FOR RELEASE: SEPTEMBER 10, 1991
FTC CHARGES INVENTION PROMOTION COMPANIES WITH MAKING FALSE AND DECEPTIVE CLAIMS: SETTLEMENTS PROPOSE $570,000 FOR CONSUMER REDRESS
The Federal Trade Commission has charged that American Idea Management (AIM) of Stoneham, Massachusetts, an invention promotion company, its two successor corporations and three individuals have misrepresented the nature, quality, and success rate of invention promotion services they have sold to inventors. Proposed consent decrees to settle the charges would prohibit future misrepresentations. In addition, the defendants would pay $570,000 plus interest, to provide partial refunds to consumers injured by the defendants' allegedly deceptive activities. The FTC will send refund-claim forms to eligible consumers during the next several months.
In two separate complaints, filed in different jurisdictions and accompanied by the proposed consent decrees, the defendants are: AIM; Idea Management and Patent Assistance Corporation, also of Stoneham, Massachusetts; Technology Licensing Consultants Incorporated, of Pittsburgh, Pennsylvania; and corporate officers or owners: Suzanne Kameese, of Lynnfield, Massachusetts, and Anita French, and Lowell French, both of Pittsburgh.
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(American Idea Management -- 09/10/91)
Since 1984, according to the FTC complaints, the defendants have sold a variety of invention promotion services to individual inventors. The defendants solicit inventors to submit ideas or products for a free "initial review." They then offer the inventor -- for a fee ranging from $450 to $595 -- a written "research report" that often includes a patent novelty search and a written opinion of patentability prepared by a registered patent attorney. If the "research report" is favorable, the defendants then offer marketing, promotion, and licensing services for an additional fee ranging from $3,500 to $9,750.
The FTC charged that the defendants have made numerous false representations when selling these services to consumers, and as a result have caused substantial consumer injury. Among the false claims, the complaints allege, are representations that:
-- the defendants' clients have realized financial gains when, in fact, no inventor has earned more money than he or she paid the defendants for their services;
-- the free "initial review" and "research report" are honest, competent and objective evaluations of the merit or marketability of the invention when, in fact, they were not;
-- the defendants perform substantial services to develop or refine the clients' ideas when, in most instances, they did not;
-- they have special access to, or have been retained by, manufacturers seeking new product ideas, though, in fact, neither claim was true.
The proposed consent decrees, which require the approval of the courts in which they were filed, would permanently prohibit the defendants from making the kinds of misrepresentations alleged in the complaints, and from misrepresenting any material aspect of their services.
The decrees also require the defendants to disclose to future clients -- in their initial written communication and in the client contract -- the number of clients who have earned more money than they paid for the defendants' services, and all fees the defendants' charge for these services. The defendants also must disclose the risks associated with marketing and licensing new products: specify that the defendants do not evaluate the marketability of ideas they promote; and inform consumers that they have seven days to cancel a contract with the defendants.
(Amercian Idea Management -- 09/10/91)
The FTC filed the complaints and proposed consent decrees in the U.S. District Court for the District of Massachusetts, and in the U.S. District Court for the Western District of Pennsylvania, on September 9. This matter was handled by the FTC's Boston Regional Office.
NOTE: Consent decrees are for settlement purposes only and do not constitute admission of a law violation. Consent decrees are subject to court approval and have the force of law when signed by the judge.
Copies of the complaints and proposed consent decrees will be available shortly from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Ave., N.W., Washington, D.C. 20580; 202-326-2222; TTY 1-866-653-4261
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MEDIA CONTACT: Howard Shapiro, Office of Public Affairs, 202-326-2176
STAFF CONTACT: Phoebe Morse, Boston Regional Office, 10 Causeway Street, Rm 1184 Boston, Massachusetts 02222 617-565-7240
(Civil Action Nos: Pittsburgh -- 91-1500)
Boston -- 91-12353K)
(FTC File No. 882 3023)