FTC alleges company offered bogus promotion and protection services to hopeful inventors
Freeze!
In late August, the Southern District of Florida ordered a preliminary injunction against World Patent Marketing (WPM), a patenting and invention-promotion service provider. The injunction, issued with the expectation that the Federal Trade Commission's (FTC's) case against WPM would be successful, forbids the company from misrepresenting its products or services and from making threats against people who complain about the company.
The injunction is the most recent development in the FTC's case against WPM, which it launched in March.
Great Idea
That original complaint accused the company of running a promotion scam targeting inventors that "bilked thousands of consumers out of millions of dollars." The suit alleges that WPM made promises to aspiring inventors that their service would create a patent for the inventors' product, and that accompanying agreements for manufacturing and licensing would help the inventors make money off their creations. Specifically, the FTC claimed, WPM devised marketing materials that created a false impression that the company had actually helped other inventors in the past – when the company had no track record of success in doing so.
The FTC alleged that inventors that made it onto WPM's radar would be contacted by company representatives pushing a patent analysis product for about $1,200. The analysis was invariably positive; later steps in the alleged scam included patent protection and promotional service packages priced at as much as $60,000. The services themselves, the commission alleges, are bogus.
The marketing assault occurred on a wide front, including internet, television, email, telemarketing and standard postal mail advertisements. The website featured profiles of products that the company had supposedly helped develop, and testimonials from the inventors. But the FTC claims that there has been little success with many of these featured products, and the inventor endorsements occurred quite early on in the customers' relationships with WPM – far too early to justify their claims.
Additionally, when clients would threaten complaints about the company's performance, WPM would make a variety of legal threats against them, including promises of extortion and defamation lawsuits.
The Takeaway
The preliminary injunction extends a freeze put on WPM's activities by a temporary restraining order that the FTC obtained shortly after filing the initial complaint.
WPM and its co-defendants argued against the motion, claiming that their business model had changed from analyzing and filing potential patents to developing and marketing the inventors' ideas. Unfortunately for WPM, the court found that the evidence – including an undercover investigation by the commission – indicated that the company continued to offer the same services as before, as well as the same misrepresentations.
The preliminary injunction prohibits misrepresentations, false marketing of services and the suppression of customer complaints, and freezes WPM's assets.
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