FTC Targets Invention Promotion Firm

The Federal Trade Commission has won a federal district court order temporarily halting a deceptive invention promotion telemarketing scheme run by Global Patent Research Services, Inc. The president of Global -- Kenneth A. Rogers, of Nokesville, Virginia -- testified last year at a hearing on invention promotion fraud as a “reformed” telemarketer of one such scheme. But in the case announced today, the FTC charged both Global and Rogers with claiming that their invention research, patenting and promotion services would help consumers commercialize their inventions and reap the resulting financial gain. In fact, the FTC alleged, the chance that Global’s customers could do so was extraordinarily low or nonexistent. Global charged customers from $488 to $788 for an initial report from the company, and an additional $5,990 to $8,990 for its patent and/or promotion services.

At the FTC’s request, a federal district court issued a temporary restraining order halting the challenged scheme and freezing the defendants’ assets to preserve them for possible redress to consumers at the conclusion of the case.

According to the FTC’s complaint detailing the charges in this case, Global does business as Global Development Services, Inc.; has offices in Manassas, Virginia, and Madison, Wisconsin; and has been in business since at least May 1993. The firm sells two basic services: a product research report that purports to evaluate the feasibility and marketability of an idea and which contains a “projected profit analysis” of the idea; and a patent/promotion service agreement under which Global purportedly works to secure a patent for the idea and then promotes it to industry in an effort to get a licensing agreement for the customer.

“Typically, in these cases, the research report looks quite impressive but turns out to be a mass-produced booklet with a great deal of generic information that could apply to almost anything,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “Moreover, if the firm secures a patent for the customer’s idea, it’s likely to be a design patent, which protects only a picture or design on the surface of the item and not the functional aspect of the invention. Because the design can be so easily modified, these patents have very little commercial value. Consumers also should know that our investigations in this area have shown that many invention promotion firms actually do little or no real promotion of the invention, save sending out a few blind letters to companies on mass mailing lists.”

Bernstein added: “Statistically, the chance of developing and marketing the average invention idea into a commercial success is well below one percent. The actual success rate of firms that tell consumers otherwise should be thoroughly checked out.” Bernstein also recommended that consumers write for a free copy of the FTC’s brochure, “Invention Promotion Firms,” which contains this and other tips on distinguishing between fraudulent and legitmate invention promotion firms.

In the case against Global and Rogers, the FTC charged that the misrepresentations they made regarding customers’ potential financial gain violated both the FTC Act and the FTC’s Telemarketing Sales Rule.

The FTC filed its complaint under seal in U.S. District Court for the Eastern District of Virginia, in Alexandria, on May 17. The seal was lifted yesterday. The Commission vote in this matter was 5-0.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaint and the free FTC brochure for consumers titled “Invention Promotion Firms” 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. 962 3121)
(Civil Action No. 96-676-A)