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O'Hara invention promoter, FTC settle case for $10.7 million

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Monday, July 14, 2008

Novice inventors who say they paid thousands of dollars to an O'Hara company that dazzled them with talk of marketing their gadgets and delivered little in the end finally stand to recoup part of their money -- though it may be less than expected.

U.S. District Judge Gary L. Lancaster signed an order approving a settlement that ends 11 years of litigation between the Federal Trade Commission and Davison & Associates Inc.

Under the final terms, the invention promoter will pay $10.7 million in cash, real estate and investment assets to the FTC to settle the case.

The FTC claims the company misrepresented its services and rate of success in growing clients' ideas into actual products for sale.

The $10.7 million represents less than half Lancaster's original judgment against Davison. In a March 17, 2006, decision, he ordered Davison to repay $26 million to clients it represented going back to 1989, when CEO George M. Davison founded the company.

John Mendenhall, regional director of the FTC's Cleveland office, which handled the case, said this morning that while the money available "will not cover all the injury from the case, it will be fairly significant." The FTC now will "identify victims" of the company in order to distribute the money, he said.

The FTC's case against Davison had been among its "Project Mousetrap" actions against invention promoters, but unlike most of the cases it wasn't settled out of court. A three-week trial was held in 2005.

Davison noted in a statement this morning that it opted to settle the dispute, rather than continue to pursue an appeal of Lancaster's decision.

The company noted it has added risk disclosure statements to its marketing material to emphasize that "new product design is a high-risk venture." Lancaster earlier specified cautions for Davison to use in documents it sends to potential clients.

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