A company that offered to help U.S. inventors turn ideas into profitable products was ordered to repay consumers $26 million and to stop using bogus claims to recruit customers, the Federal Trade Commission said on Wednesday.
The FTC sued Davison & Associates Inc. for allegedly making false claims in Internet and classified ads to sign up inventors by boasting of relationships with manufacturers. The company claimed that its income came from sharing royalties with inventors rather than from the fees of $800 to $12,000 charged to each inventor, the FTC said.
"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 1 percent of the customers who invested in their services got royalties from their patents that amounted to more than they paid the promoters."
Davison also allegedly made false statements that it had a vast network of corporations with whom it regularly negotiated successful licensing agreements, and that the company's marketing services were necessary for consumers to license their invention ideas.
A federal judge in Pennsylvania ordered Davison to pay $26 million in consumer redress and halt bogus claims made by the company.
Davison must also give any future clients a disclosure statement allowing them to objectively measure the value of the company's services, the judge said. The Pittsburgh-based company is also known as Davison Design and Development Inc. and Manufacturer's Support Services Inc., and is run by George Davison, Thomas Dowler, Gordon Davison and Barbara Miele-Davison, according to the FTC.
