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July 20, 2008

Inventor Scam

After an 11-year court battle, the FTC has squeezed, in settlement, a $10 million penalty from Davison for running a con on patent holders. The FTC claimed the company "enticed consumers with false claims about their selectivity in choosing products to promote, their track record in turning inventions into profitable products, and their relationships with manufacturers. They also deceptively claimed that their income came from sharing royalties with inventors, rather than from the fees consumers paid."

The settlement hypothetically bans misrepresentation, and requires something approximating transparent disclosure of the company's track record.

The FTC press release:

The owners of an invention promotion operation have agreed to pay $10 million in consumer redress to settle Federal Trade Commission charges that they deceived consumers across the country. The settlement includes a cash payment of $6.9 million, plus other property valued at $3.1 million.

According to the FTC, the defendants charged up to $12,000 to evaluate and promote consumers' inventions. The defendants enticed consumers with false claims about their selectivity in choosing products to promote, their track record in turning inventions into profitable products, and their relationships with manufacturers. They also deceptively claimed that their income came from sharing royalties with inventors, rather than from the fees consumers paid.

Under the proposed settlement, in connection with providing research, patent, marketing, and/or invention promotion services, the defendants cannot misrepresent that they're selective in accepting inventors, and that they have a stake in an invention because they "work for free" and/or receive significant income from royalties. They also can't misrepresent how many consumers have contracted with them, how many of those consumers realized a net profit, or how many product licenses they obtained for consumers.

The settlement also bans the defendants from misrepresenting that they've helped inventions become products without disclosing whether consumers have profited from the product, and that they have a vast network of corporations with which they regularly negotiate licensing agreements. They also can't misrepresent that their services are necessary for consumers to license their ideas, and that they prepare objective and expert analyses of the marketability or patentability of ideas.

The settlement requires the defendants to post on any Web site or advertising, and to furnish to prospective clients, an affirmative disclosure statement that clearly and unequivocally states:

How many consumers submitted ideas within the past five years;
Of those, how many were offered, and how many signed, agreements for defendants' several services including research, presentation, and licensing services; and
How many consumers succeeded in licensing their ideas, how many made more money in royalties than they paid the defendants in fees, and the percentage of the defendants' income that comes from royalties earned from their customers' inventions.
The statement must include, in bold print, how many consumers in the last five years made more money in royalties or sales proceeds than they paid the defendants, and the percentage of the defendants' income that came from royalties paid on licenses of consumers' products.

The defendants are Davison Design and Development, Inc., formerly known as Davison & Associates, Inc., and its principal, George M. Davison III; Manufacturer's Support Services, Inc. and its principal, Gordon M. Davison, and his wife, Barbra M. Davison; and relief defendant Barbara L. Davison, who is George M. Davison's wife. The settlement ends the litigation between the FTC and the defendants.

Earlier, after a trial, the U.S. District Court for the Western District of Pennsylvania entered a $26 million judgment in favor of the FTC against the defendants, except that it limited Barbra M. Davison's liability to $8 million and imposed no liability on Barbara L. Davison. The proposed settlement will suspend the judgment once the defendants transfer cash and other assets valued at about $10 million, including residences in Fox Chapel, Pennsylvania. The cash payment includes $6.8 million specifically listed in the order, plus approximately $105,000 in interest on a cash bond. The FTC has established a telephone line for consumers who may have been harmed by the defendants' conduct. Consumers may call 216-263-3434 for more information.

The Commission vote to authorize staff to file the proposed consent order for permanent injunction was 4-0. The order was filed in the U.S. District Court for the Western District of Pennsylvania on July 14.

Posted by Patent Hawk at July 20, 2008 1:47 AM | Patents In Business

Comments

A settlement that prohibits them from committing fraud, now that's a winner. The "settlement" only prohibits Davison, Davison, Davison, Davison and Davison from doing what they're already prohibited from doing by law. My bet is the amount they're required to cough up is but a small portion of their ill-gotten gains.

Hardly a victory for truth, justice, and the American way. Hold on -- scamming inventors IS the American way.

