Complaints about AbsolutelyNew Resurface
Invention submission company AbsolutelyNew says it changed its ways when it changed management a few years ago.
But a spat of complaints from inventors has the San Francisco-based company back on the defensive.
Disgruntled inventors say AbNew sales reps pressured them to pay upwards of $24,000 and assured them their products would make millions, but delivered unprofessional marketing “packages” that entailed single-sided sell sheets with low-quality photographs – and no licensing deals.
Others say AbsolutelyNew also failed to fulfill contracts and misled them about attending and pitching products at tradeshows.
The troubles don’t end there.
- California suspended AbsolutelyNew’s operating status on May 2 this year for late tax filing. State officials say any contracts signed with a suspended company could be deemed null and void. [The company’s status is now active.]
- This year AbsolutelyNew lost a patent-infringement case for knocking off a pet product. New Angle Pet Products won a $60,000 judgment against AbsolutelyNew in U.S. District Court in New York.
“AbsolutelyNew Inc. shall not make, use, import, sell or offer for sale the product known as ‘Hydro-Handle’ in the United States, for the remaining term of U.S. Patent No. 5,636,592, and shall destroy all such existing product presently in their possession or control,” court documents state.
- At the time of this writing, AbsolutleyNew was embroiled in a trademark-infringement lawsuit. Oak Brook, Ill.-based Invent Worldwide Consulting alleges AbsolutelyNew’s “Idea Director” Jose Miguel Castello posted Invent Worldwide’s logo and disparaging remarks on the web.
Invent Wordwide “alleges (AbsolutelyNew’s) actions are willful, reckless, outrageous and malicious and meant to cause Plaintiff harm and benefit Defendants,” according to records from the U.S. District Court in Eastern Illinois. Invent Worldwide is seeking at least $75,000.
- AbsolutelyNew severed ties with the United Inventors Association amid bitter accusations and counter accusations of ethical breaches and dereliction of duty. AbsolutelyNew no longer is UIA “certified” and AbNew Vice President of Marketing, Bill Freund, resigned as a UIA board member.
No Show?
Inventor Steven Brown of Los Angeles says the first of some half-a-dozen solicitation letters form AbsolutelyNew began arriving in 2008, the year he lost his contractor’s job.
Brown had invented a bed skirt with pockets. He hoped he had the next Snuggies.
In February this year, he called AbsolutelyNew. Sales rep Dave Stickel told Brown it would cost upwards of $40,000 to bring his product to market, but AbsolutelyNew could do it for about $20,000.
Brown says Stickel urged him to act fast, however, because the International Home and Housewares Show in Chicago was in March. If he signed quickly, AbsolutelyNew could pitch his product at the company’s booth.
The inventor was comforted – and perhaps a bit flattered – when Stickel reportedly told him AbsolutelyNew’s policy was to only take on a product if the company saw the potential to make $300,000 to $500,000 on its share of the royalty.
Stickel introduced Brown to Serena Soo at a face-to-face meeting at AbNew’s San Francisco office. Soo would put together the marketing package to present at the upcoming housewares show.
Fast-forward to March 14, a week after the tradeshow. Brown says he left a voice message for Soo asking how the show went.
She reportedly replied via email:
“The Chicago show went well; the companies were open to looking at products and new products for next season. When I spoke to companies about your product they were intrigued, and I told them I would follow up in the next few weeks once the concept sheet is complete. Once the concept sheet is complete, I will begin the marketing.”
Soo never attended the show.
The marketing “package” she produced was a single-sheet flyer with small, low-quality photographs, Brown says.
Moreover, the initial draft of Brown’s contract failed to include AbsolutelyNew’s success rate – the number of inventors who have made more in royalties than paid in fees. Federal law requires invention submission companies disclose this information.
Of 409 clients under contract, eight have received more in royalties than fees paid to AbNew for a success rate of 1.95%. (That percentage is higher than rivals InventHelp and Davison & Associates.)
AbsolutelyNew later inserted that language in the contract Brown signed.
Brown says had he known about AbNew’s figures, he may have re-thought using its services.
But he was more upset that Soo misled him about attending the housewares show, the “amateurish” marketing package and that she only contacted four companies in five weeks.
“The tradeshow aspect of the contract was where I saw the value of employing their services,” Brown says. “I knew that it would cost me thousands of dollars and considerable hours of my time to take my products to tradeshows across the country.”
