A federal district court judge has ordered American Inventors Corporation (AIC), American Institute for Research and Development, Inc. (AIRD), and two individuals, Ron Boulerice and John Samson, charged by the Federal Trade Commission in late October with running a deceptive invention-promotion scheme that bilked consumers out of thousands of dollars each, to disclose to customers that over the past three years, less than 1 percent of their clients have received license agreements for their products and that no clients have received more money than they paid AIRD or its predecessor, AIC, for invention-promotion services. The scheme ran nationwide over the last 20 years. The judge issued the order as part of a preliminary injunction, sought by the FTC, which also continues an existing freeze on the defendants' assets, prohibits them from making certain misrepresentations that were challenged by the FTC, and orders them not to destroy documents, pending the outcome of a trial on the FTC allegations.
The FTC's October complaint alleged that the Westfield, Massachusetts, firms and their principal officers made a variety of false claims and failed to disclose key information in the course of inducing consumers to purchase their patenting and marketing services. The individual defendants named in the FTC complaint are AIC president Ronald Boulerice of Russell, Massachusetts; AIRD president John Samson, who resides in West Hatfield, Massachusetts; and John Hoime, of Westfield, who was employed by AIC between 1989 and 1994. The FTC said consumers spent hundreds to more than $10,000 each for the defendants' services.
Under the preliminary injunction, the defendants are prohibited from making any material false or misleading statements in connection with offering invention-promotion services, including misrepresentations that:
- they select and recommend for further services only a small percentage of the invention ideas submitted to them;
- their patenting and invention-promotion services are likely to result in financial gain for customers; and
- the patents they seek for consumers have commercial value.
The disclosures required by the preliminary injunction must be provided to consumers at each initial contact, and the defendants must request a signed copy of the disclosure statement before contracting for services. The disclosure reads, in part:
"...During the past three years...AIRD and its predecessor...AIC have selected and recommended for further invention promotion services the vast majority of all invention ideas submitted to the two companies for a preliminary assessment. ...As a result of AIRD's and AIC's services, less than 1% of AIC and AIRD clients have received license agreements for their products, and no AIC or AIRD clients have received more money than they paid.... The marketing or licensing of a new product is an extremely difficult and uncertain process, with a very low success rate." The preliminary injunction was issued Nov. 16 by Judge Michael A. Ponsor of the U.S. District Court for the District of Massachusetts, in Boston. Trial on the FTC allegations will be scheduled at a later date.
Copies of the preliminary injunction, as well as a free FTC brochure for consumers on invention promotion firms, and the October complaint and news release the FTC issued at that time, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov
(FTC File No. 952 3208)
(Civil Action No. 95-30219-MAP)