(FORTUNE Magazine) – Years ago David Levy foresaw how ergonomically ugly computer keyboards would get when shrunk to the size of Barbie's suitcase. Not that it's impossible to use the lentil-sized keys on the latest status symbol, pagers with tiny keyboards for sending e-mail. In fact, i typed thizs setence on one, then bea,med jit to my ofice computfer frokm starbucks--hey look, no woires! But there's something maddeningly oxymoronic about devices designed to make our lives easier by forcing us to type in Barbie-space. Inspired by this paradox, Levy invented a keyboard with no fewer than 64 normal-sized typewriter keys cleverly scrunched into an area smaller than a credit card.

Perhaps it's no coincidence Levy spent a year as an itinerant street magician before earning his stripes as a mechanical engineer at Massachusetts Institute of Technology. When he won the 1996 Lemelson-MIT Student Prize, a $30,000 award that anointed him one of the nation's premier young inventors, his MIT mentors took special note of his designs' superlative simplicity. Like sleights of hand, they beguile with a deft economy of means--Rube Goldberg in reverse.

For the keyboard trick, Levy spliced a vertical dimension into the traditionally flat QWERTY landscape. It's as nifty as a zipper--and as hard to reduce to words. (So you simply take a hollow Y-shaped guide and move it linearly to mesh interdigitating rows of protuberant teeth via interlocking concavities that...) When you see Levy's tiny keyboard in action, though, you feel like slapping your head and exclaiming, "Of course!" Later you realize you were most taken in precisely at that aha! moment, for simplicity is the inventor's coolest illusion of all--it makes a long pilgrimage through a maze of mistakes seem like a little walk in the park. Engineers spent 23 years in the zipper maze, by the way, a dark time during which proto-zippers on trouser flies tended to get stuck in the down position. The Thomas Edison of zippers, Gideon Sundback, finally got the design right in 1914.

Levy first began inventing in earnest a decade ago at Apple Computer, where he worked before going to MIT for a Ph.D. At Apple he was known as a go-to guy on tough design problems. Among other things, says a former colleague, "he changed the way people thought about PowerBooks"--Levy helped make the pioneering laptops thinner and easier to use. But like many of the creative people drawn to Apple during its heyday, he felt out of place when its morning-after blues hit. In 1992 he split, determined to join that quirky, prickly, peculiarly American tribe: the independent inventor.

It's hard to imagine what the world would be like without these cocky mavericks, its David Levys. In his book The Design of Everyday Things, Donald Norman estimates that the typical U.S. adult is familiar with some 20,000 kinds of designed products, from paper clips to computers. It's a fair bet that the conceptual leaps leading to most of them were made by independent inventors, who almost by definition think outside the box. Some 56% of inductees into the National Inventors Hall of Fame in Akron did their main thing as independents or at small firms they founded, vs. 27% employed by large companies, according to a recent count. (The rest were academics.)

By following their noses no matter what, self-employed inventors have lit up the night and given us everything from wings to waterbeds. Their legacy includes the seed corn whence sprang many, if not most, of the FORTUNE 500. Pundits have long predicted that technology's advance would leave independent inventors in the dust. Wrong. Consider just a few of the technologies that Jerome Lemelson, who died in 1997, put his mark on while racking up more than 500 patents: robots, fax machines, camcorders, data-storage devices, cordless telephones.

Yet it does appear that these key producers of the economy's seed corn are losing ground in their perennial struggle to get a fair share of the harvest. A congressional bill backed by big companies last year, says former U.S. patent commissioner Donald Banner, would have handed corporations powerful options for challenging outsiders' patents, enabling them to instigate costly courtroom wars of attrition in which independent inventors "would be dead ducks." The bill almost passed, Banner says, an indication that "the playing field is tipping against small inventors. They're an embattled species."