Posted by: Babel Boy at July 21, 2008 8:21 AM

Wow, what a gift! Davison now has a license to continue raking it in. Try finding that Affirmative Disclosure Statement from their main web page.

Posted by: Joe Breimayer at July 21, 2008 10:00 AM

i'm here in England and they are trying to get money out of me for my "excellent idea" it's a good job i typed "davison scam" into google & guess what came up? scammeres are lowest of the low!!

Posted by: jeff down at November 20, 2008 9:18 AM

Very helpful,they are trying to get me also. I have an idea and started getting hesitant when the sales person kept hassling me to submit my money. Does anyone know a good company I can use?

Posted by: Jeremy at December 19, 2008 6:33 PM

Just a thought! Have Davison actually helped anyone to satisfaction? Has anyone been to meet with them?

Posted by: David Osborne at February 16, 2009 2:01 PM

Hi can anybody help me we have just been ripped off by Davison for £7.000 pound. They are still getting away with it my husband sent his idea to them with 2 prototypes and a video they were delighted with it so much that they have just sent us a digital drawing of somebody elses invention.When questioned about it they said it would not be cost productive to Davison having said this his was ready to go to manufacturer with no alterations. Now they want him to sign for there invention we have taken out a design patent in 25 countries why would we alter the design.Davison new that we have patented it.Also they said they would look at it again and alter it back asked how long that would take theysaid a long time .to get to this stage it has taken them 8months we said we dont wish to continue he said read your contract we have the right to cure in contract it states 30days hes saying a long time.We have sent a letter to them asking for a refund and all papers back and prototyphes has anybody else out there had same problems. Or can advise us.PLEASE

Posted by: Hazel at April 5, 2009 9:53 AM

I submitted a very simple idea (took me 2 hrs.to make)Davison took two years to get my project out to a manufacturer(of course they turned it down). It cost me $11,000.00 and now each time they change the packaging its another $355.00. Someone has got to help us get honest invention advise. Too many scammers out there.

Posted by: Tom Schwalbach at June 15, 2009 6:26 PM

They are trying to get me to send in my paperwork and check. Since seeing all of these comments, I am not going to continue. I'm now afraid of them stealing my idea and leaving me out of the deal. Is there another venue (an honest one) for submitting ideas and getting them developed and sold?

Posted by: Carlos Balmaseda at August 31, 2009 9:09 AM

I have been fighting this company for over 7 years now and am, at least, getting my story with the credit card company that I used, validated. When I used my credit card to Davison, I went online about 2 weeks later and found out that they were fraudulent...I reported the fact to the credit card company and they said that since the party that collected the money wouldn't say it was fraudulent (who would turn down $10K?), then I had no case. I have been paying the credit card company over the years and still don't have it paid off yet..I have been paying something for nothing...so people..PLEASE learn from my mistake...don't be fooled by these scammers... and pray for all of us that have been duped to have the banks, etc. realize that we were the ones being duped, and therefore get the money back we paid them, and our account fixed.

Posted by: Tj at October 6, 2009 12:37 PM

Is there a reliable company out there that can help me with my idea I just paid davison 670.00 to as they say help me invent my product and they didnt mention that there would be additional charges ,I assumed that that"s all they wanted to help me sale my product now that I'm reading these testimonys Im scared also that my idea might end up in the wrong hands. need help. .

Posted by: rudy at November 30, 2009 3:12 AM

I just paid 670.00 to the Davison co but now that I'm. reading this I'm having second thoughts. Is there a legitament company out there that will help me. I sent in all the money I have so I'm still preying they dont rip me off as well.

Posted by: rudy at November 30, 2009 3:23 AM

www.ipwatchdog.com go there and pester Eugene.

