Pittsburgh Invention Firm Davidson & Associates Settles With Feds For $10.7 Million
We just received this interesting piece of invention related news to share. This is good news for the everyday inventor!:
Pittsburgh Invention Firm Settles With Feds For $10.7 Million
Davison & Associates Was Sued By FTC -- 3:08 pm EDT July 14, 2008
PITTSBURGH (AP Wire) - A Pittsburgh-based invention-promotion firm
agreed to settle a lawsuit brought by the Federal Trade Commission and will
pay nearly $11 million to thousands of novice inventors who got little bang
for their buck.
Davison Inc. promised to market inventions, but delivered little to
inventors, the FTC said. Fewer than 1 percent of the company's clients
earned more from their inventions than they paid Davison to market the
"This is the most significant settlement we have had against any idea
promotion company," Mr. Mendenhall said.
A federal judge ordered the company to pay $26 million to thousands of
clients two years ago. In March 2006, U.S. District Court Judge Gary L.
Lancaster found the company used bogus claims to recruit customers. The
The FTC charged the company, using Internet ads, made false claims about
how it was selective in choosing customers, about its track record on
making inventions profitable products and about its relationships with
During the trial, the FTC contended that few of the company's customers
ever made enough money from their inventions to break even with Davison's
The company has been ordered to provide full disclosure to its potential
clients about its ability to turn their ideas into profitable inventions.
One area of contention by the FTC was that the company claimed it was
making its money by sharing royalties when the reality was that it was
supporting itself by charging inventors between $800 and $12,000 in fees.
Davison on Monday agreed to pay $10.7 million in cash, real estate and
investment assets rather than risk further appeals of the lawsuit, which is
already 11 years old. The FTC must now identify the company's victims and
distribute money to them.
When U.S. District Judge Gary Lancaster ruled against the company in 2006,
he ordered it to set up a compensation fund for customers. At the time, the
FTC said about 33,000 had paid the company about $695 each for Internet
research over the previous five years.
More than 9,000 of those customers paid another $8,000 to $13,000 each for
prototypes of their inventions, the commission said.
John Mendenhall, who directs the FTC's regional office in Cleveland, said
the settlement "will not cover all the injury from the case, (but) it will
be fairly significant." Mendenhall said that Davison will remain under very
close federal scrutiny through 2014. He said the FTC is continuing to look
at the manner by which it makes sales calls to move its "services."
"We are continuing to get calls regarding the building out of prototypes,
where Davison is claiming they were somehow lost in storage, we frankly
don't buy it," Mendenhall said.
The company's founder, George M. Davison, said in a news release that the
new disclosure statements by the company set a standard in the industry.
"Our company is the model for disclosure in this industry," he said.
Davison issued within the statement saying it has added risk-disclosure
statements to its marketing materials to tell inventors that "new product
design is a high-risk venture."
If you feel you were a victim of Davison contact the office of the US
Government Federal Trade Commission.
Via AP . Thanks to Frank Sowa for tip.