY: (651) 297-7206 or TTY: (800) 366-4812
For information about filing a patent or copyright, you may contact the U.S. Patent and Trademark Office (regarding patents) or the U.S. Copyright Office (regarding copyrights), as follows:
United States Patent and Trademark Office
USPTO Madison Building
600 Dulany St.
Alexandria, VA 22314
(800) 786-9199 (toll free)
United States Copyright Office
101 Independence Ave. SE
Washington, DC 20559-6000
(877) 476-0778 (toll free)