Two years ago I sought out Levy to see what was happening to the embattled species in its natural habitat: the garret. As it happens, Levy's is the top floor of an old three-story house in Cambridge, Mass. Clumping up to his cluttered loft from time to time, I've had a chance to observe the magic of intellectual property aborning and to form tentative answers to a few questions: How do prolific inventors get that way? What inspires their ideas? How do large companies sometimes become magnets for them? What happens when a talented outsider tries to hurl a radical new design over corporate walls?

Levy, at 33, had just launched himself as a full-time inventor when we met. Though still working on his doctorate, he had a dozen patents granted or pending. Two of them--for multilayered labels and a lock for removable bike seats--had been licensed by 3M and Kryptonite, respectively. These were small potatoes, though, compared with his patented miniature keyboard. Potentially worth millions, it had attracted interest from Motorola and other giants racing to splice computers into cell phones and pagers. While completing his Ph.D., Levy was striving to license it.

Meanwhile, he was beginning to show a kaleidoscopic fecundity. One day I found him tinkering with a dolly he'd designed to let the average adult move a refrigerator down a flight of stairs with one arm. A few weeks later he was investigating a way to implant tattoos that could be changed as readily as images on a computer screen. Then he invented a way to free the arms of people on crutches so they could do two-handed tasks without losing support.

Rummaging through a big wooden box where he tosses prototypes like discarded toys, I found a novel volume controller for a Walkman that shows by touch how loud it's set before you flip it on, a clever device that enables victims of carpal tunnel syndrome to write without using their hands, and a--what the heck is this thing, anyway? "I call that the Oh-Ring," he explains. "It lets a man wearing a condom feel as if nothing is there."

Next there was a contrivance for detecting land mines. Version two of a dog-poop catcher designed to be worn like a feedbag in reverse. A gadget to let surgeons snap together severed blood vessels without sutures. A foam-rubber football implanted with a TV remote control.

The football, which Levy devised in a moment of whimsy with an MIT friend, offers the first truly aerodynamic way to meet TV viewers' "long-felt need not to get up," according to its patent application. Dubbed Pass-it, it was licensed to a Florida company that began selling it in February. But Levy winds up shelving most of his inventions. Some are beyond his means to develop; others are of doubtful patentability or cost effectiveness. No matter. He has more good ideas than he knows what to do with.

Poised, lean, and quick in gesture and speech, Levy usually seems headed somewhere in a hurry, even when sitting. He loves multitasking--scanning the evening news, say, while debugging a prototype. He doesn't like coffee, preferring to fuel late-night bursts of work with Atomic Fire Ball candies. To save money, he writes his own patents and does his own searches for existing ones. He's a master of what engineers call satisficing, the art of devising cheap, fast solutions that barely get the job done (the word combines "satisfy" and "suffice"). When the exhaust pipe on his 1983 Saab rusted through, he rigged a perfectly adequate patch in 15 minutes with aluminum foil and ring clamps. "I like to be efficient," he says.

Levy sees himself as operating somewhere between "deep inventors who build something really new from the ground up" and "heated-toilet-seat inventors," tunnel-vision tinkerers hopelessly hooked on minor strokes. "I often just take known things and put them together in a different way," he says. "But I have a sense for what might be valuable." Still, he confesses, "for years I didn't call myself an inventor because I was afraid people would think, 'This guy doesn't know dynamite from doorknobs.'"

"Some of his ideas are nutty," says Boston venture capitalist Dana Callow, one of several VCs who approached Levy after he won the Lemelson-MIT prize. "Yet I've seen few people in 20 years with inventions that appear as commercially viable."

So far, Levy has shied away from potential investors who want to pursue entrepreneurial schemes, betting that proceeds from his keyboard will support his inventing habit for years to come. A few months ago he exuberantly e-mailed me that "life is good...I have $569 left in the bank and just turned down an offer of $100,000." Says Callow: "He loves the chase."

It seems we're all born with a drive to invent. The need to deconstruct and reconfigure emerges about the time language does, showing that inner, not outer, necessity is the real mother of invention. As the drive shifts gears and we become adept, more and more of the world looks plastic to us. At fourth gear or so, circular saws typically scream their logic in our ears: Wood is Play-Doh. To Levy, who has reached about eighth gear, even plastics seem plastic--with computer-aided design and "rapid prototyping" systems, he could whip out polymer cockleshells, if needed, in a trice.

