When the receiver LED light is green, it should record data from the pen as soon as the pen tip touches the paper; the pen LED should also display green to indicate that it’s communicating with the receiver.
If it appears that both the pen and receiver are working properly, but there is no communication between the devices (and you’re certain that the battery is charged), there may be an external item blocking communication between the pen tip and the receiver, or the distance between the pen and receiver might be too big.
The connection can also be lost through interference from external factors such as noise or too much light. If you’ve ensured that none of these factors are interfering with communication, it’s likely there is a fault in the hardware, and the Inkling will need to be exchanged.