Brown’s complaints echo those of several other inventors whom Inventors Digest contacted. They expressed dismay at the quality of marketing materials. They believe the company failed to live up to the terms of their contracts. They say AbNew reps made big promises, but didn’t deliver. And for upwards of twenty grand, these inventors were hoping to see a better return on investment.
Paul Ebai of Silver Spring, Md., developed a brush/hair dryer for pets. He says company officials told him two major pet retailers were interested and that he could expect one of them would pay $8 million for the rights to his grooming product.
Ebai paid AbNew more than $23,000, which included a design patent.
Ebai’s contract with AbNew ended with no licensing agreement or rights sale.
Richard Donat, AbsolutelyNew’s chief executive, says Ebai’s story is “bullshit,” and that AbNew never said anything about $8 million.
Another inventor client, Peter Brewster of the San Francisco Bay Area, says AbsolutelyNew assured him company reps would be attending “several tradeshows on our behalf.”
However, Brewster says he received no written reports to confirm AbNew pitched his invention at any tradeshow. His contract ended in June.
AbsolutelyNew’s Donat says Brewster is a longtime client who owes money. “Now that we’re trying to collect,” Donat says, “all the sudden he’s unhappy.”
AbNew Re-Do
Donat is less combative when it comes to Steven Brown, the aggrieved inventor of the bed skirt with pockets.
Donat says the company refunded Brown’s money with interest this summer.
Donat says Stickel “was terminated within a couple of hours of me finding out what happened.”
Serena Soo is still with the company, but reassigned “into a position where she no longer works with inventors,” Donat says.
Despite the email where she indicates she attended the housewares show on Brown’s behalf, Donat says, “she did not tell him she went to the show. We had other people go to the show.”
Donat says after conducting an investigation, his legal counsel advised him not to fire Soo lest he open himself to a wrongful termination lawsuit.
Donat concedes the company initially sent Brown a contract that failed to include AbNew’s success rate, as per federal law.
“Ultimately,” Donat quickly adds, “Steven Brown did sign the correct contract.”
Donat says invention submission services comprise 20% of AbNew’s business. The bulk of AbNew revenues, he says, comes from manufacturing and selling its own products, primarily goods for the pet industry.
Earlier this year AbsolutelyNew announced PetSmart was rolling out four of AbNew’s products – Treat Launcher, Squeeze Bones, Catnip Tip ‘n Twirl and Roll Play.
AbNew also says it has relationships with and products on the shelves of Home Depot, Sears, Lowe’s, Target and other major retailers.
AbNew has completed 409 contracts with inventors over the last five years. If each of those were for $20,000, the revenue would be nearly $8.2 million.
However, contracts signed with AbsolutelyNew after May 2, 2011, may be considered unenforceable.
The California Franchise Tax Board sent up to five notices to AbNew prior to suspending the company’s operating status, according to agency spokesman Daniel Tahara.
Tahara said the company owed $541.
“Technically, when you’re suspended, you lose the right to use the company name and operate,” Tahara says. “You shouldn’t be operating anymore.”
“Contracts can be voided if you’re not in good standing,” he adds. “It’s not in a company’s best interest to do business with a suspended status.”
The state’s website showed AbNew’s operating status was still suspended as of Sept. 23, 2011. However, the status is active.
Donat says the suspension was for filing tax returns late but that it paid soon after May 2. He says the state had not updated its website.
Déjà vu?
AbsolutelyNew formed in 2003 as a sister company of Inventors Publishing & Research or IP&R, a defunct San Francisco-based invention-promotion firm notorious for over-promising, under-delivering and generating numerous consumer complaints.
Donat re-launched what he deems the new AbsolutelyNew in 2007. It now has about 50 employees, including sales, marketing, engineering and technology people – down from about 75 employees a couple of years ago.
He’s been able to attract notable people to the company. Jon Dudas, the former Director of the U.S. Patent and Trademark Office and currently president of the nonprofit organization FIRST, is listed as an advisor.
AbsolutelyNew’s website stated at the time of this writing in September: “Based on our top-notch customer service, the Better Business Bureau (BBB) recently invited us to become a BBB Accredited business.”
AbsolutelyNew is not accredited with the Better Business Bureau, although the company has an A+rating, based largely on its response and resolution to complaints. AbNew has 11 complaints closed with the BBB in the last three years, seven within the last 12 months.
“If I catch (employees) lying or overselling,” Donat told Inventors Digest in 2009, “I will fire (them) right there on the spot.
