Court Issues Temporary Restraining Order Against Invention Patenting and Promotion Company for Unfair and Deceptive Trade Practices

Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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There are many businesses focused on helping inventors develop and monetize their ideas.  There are companies that, for instance, help people seek patents on their inventions, license their inventions, turn their ideas into tangible products, and promote those products.  World Patent Marketing in Florida bills itself as one of those companies.  But according to a complaint filed by the Federal Trade Commission this month, World Patent Marketing is in fact “an invention-promotion scam that has bilked thousands of consumers out of millions of dollars.”  The FTC charges World Patent Marketing with committing unfair and deceptive trade practices in violation of Section 5(a) of the FTC Act. On March 8, the Southern District of Florida found that the FTC was likely to succeed in proving this charge and issued a temporary restraining order.

The Company’s Marketing Claims

The FTC alleges that when consumers first contact World Patent Marketing and describe their invention, salespeople “almost invariably tell consumers that they have a great idea” but that, in order to continue the process, consumers must purchase a “Global Invention Royalty Analysis” or similar report.  These reports “invariably conclude that consumers’ ideas are patentable and marketable.”  The salespeople then typically pitch packages for “varying levels of patent protection and invention-promotion services.”  According to the complaint, World Patent Marketing advertises that it has “successfully marketed the inventions of many of their customers and secured licensing or marketing agreements for them,” and salespeople “sometimes reference companies lining up to license or purchase consumers’ inventions.”  World Patent Marketing’s advertising materials also allegedly include various “success stories” and favorable testimonials.

The FTC Allegations

According to the FTC, however, the reality of the situation is much different: “virtually none of [World Patent Marketing’s] customers [have] made money, or even recouped his or her investments, through [World Patent Marketing’s] purported patenting and invention-promotion services.”  The FTC goes on to allege that World Patent Marketing has “not actually secured third-party licensing or manufacturing agreements for their customers, and their customers have not received income from patent royalties or sales of products as a result of [World Patent Marketing’s] work on their behalf.”

The FTC further alleges that World Patent Marketing and its lawyers “threaten[] consumers with lawsuits and even criminal charges and imprisonment” if they complain about the services they receive.  The FTC cites one instance where World Patent Marketing’s lawyer told a customer that “her conduct of seeking a refund constitutes extortion under Florida law.”

The ex parte temporary restraining order issued against World Patent Marketing prohibits it from, among other things, representing that its services are likely to result in financial gain or that the company has successfully marketed the ideas of its customers.  The order also prohibits World Patent Marketing from threatening or intimidating anyone over their complaints about the company.  Finally, the court froze the company’s assets and appointed a temporary receiver to prevent the company from dissipating its assets.

The case, Federal Trade Commission v. World Patent Marketing, Inc., 1:17-cv-20848 (S.D. Fla.), has just begun, and World Patent Marketing has not yet responded to the FTC’s allegations.  This case nonetheless serves as a paradigmatic example of the types of conduct the FTC considers unfair and deceptive.

Lookout for Trademark Scams, Too

Similar misrepresentations and deceptive sales tactics occur in the trademark arena as well, and IP owners in general should be on the lookout for possible scams.  For instance, a number of unscrupulous entities with official-sounding names distribute invoices and other documents soliciting fees for various services that are unnecessary (such as “recordation” in a proprietary trademark database) or premature (such as trademark maintenance filings).  The real USPTO maintains a website that lists many of these companies, such as the “U.S. Trademark Compliance Office” and the “Patent & Trademark Agency,” and provides advice on how to spot solicitations disguised as official documents.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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