Court Halts Bogus Invention Promotion Claims
Orders $26 Million in Redress For Consumers; USPTO’s Director Jon Dudas Praises Court Decision
A U.S. district court judge has ordered an invention promotion operation to pay $26 million in consumer redress and has ordered a permanent halt to the bogus claims the company used to recruit customers. The court also ordered that in future dealings with consumers, the company make specific, detailed disclosures about their track record in helping inventors market their ideas. “This affirmative disclosure statement is needed due to defendants’ blatant, varied, and repeated misrepresentations . . . ” Judge Gary L. Lancaster of the U.S. District Court for the Western District of Pennsylvania wrote in his decision.
“This outfit is typical of invention promotion scams,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “They touted their ability to turn inventors’ ideas into profitable products, but fewer than one percent of the customers who invested in their services got royalties from their patents that amounted to more than they paid the promoters.”
In a complaint filed by the FTC as part of “Project Mousetrap,” the agency charged that the company used Internet ads and classified ads to lure inventors across the country to sign up for their services. The agency charged that they made false claims about their selectivity in choosing products to promote, false claims about their track record in turning inventions into profitable products, and false claims about the relationship they had with manufacturers. They deceptively claimed that their income came from sharing royalties with inventors rather than from the $800 to $12,000 fees they charged inventors.
Jon Dudas, Under Secretary of Commerce for Intellectual Property commented, “Judge Lancaster’s decision sends a strong signal to all those invention promotion and licensing firms that prey upon America’s independent inventor community that fraudulent and unscrupulous practices will not be tolerated.”