As he flew through the usual lower gears as a youngster, his parents wisely got out of the way. His mother, Joyce, recalls that at age 5 he watched her struggling to hold macadamia nuts while cracking them with a hammer. After several nuts flew across the room, he asked for the hammer. When she handed it over, he wedged the nuts in the interstices of a shoe-wiping mat and showed her how to crack them with ease.

At 9 he began reconfiguring his home, beginning with the installation of a system that allowed him, while lying in bed, to control various light switches by pulling strings. There were screw eyes all over his bedroom ceiling.

A few years later it dawned on him that entire buildings are as clay. That inspired him, at 14, to walk into an architect's office and announce that he wanted to sign on. "They thought I was cute," he says, "so they taught me how to do perspective drawing" and later hired him for the summer as a draftsman. Not long after, his mother awoke to the sound of hammering and found him knocking out the ceiling in his room to open a passage to the attic. He was moving his bed up to make space for a drafting table. That evening his father, Hyim, an engineer at TRW, drove up from work to find his son sawing a big hole in the roof. The elder Levy shouted up, "What are you doing?"

"I'm putting in a skylight."

"Is it going to leak?"

"Nope."

Hy said no more and went in.

"Of course, it did leak after a few years," says Levy. "But I fixed it."

Levy became fascinated by magic in his early teens, but he was more interested in devising new tricks than in perfecting his technique on old ones. When his father, an accomplished magician, offered to help him learn the ropes, he responded the same way he had since about age 8: "No thanks, I'll figure it out." For a junior high talent show, he designed a trick that involved tying up and immobilizing two friends in a box, then shooting arrows through it. (Fake knots allowed the accomplices to disentangle themselves and duck.) "It showed a lot of creativity," says Hy, "but I was pleased to see it retired."

Levy compiled a good high school record in Manhattan Beach, Calif., but MIT, the only college he deemed acceptable, found it lacking and rejected him. He soon got his act together. Correction: an act. He scraped up just enough for a one-way ticket to Berlin, then wandered Europe for a year, living by his wits as a street magician and juggler. What college admissions officer could resist such verve? MIT took him the following year.

After earning his master's degree in 1987, he says, "I wanted to work at only one place: Apple. It was going to change the world, and that's what I wanted to do." Apple aimed to outdesign the competition, generating mind tools of such rare elegance and utility that customers would just have to have them even if they cost a little more. To engineers it was a business plan to die for, and Apple had its pick of the best. Turned away at first, Levy moved in with a friend in Silicon Valley and began knocking on Apple's various departmental doors. Three weeks later a job sprang open in its research department for a self-starter who could do architectural drawing and mechanical engineering--Levy's versatility had clicked.

He found himself immersed in perhaps the world's top training school for inventors. Apple assigned him to help create an insanely great input device that would enable a stylus to be moved in midair to conjure up three-dimensional shapes on a computer display. After spending $3 million, his three-man team eventually got a prototype to work. Then the project was canceled to save money.

Levy next played a key role in developing laptop features that are now ubiquitous, such as placing the keyboard at the back to accommodate typing in tight quarters. One day a struggling Utah inventor named George Gerpheide walked into Levy's office with a crude device that, when plugged into a computer, let a person move the cursor by dragging a finger across a touch-sensitive pad. After playing with it for 60 seconds, Levy told Gerpheide, "We've been waiting for you." A few weeks later, Levy stuck his neck out by writing a personal check to fly Gerpheide in to meet with Apple officials. Gerpheide's "trackpad" later became a standard feature.

Levy's star was rising at Apple, but as fiscal woes shrank its horizons, he sought a new creative outlet. "I made it a rule that I wouldn't get out of bed on Saturday until I thought of an invention that had real value," he says. "I would walk through life in my mind and think about the problems people have. It usually took me about half an hour to invent something. Then I'd go to the library and do a patent search. Usually that ended it"--the invention would already be patented.

