Eureka Solutions International, Inc. and OEM Communications, both based in Monroeville, Pennsylvania, and company president and founder Gregory S. Bender, have agreed to settle Federal Trade Commission charges that they misrepresented the likelihood of financial gain to consumers who purchased their invention promotion services. The FTC alleged that few, if any, of the defendants' clients realized any appreciable amount of money from their inventions. The settlement would prohibit the defendants from making false statements about, or omitting, any material aspect of their invention-promotion or related services, and specifically would prohibit misrepresentations about the likelihood that clients will realize financial gain or that the defendants have successfully marketed clients' invention ideas. In addition, Gregory Bender will turn over approximately $25,000 to the FTC for consumer redress.
The defendants ran one of five invention promotion schemes that together generated in excess of $90 million for the schemers -- but very little for their clients -- when the FTC filed charges in federal court against them in July 1997. The FTC actions were part of a law-enforcement sweep called "Project Mousetrap," targeting fraudulent invention promotion services.
In addition to prohibiting the specific claims as alleged in the complaint, the settlement requires that in the future the defendants disclose in writing to potential clients:
- the total number of clients with whom they have signed agreements in the past five years to research or promote the client's idea;
- the total number of clients whose ideas or inventions were licensed by an unaffiliated third party;
- the total number of clients who received more in royalties or sales from the licensing agreement than they paid to the defendants for their services; and
- the total number of prototypes, market tests, or other pilot programs the defendants funded for clients.
Further, the settlement would prohibit the defendants from initiating any contact with the potential client until three days after providing the written disclosure.
The FTC filed the settlement in the U.S. District Court for the Western District of Pennsylvania, in Pittsburgh, on April 22, 1998. The settlement is subject to approval by the court. The Commission vote to approve the settlement for filing was 5-0.
NOTE: This stipulated order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Court settlements have the force of law when signed by the judge.
Copies of the settlement and other documents associated with "Project Mousetrap," are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-382-4357 (FTC-HELP); TTY for the hearing impaired 202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No.: X970087)
(Civil Action No.: 97-1280)
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