Inventors tell of dashed dreams
The wannabe inventor liked to scratch ideas on a notepad that he always kept in his shirt pocket. His latest was the "Clamper," a device that would keep a ladder snug against a pole.
When Roosevelt Allen Jr. of Fairfield, Ala., saw a magazine ad for the Oakmont firm Davison & Associates, he thought he finally had found help to keep yet another of his ideas from becoming stillborn. The ad promised help to develop and market fledgling ideas.
He initially paid $545 to Davison & Associates to develop his idea further. When the firm's officials told him they had secured an interested manufacturer, Allen mortgaged his home to pay another $12,450 so that Davison & Associates could develop a sample product to show the manufacturer.
Allen's dreams, however, now are dashed.
He counts himself as a victim -- one of thousands allegedly defrauded by Davison & Associates, according to a lawsuit filed in U.S. District Court in Pittsburgh.
There are signs the 8-year civil case may be coming to a close.
Last month, U.S. Magistrate Judge Ila Sensenich sent the case back to U.S. District Judge Gary Lancaster for trial. She noted in her order that the parties are engaged in serious settlement negotiations.
Davison & Associates is part of a $200-a-million-a-year industry known as invention promotion. As many as 25,000 would-be inventors do business annually with such companies, hoping their one good idea will turn into millions, according to industry estimates. Instead, virtually everyone ends up poorer rather than richer, say federal regulators and industry advocates.
The Federal Trade Commission contends that Davison & Associates continues to violate a 1997 court order barring the firm from making false statements to customers about its ability to market inventions. The FTC says the firm still is making misleading statements to customers about its marketing success.
The FTC's lawsuit, filed in 1997, alleges that Davison & Associates is engaging in a big scam. The slick sales talk, glossy brochures and professional resumes hide a con game, the federal agency contends. The firm charges hefty fees for so-called expertise that is actually worthless, the agency claims.
Davison & Associates brings in big money, but not for inventors. Instead, the firm is the one raking in the money, according to the documents.
The firm's financial records show that hopeful inventors paid more than $7.2 million from 1994-97. In return, Davison & Associates produced $30,000 for inventors, the commission states. More recent financial records were not available.
The lawsuit seeks refunds for thousands of customers.
Davison & Associates had hired former U.S. Attorney Thomas Corbett to defend the firm in court, but Corbett will be sworn in next month as Pennsylvania's attorney general. The case now is being handled by Corbett's former co-counsel, George Crompton, who declined comment.
George Davison III, the founder of the firm and chief executive officer, also declined comment.
In court filings, he said he runs a legitimate business. In a sworn court statement, he stated his firm has produced profits for 3 percent of the products it marketed. He maintains that the inventors know that even with the company's help, their chances of success are slim.
Invention success depends a lot on luck, Davison testified in court proceedings.
"However, I am personally aware that for many of our clients, the development of their product -- and, for some, the licensing of their product -- is a significant reward in itself," Davison said.
The FTC said Davison & Associates entices customers through misleading statements into paying fees, encouraging them to borrow money. Then, after thousands of dollars are spent, the reality slowly sinks in that the product never will be marketed properly, the commission alleges.
"Davison is thus not only deceptive, he's ruthless," the agency contends in court filings.
Company sales associates were given scripted presentations to close deals with investors. One memo instructed them to tell potential customers: "The guarantee is that we will have the resources to sit down face to face with the CEO's of these companies. They know us and trust us."
In reality, the firm sends out unsolicited mass mailings touting proposed inventions to companies across the nation. Virtually all the mailings get tossed in the trash, the FTC states in court filings.
Frank Pilat Jr., 29, a construction worker from West Reading, Berks County, said he thought Davison & Associates would pave his way to riches. He answered the firm's ad, hoping the company would help him market his idea to outfit pickups with scales to weigh loads.
He agreed to pay Davison & Associates $495 for research. When the firm's salesman told him manufacturers were interested, he agreed to pay another $2,950 to do a mock-up of his proposal for interested companies, Pilat said in court documents. He contends in a sworn statement that a salesman told him in 1999 that an interested manufacturer was pricing his product in Germany.
"Then, all of a sudden, a couple months went by, and the guy told me everything fell through," Pilat said in a recent interview. "They get you all happy and excited -- thinking you'll make some bucks and have a comfortable life -- but it's just a scam."
Richard Maulsby, director of the office of public affairs for the U.S. patent and trademark office, said that people who come up with an invention -- no matter how seemingly ridiculous -- have hopes and dreams and are vulnerable.
"People love their inventions," he said. "They are susceptible to somebody saying their invention is the greatest thing since sliced bread. People will turn over their life savings. They hope the companies will help them get a patent and help them market their invention."
George Davison III, founder and chief executive officer of Davison & Associates, is a graduate of Allegheny College in Meadville and a former employee of Carnegie Tar & Asphalt. He tells his prospective customers he attended the prestigious Wharton College of Business at the University of Pennsylvania, according to court documents. His stint there, though, was a two-week course that he took after forming his company, he later said in sworn testimony.
His lawyers in court filings deny that the purpose of Davison & Associates is to generate profits for inventors.
"Although profits are highly desirable, many consumers are motivated by intangible factors, including the desire to see their idea made into an actual product, the desire to work with professional designers to develop their raw idea into a more polished product and opportunities relating to their idea," those filings state.