He finally hit pay dirt with Peelables, the multilayered labels licensed to 3M. (Picture sticky notes peeled off one by one as a label is updated.) His proceeds totaled only about $30,000 before the product was discontinued. But he was hooked. "I decided the optimal job is one you could do lying in bed. At the time, Apple was laying off hundreds of people. I wanted to be one. So I went around the company and found out about all the projects that had lost support [of the top brass]. When my boss asked what I wanted to work on next, I mentioned those projects."

Levy soon walked out of Apple with a hefty severance check and headed east to reinvent himself.

Subway riders passing through Harvard Square a few months later witnessed a curious affair right out of Conan Doyle: Precisely 50 men boarded the train with yellow ink on their fingers. Even Watson could have guessed they had all just been fingerprinted. On further inspection he'd have spotted the perpetrator--a 30ish guy with a stamp pad was accosting males as they waited on the platform under the square, asking for their prints. But why?

Elementary satisficing, old bean. Levy had hatched his idea to shrink the keyboard and needed to know how small he could make the "finger-pressure zones" of its keys without crossing the border into Barbie-space, where fingers tend to hit more than one key at a time. A scholar might have spent days combing the technical literature for statistics on fingertip dimensions. Levy generated them from scratch in one afternoon. Drawing on his street performer's knack for working a crowd, he approached 51 men to get the 50 prints he wanted--just one said no. (He sought only males, since their fingers, especially thumbs, would define the maximum space he needed to accommodate.) A few hours later he was ready to design a keyboard that would let even short-fingered vulgarians aspire to wirelessness.

The design came to him slowly. At first he envisioned crossing keyboards with accordions, breaking them into foldable pieces, jamming keys into pop-out devices--all rejected as lacking elegance. When he got stuck, he tried a mental trick that he'd invented in third grade. "I had a school problem I couldn't solve," he says. "No idea what to do next. Suddenly this magic question came to me: 'If I were a smart person, how would I answer this question?' Then, poof, I saw the answer."

Finally he hit on a brilliant two-poofer: First, put most of the letters on half-sized keys shaped like flat-topped volcanoes. Then place the remaining letters in the valleys around the volcanoes, at the intersections of the keys, so they're actuated by pressing four keys at once. In effect, the trick puts neighboring letters on different levels, giving each a surprising expanse of tactile real estate (see box).

Then the perspiration phase began: Levy spent tense hours at the Boston Public Library scanning its computerized database of U.S. patents for ones that might cover his design. He walked out on a cloud. His idea appeared highly patentable, and he'd spotted a lot of problems with past attempts to shrink keyboards. The research was fodder for his patent application, a 15-page sales pitch that he drafted with great care over the next week.

Following a time-honored format, it began with a litany of woe about existing devices, then lavishly described how his keyboard would end the strife. Levy knew that patent examiners would try to tear it to shreds--they're duty-bound to make sure that an invention is useful, novel, and nonobvious before approving it. So he included some readily shreddable parts: overly broad claims he could live without. "You want the fight to be over something you don't mind losing," he says.

His expendable claims covered combination keys of any size. The claims he couldn't do without covered design tricks enabling keyboard miniaturization. After the application spent 2 1/2 years in limbo at the patent office, Levy was told by an examiner that only a limited subset of his claims would be approved--the ones for keys of any size would have to go. That night, he says, "I went out for sushi at the best place in town."

Levy now had intellectual property to peddle. But presenting it to a big company without a prototype would go over like an IOU at the IRS. He knew that building one would be a long haul, so he downshifted to satisficing mode.

With an MIT classmate's help, he "drew" a three-dimensional image of his keyboard on a personal computer, using software that a few years ago was available only to corporate engineers designing aircraft and the like on $50,000 workstations. (The recent advent of home-brew computer-aided design, or CAD, is one reason garage inventors can still do rocket science.) His digitized drawing was then fed into a computer-driven rapid-prototyping system that fabricates objects by spraying alternate layers of nontoxic powders and adhesives to build up complex shapes. Minutes later he walked out with the first tangible model of his keyboard. The palm-sized mockup was made of powdered sugar.