Posted by: 6 at November 30, 2009 10:29 AM

Davison are still scamming inventors I paid them
£3100 for a single sheet of paper with my product idea printed on it,very badly done,it took Davison 12 weeks to produce this rubbish my eight year old grandson could have done better in a couple of hours,when I complained Davison asked for £2000 more to put right my issues,I refused to pay them,Once they have your money they become
very difficult to get hold of.they ignore faxes phone calls and emails,they have a compliance dept
that just ignores you,BEWAREDAVISON.See www.bewaredavison.com

Posted by: Derek Thomley at April 16, 2010 1:29 PM

Davison would like to have any feedback regarding complaints or consumer issues handled as quickly as possible. If you would like to discuss your project, and the reason you are unhappy with the results, please contact Davison at cca@davisoninvents.com. Once the problem has been explained we can address the issue and get it solved. Please include your contact information in the email and the name of the Director of New Products that was handling your product idea. Below is the original post regarding this issue.

On November 1, 2009, the executive management staff at Davison created a new position titled Chief Consumer Advocate. The core responsibilities of this position are to ensure that we are truly listening to you, hearing what you are saying, and taking our customer concerns directly to the office of the President. The mission of this position is “100% customer service based on Open, Honest and Accessible Communication.” We want you to know that we are on your side. We also understand that the consumer has a larger voice than ever before and they are not afraid to speak up. Several years ago, we began investigating the negativity about us on the Web and even joined a corporate advocacy program through a website that posts negative blogs. That investigation opened our eyes to the serious issues we face and how we are perceived in the online consumer world. What we uncovered was that only 30% of the nearly 100 complaints were from actual consumers. The majority of the blog postings came from competitors and people who have never submitted an idea to us. Finally, the vast majority of complaints were from inventors who did not want to do anything to help develop their inventions, but expected us to do this work for free. We honored our pledge on that site and worked hard to satisfy all clients who filed a complaint.

This new independent department called “Consumer Advocacy” is set up within the company to address every concern that a client may have with our company. This department, headed by the Chief Consumer Advocate, also includes vice presidents and our in-house attorney. Every issue is investigated, a fair and reasonable solution is determined, and then we respond back to the client in the form of a letter, email, or phone call. The department’s email address is CCA@davisoninvents.com

This year’s new initiative is a challenging one as there are many new complaint websites and fewer requirements from complainers to provide accurate contact information that would help us to remedy situations. For this reason we are providing a reward for anyone who can help us separate the factual complaints from the bogus ones. To begin, if you need to communicate a concern to us, please email us at CCA@davisoninvents.com; this will ensure that your voice is heard. Next, we are offering a $300 reward for evidence that proves that a bogus complaint was submitted by a competitor or person not affiliated with us. All current and former employees are bound by an ethics and confidentiality agreement so we will pay $200 for evidence that exposes a former employee for slanderous and false statements intended to mislead and misinform customers. Finally, a payment of $100 will be given for contact information that leads us to a false statement(s) made by a former client. We have been in business for 20 years and we have more products on the shelf than any of our competitors. We appreciate everyone who encouraged us to take this stand to protect our name. Lastly, we strongly encourage all former, current and future clients to view our Frequently Asked Questions page on our website so you can get the answers directly from us.
Thank you,

Davison Chief Consumer Advocate

Posted by: Chief Consumer Advocate at June 25, 2010 6:44 AM

Oh bugger I'm starting to get seriously worried now. I was contacted by a guy called Mark Strawins a couple of weeks ago who talked about the "Very good prospect of my idea being a commercial success". After a couple of conversations I was confident enough to send in some photos of my product on the basis of another conversation to "further the product" but I stated that I wasn't in a position to come up immediately with the £795 start up fee (the only fees I was ever going to pay according to Mr Strawins). Half an hour before the arranged conversation I received an Email stating that our meeting had been schedualed for another time due to "a family emergency" which of course I was happy to abide with under the circumstances. The time came for our rearranged meeting and I heard nothing. Two days later I sent an Email asking if Davison want to continue with me or not and still nothing. I sent one more Email and yet again nothing. I am now extremely concerned as they have a working product of mine plus pictures and have seemingly blanked me presumably after I said that I couldn't immediately come up with the $795 fee.

Posted by: Paul Darrow at December 12, 2010 10:32 AM