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Pittsburgh Invention Firm Davidson & Associates Settles With Feds For $10.7 Million

Invention News

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
devices.

"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
company appealed.

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
manufacturers.

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
fees.

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.

Comments
Jul 16, 2008
by Anonymous

Good riddance

These guys had the best marketing materials of any company of their type, so I can see how so many were duped. Once you get on their list, the phone calls are near harassment, and I had to tell them on three separate occasions that I thought they were fraud until proven otherwise.

Caveat Emptor Inventors: There is NO SUBSTITUTE for due diligence.

Jul 28, 2008
by Anonymous

I just started with davidson inventors now I am unsure!!!

I just started to talk to them about my invention. And haven't got to much into it and they had told me there was a fee. In which, I can't afford right now they told me not to worry about it. But now I'm unsure now considering all these complaints that I had read about them. I understand that people and companies make mistakes but it shouldn't be when it comes to peoples hard earn cash. I know not to send them any money for my patten if I ever get one. Now considering I had signed an agreement of working with them. Now I just wish that I should of worked with someone else. But I am going to give them the benefit of the doubt and considering they are being watched closely by authorities. But I know not to hand out any money unless I am making money.

Sep 27, 2008
by Anonymous

canadian Inventor

I had that company do a patten search that cost me thousand something american at that time the dollar was higher. Anyways they sent me a folder with papers falling out everywhere that looked like a kindergarden scap book. Boy then the harassment calls came in about moving forward as quickly as possible. Blah,Blah, 6 month later I was reading the saturday paper when my heart dropped it seems my invention went on to win a competition in Geneva. We create inventions to make this world a better place not to get duped by leaches.. JMB..

Oct 5, 2008
by Anonymous

Davidson will steal your idea and lie to you

I too was a victim of the Davidson inventgrations group funneling money to them for nothing now they threat to sell my idea to someone , i now have filed with the FTC and an attorney to get my moneys returned and my idea has been documented with the FTC to prevent any futher .don,t become a victim of this firm

Feb 2, 2009
by Anonymous

worried

Have invested 15k, Am hoping to get a prototype out of it but still owe davidson 40% of the figure thay gave me. Has anyone recieved a prototype for there money?

Feb 18, 2009
by Anonymous

davidson is at it again

Good luck geting any thing from them but phone calls wanting more money, they talk a good talk but can't back it up i bet you are dealing with shawn he is a good talker with no action contact the usgftc