35 U.S.C. - Written Description

What you get for the money…

…Is apparently not much, according to the district court for the Western District of Pennsylvania in FTC v. Davison Assoc. (via invent blog). Davison, if you remember, is one of those invention submission corporations. Well, what most people have long suspected is now “true” according to the court: it’s a rip off. The court ordered a permanent injunction and $26 million in equitable relief (interestingly, the court suggested this could have been more but the FTC failed to provide evidence of earnings for years other than 2004).

From the findings of fact, the scheme works in “two” parts. * There were slightly different approaches before and after the FTC filed its complaint. *

First, an inventor signs a “Pre-inventegration” agreement for the seemingly cheap price of $700. The $700 buys a “portfolio” containing “product research, a patent design search, and a provisional patent application”. The inventor then signs a “Contigency” agreement costing 10% of future licensing. It requires, among other things, a “virtual reality presentation” before any further work will continue.

This takes us to step two. Once the inventor signs the Contingency Agreement, Davison conveniently offers to produce the virtual reality presentation. This costs money, of course. You can pay by the hour or simply pay the flat rate, between $8,000 and $14,000, and another cut of future royalties.

There were a number of interesting findings. First, Davison approach here is to make it look like they are invested equally in the invention by using royalties. The problem, however (but unsurprisingly), is that the court found fewer than 1% of all revenue to Davison was by way of royalties. Second, most of the claims were simply “hiding the ball”. For example, since the Contingency Agreement was royalties only, a $1 return was a “profit”—of course, ignoring the very expensive “other services”.

After looking at a number of things, the court concluded several things:

1. inventors were lead to believe that there was “a reasonably good chance of realizing financial gain”
2. inventors were lead to believe that “some or more” of Davison’s client’s products had been successful and profitable;
3. that Davison did not have the “vast network of corporations with whom they have ongoing, special relationships” they claimed to have;
4. that Davison lead inventors to believe all the services were necessary for licensing their inventions to corporations; and
5. that Davison was not the expert in patentability of consumer inventions they claimed to be

Though, the court rejected the argument that Davison “falsely represented” had helped “many” customers.

posted by Mike @ 12:50 PM