A few weeks later, Levy showed his sweet little keyboard to a group of Motorola officials touring MIT. It whetted their appetite, and the company advanced him $8,000 to build a set of working "keypads" for testing in pagers. His timing seemed perfect: The work for Motorola enabled him to develop a crude version of the keyboard just before the 1996 Comdex, a massive computer trade show held each fall in Las Vegas. Wandering the show with his device in an old leather briefcase, he managed to put himself on the radar screens at Ericsson, Nokia, Rockwell, Matsushita, and a half-dozen other companies; all requested polished prototypes. Over the next few months visions of seven-figure competitive bids danced in his head. For the first time, Levy began calling himself an inventor when introduced to strangers.

There was just one problem: He couldn't get his prototypes to work well enough to present as proofs of concept. Pressing "Q," for instance, sometimes yielded a "W" on the keypad's liquid-crystal display. When he made fixes, other bugs appeared. For more than a year elusive glitches would threaten to scuttle his dreams. Thinking he had the problems licked at one point, he sent a rectified prototype to a large company, then found he couldn't reproduce its accuracy. "I had to get it back to see what was different about it," he says, "so I told them I would make it even better if they gave it back for a few weeks." He made good, but it took three months of desperate tinkering.

He knew the bugs lived in one of two components: the circuitry or the mechanical parts. But which? The problem was complicated by the fact that bugs could skitter back and forth between the two--since the components had to mesh like clockwork, changing one could cause glitches in the other.

Levy had no choice but to tweak and tweak again. On the mechanical side, he fiddled with the shapes of the volcano keys, the way they were attached to the device, even the elasticity of the rubbery stuff from which they were made. To gauge elasticity, he invented a unit of measure called "droop"--the exact distance each version of the material sagged when a piece of it was held horizontally by an edge.

On the electronic side, he faced the classic problem of engineering: warring needs. The issue was timing. When his keypad's electronic brain senses a keystroke, it must hesitate briefly before deciding which letter is intended. If other keystrokes very quickly follow--as happens when a multikey letter is being pressed--it analyzes the pattern of pressed keys to deduce the letter. Otherwise it assumes a single-key letter was pressed. Here's the dilemma: If it ponders too long, a fast typist could confuse it by pressing two single-key letters in quick succession, causing it to incorrectly register a multikey letter. But if it decides too fast, it could err by failing to sense the other signals associated with a multikey letter.

Levy's hard-won solution to this conflict is a trade secret--he's trying to patent it, along with other critical fixes he made during the battle of the bugs. If awarded, he says, the follow-on patents will block rivals from patenting crucial improvements and forcing him into a cross-licensing deal that drastically cuts his proceeds. He hopes to prevent companies that license his keypad from doing this. (Companies often surround an outsider's invention with their own intellectual property on the way to market, then offset their costs by such cross-licensing, says former patent commissioner Banner.)

By fall 1997, Levy felt the keypad worked well enough to show around. He sent two to Ericsson, a Swedish company that seemed eager to license it for use in "smart" cell phones that could handle e-mail. On a cold, clear November day, an Ericsson official called with crushing news: The company had found a 1985 patent that appeared to cover Levy's keypad. The federal examiners who awarded Levy's patent had missed it.

Rushing to the Boston library, Levy, like a father looking for his child's kidnapper, charged into the hushed inner sanctum where patents are kept. His heart sank when he saw the rival patent: Its author was James Lapeyre, a New Orleans entrepreneur who had made a fortune by inventing a shrimp peeler in 1946 and had gone on to become one of the nation's most prolific inventors. Levy was facing a heavyweight. But while reading the patent, he says, "I saw a crack, and the more I looked, the wider it looked."

