News Release

"The past is prologue,

Study the past"

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"Project Mousetrap"

Joint Operation by FTC/States

"Clamps Down"

On Invention Promotion Industry

July 23, 1997
Washington, D.C.

A significant number of firms in the invention promotion industry are perpetrating a massive fraud on American consumers by claiming they have the resources and corporate connections to successfully develop and market individuals' inventions, according to federal and state officials who gathered at the Federal Trade Commission headquarter in Washington D.C. today.
Issuing a message of extreme caution to consumers about using the very expensive, but almost always fruitless, services of an invention promotion firm, the FTC announced "Project Mousetrap", a law enforcement sweep that has leveled federal and state charges in seven actions against companies and their principles involved in schemes purportedly to help independent inventors who tinker away in their garages late into each night in the hope of building a "better mousetrap."
The FTC brought federal charges in five of the cases. The Pennsylvania Attorney General's Office brought its action under the FTC's Telemarketing Sales Rule, one of the first by a state in federal court, seeking a temporary restraining order and asset freeze, without notice to the defendants, under that rule. Florida's Attorney General also filed an action, in state court, as part of Project Mousetrap. The FTC obtained temporary restraining orders and asset freezes against the defendants in its cases and is seeking permanent injunctions and redress for consumers. "Time after time these firms lie to consumers about their sincerity of their belief in an idea and its marketability," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "It is no accident that these firms profit while the dreams of their customers die. That is their plan, and up to now, they have been very successful in perpetrating that plan. Virtually no consumers have even made back their investment, let alone any profit, from these `companies services."
"Project Mousetrap" also begins a concerted effort among law enforcement officials and other federal regulators to combat this type of fraud with a targeted consumer education campaign. The U.S. Patent and Trademark Office (PTO), the Department of Justice and the Federal Trade Commission have formed a task force to gather and share information and develop a long-term campaign to give consumers information about invention promotion fraud at key times where they might be especially receptive to the message -- for instance when they receive information from the PTO.
According to the PTO's Solicitor, Nancy Linck, "We are particularly concerned about the impact these disreputable firms have on independent inventors' confidence in the patent system. We strongly support the actions taken today by the FTC and look forward to working closely with them on their consumer education effort."
FTC Defendants named in the cases are:

International Product Design, Inc.

The Innovation Center, Inc.
American Invention Associates, Inc.
Invention Consultants, USA, Inc.
New Products of America, Inc.
International Licensing Corporation, Inc.
Azure Communications, Inc.

States Defendants are:
National Idea Network, Inc. dba The Concept Network, Inc.
Eureka Solutions, International, Inc. doing business out of the Pittsburgh Expo Mart in Pennsylvania.
(one other case is still under court-ordered seal)

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INVENTION PROMOTION SCHEME

The FTC said its investigations of the industry have given it a wealth of knowledge about how invention promotion firms work. Most firms offer services in two stages, the FTC said. First, the firm might promise a free initial evaluation of the inventor's idea -- the evaluation is virtually always favorable -- and that sets the stage for phase one, a more extensive study of the idea, its patentability and market potential.
The FTC showed samples of those reports at today's news conference -- they are often quite lengthy, but typically are massed produced and consist largely of boilerplate pages into which the inventor's name and idea are inserted. They are not honest appraisals of merit, technical feasibility, or market potential, and the patent searches are usually not complete.
The phase one report serves as a marketing tool for phase two services, which include patenting and marketing the idea. They mention trade shows and special relationships they have with manufacturers who might produce it. They require the consumer to pay a fee, usually several thousand dollars in advance for phase two services. The FTC notes reputable companies usually rely on royalties from the product's success rather than advance fees.

TIPS FOR INVENTORS

Invention promotion firms that do not explain the difference between a design patent and a utility patent should wave a red flag of extreme caution. The unscrupulous firms often apply for the limited protection of a design patent in order to avoid breaking the law of promising to obtain a patent and not doing it.
An unscrupulous firm will imply that registering your idea in the USPTO's Document Disclosure Program offers protection. That is simply not true.

Other tips and information include:

Reputable companies are choosy about which ideas they pursue and usually work on a contingency basis. If a firm insists on an up-front fee, take your business elsewhere.
A firm that claims you need to hurry and patent your idea quickly before someone else does is employing high pressure tactics; a red flag for fraud.
Many firms claim to have a great record licensing their clients' inventions. Ask for the company's success rate and the number of clients who made more money than they paid for their services. (IN WRITING) Ask for references of recent clients and check with your state Attorney General's office whether your state requires success rate disclosure. Another red flag of fraud is the agreement in their contract to list the manufacturers they identify by coding your idea with the U.S. Bureau of Standard Industrial Code (SIC). A list of that nature is of extremely limited value.

"The past is prologue, Study the past"

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