“IP&R was willing to tell all the positive things about being an inventor and getting products to market,” he said then, “but I don’t know they were always as willing to set the bar and explain the risks.”
Sean Bodmer and Brock Harris developed a digital media storage card in 2005. Bodmer signed a contract with AbsolutelyNew in 2008 when he says the company assured him it could get the product to market.
Bodmer and Harris, who both lived in Virginia at the time, renewed their annual contract after the company told them that Sony was interested in their product.
The two say they endured a round of musical chairs with a rotating cast of AbsolutelyNew reps. The two say they never received a quarterly progress report, as per contract. And in the end, AbNew never landed a licensing deal.
Their contract with AbNew ended in September this year.
“They said they were trying and trying,” says Bodmer, an IT professional, author and public speaker. “When we asked for more information, they wouldn’t give us any specifics. Not even documents with names redacted and companies they supposedly met with.”
Bodmer says AbNew claims it owns 20% of their patent, a conflict which Bodmer says derailed potential deals with four different venture capitalists. Bodmer says AbNew has no rights to their patent and believes the company oversold its services and produced a “subpar” marketing flyer.
“I could have put together a better marketing package with (Microsoft) Paint,” Bodmer says.
“We were under the impression they were a reputable company,” he adds. “They touted they were part of United Inventors Association” among other things.
Tangled Web
AbsolutelyNew was among the first companies to become certified under the UIA’s then-new certification program launched in 2009.
The program, billed as an anti-scam campaign, was the brainchild of then-UIA Executive Director Patrick Raymond. The program included a checklist of ethical behaviors. If a company passed muster, it could pay to be a member of the UIA. Full disclosure: Inventors Digest and its sister company Edison Nation were certified.
Critics derided the program as a “pay-to-play” scheme, and called out Raymond for conflict of interest – he was a board member of AbsolutelyNew at the time. Detractors also cried foul when Bill Freund, AbNew’s VP of marketing, later joined the UIA board. Full disclosure again: Inventors Digest Publisher Louis Foreman is on the UIA board.
Raymond, who now runs a product-development consultancy and has filmed an inventor TV reality show pilot with inventor media personality Steve Greenberg, says he recused himself from AbNew’s board when the UIA board asked him to.
“When they applied for certification, they had to provide a letter describing how they were different from IP&R, and the UIA board accepted it,” Raymond says, adding, “I can no longer vouch for the integrity of the UIA certification program and its proper implementation.”
Since Raymond’s departure from the UIA last year, the national nonprofit organization has been quietly dismantling what insiders consider an ill-advised initiative. One called the certification program and Raymond’s involvement with it “a stain” the UIA will be hard-pressed to erase.
[ADDENDUM: Since publication of the print edition, UIA officials say they are not dismantling the certification program. Moreover, the unnamed UIA source said Raymond’s association with AbsolutelyNew and his role in getting the company certified was the “stain,” not the program itself. Raymond, meanwhile, says he did nothing improper; that he left his position with AbsolutelyNew at the UIA board’s request; and reiterated that AbsolutelyNew passed UIA certification muster after he left the company’s board.]
UIA Executive Director Mark Reyland was mum on AbsolutelyNew’s departure from the UIA and Freund stepping down as a UIA board member.
“AbsolutelyNew is no longer with the UIA and as is customary with the UIA, we don’t comment on non-UIA members,” Reyland says. “They chose not to renew their membership after lengthy discussions between their management and the UIA board. Lengthy discussions.
“We’re always re-evaluating relationships with our corporate members,” Reyland adds. “Corporations ebb and flow. They go up and down and for that reason we’re constantly re-evaluating them.”
Donat says, “We just felt it was time for us not to renew.
“They were going away from certification,” he says of the UIA. “I thought it was a worthwhile program, if you do what you say you’re going to do. But there’s a lot of due process involved. I don’t know that they have the resources to do it correctly.”
As for complaints from disgruntled clients, Donat says those are the vast minority who are stewing over sour grapes. He says AbsolutelyNew works diligently to best position products to potential licensors. His take: If those products don’t gain traction, blame the market, not AbNew.
“A lot of inventors need to realize they have unrealistic expectations,” Donat says. “They have to understand how difficult this business is – it’s part of the reason they can’t do it on their own.
“As a company, we’re held to a high standard of how we have to do business by all sorts of institutions,” Donat adds.
“It’s a lot easier for an individual inventor who’s disgruntled to go out and make up information and post it on the web. But there are two sides to every story.”
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