Court Slams Invention Scheme Marketers

The operators of a invention promotion scheme have been hit with a $61 million judgment, the aggregate harm to consumers, the Federal Trade Commission announced last week.

The defendants had violated the terms of a 1998 order, and in May were found in contempt of court. The parties included the company Patent & Trademark Institute, and individuals Daniel Gumpel, Darrell Mormando and Greg Wilson.

An additional defendant, Michael Fleisher, was ordered to share the financial liability, although he did not sign the original order. However, the court found that “he knew about it and was subject to it,” according to the FTC.

Gumpel, Mormando and Wilson were in July permanently banned from marketing invention promotion services, the FTC said.

According to the Aug. 24 monetary ruling by U.S. Judge Gerald Bruce Lee, the core defendants were barred by the 1998 order from misrepresenting the services they offered to amateur inventors.

However, they revived their business under the PTI name, Lee wrote. He called that firm “a successor corporation to the prior corporate defendants.”

According to a January filing by the FTC, consumers were invited to submit information about their inventions through the www.inventorshelpline.com Web site.

Those who did were called by a PTI telemarketer and told that the invention had passed an initial screening process and been “approved,” the FTC alleged.

The victim was then urged to purchase a Phase I assessment for up to $1,295, the FTC continued. This would lead the selling of Phase II services, ranging in cost from $5,000 to $40,000, the commission said.

In one such call, a consumer named Mark Huxhold was told that “his invention — a plastic holder for flowers or flats to be placed on grave marketers — could make ‘half a million a year,’ the FTC said.

Lee declared PTI and Gumpel “jointly and severally liable” for the $61 million judgment, and Fleisher, Mormando and Wilson liable for over $59 million of it.

The judge stated that the FTC could execute the judgment on all the defendants except Wilson. He is protected unless “his bankruptcy case is withdrawn, dismissed or otherwise closed,” Lee wrote.

The corporate defendants in the case also include International Product Design Inc., the Innovation Center Inc., National Idea Center and Invention Consultants USA Inc.

The case is on file with the U.S. District Court for the Eastern District of Virginia, Alexandria Division.