Lapeyre's patent, it turned out, covers keyboards with multikey letters, but not miniaturized keys with volcanic topography, which allows twice as many keys per square inch. Levy's patent still seemed golden. Ericsson appeared to buy that--it continued negotiating with him, and, in a "usability" study, found that consumers liked his keypad. But last spring, after a year of talks, the company suddenly said no deal. An Ericsson official explains: "I like David's idea very much. But Ericsson is Swedish. We're conservative. Our vice president of research feels that any departure from a standard telephone keypad design is risky." And unbeknownst to Levy, Ericsson still doubted his patent. The official says, "Our patent attorneys concluded we could use David's technology without getting a license from him."

Levy kept up his spirits with long bike rides and a spate of inventing. "This process is like watching a glacier move," he told me last May. "It looks completely static, but it's going well." Sure enough, soon Motorola and Alps Electric, a Japanese maker of computer peripherals, both indicated deals were imminent. Last spring, Motorola flew Levy to Florida to hash out preliminary terms. "Things seem to be moving fast," he told me after returning.

Motorola said it was angling for an exclusive license, an impossibility if he made a deal with Alps. Alps also wanted exclusivity. Forced to choose, Levy anxiously put his eggs in one basket: Motorola.

Motorola had long seemed his best bet. After spearheading wirelessness a decade ago, it had fallen behind in the race to bring out digital wireless devices with computerlike features. Last year Motorola said it would reorganize and cut 10% of its work force to boost profits. It clearly needed new ideas to leapfrog rivals like Nokia and Ericsson. Levy had one.

But he was worried about Motorola's dilatory bureaucracy. If the keypad wasn't adopted soon, the industry might lock into alternatives, such as Graffiti, the handwriting-recognition system used in Palm organizers.

In late August, Motorola faxed Levy draft terms of a deal under which the company would pay him a monthly fee while thoroughly vetting his keypad, potentially leading to a multimillion-dollar licensing contract. "Wow! Finally it is happening," he e-mailed me. A few days later he traded in his satisficing old Saab for a turbocharged '92 convertible version.

But when hashing out details over the next few weeks, company officials balked at terms Levy thought they had blessed in preliminary talks. In early November a Motorola attorney called to say he had ferreted out two earlier U.S. patents that, when combined, made Levy's invention obvious. "He basically told me my patent is dog poop," Levy said.

One of the two prior patents was Lapeyre's. The other was by a German inventor, whose 1983 claims covered half-sized keys used in combination. Levy's patent, however, specifies a way to place twice as many keys in a given space as the rivals do. Confident his main claims remain valid, he asked the patent office to reexamine his patent in light of the "new" prior patents. Meanwhile, Motorola told him it was still mulling over a deal.

Two months later, ties that Levy had spent years nurturing at the company were suddenly cut; as part of its reorganization, Motorola created a new group to handle input devices. The unit's manager knew nothing of the keypad. "I'm hurting," Levy said in a funk last month. "I've wasted thousands of dollars in legal fees negotiating a noncontract over the past five months and, more important, turned off other deals."

A Motorola official replies, "We're very interested in outsiders' innovative ideas. We understand David is frustrated. But the due-diligence process [to assess an invention's value] can be time-consuming."

In a prolonged fit of pique, Levy shut down his one-man skunkworks, bought a nail gun (the perfect tool for wreaking havoc, he noted), and frittered away several weeks on furniture making. The fit ended when he caught the flu. Forced to spend time in his favorite workplace, bed, he was soon feverish with ideas--so many, in fact, that pushing the keypad no longer topped his to-do list.

As of a few days ago, his invention was still in limbo. Motorola had just told him a prototype he'd submitted weeks earlier hadn't reached the official he'd sent it to. The patent office had lost the follow-up claims on his keypad that he'd submitted three months ago. Nothing was going right. Yet a crisis seemed to have passed. Levy e-mailed me that his first heady romance with inventing had indeed turned into "a love-hate relationship. But I could never give it up. There's nothing better than wandering through life seeing problems as opportunities. What could be better than making things better?"

Btter print that out6 ?and purt it on your w2all, I replied from Barbie-space.