Idea Research and Development, Inc

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IN THE MATTER OF IDEA RESEARCH AND DEVELOPMENT, lnc., ET AL. CONSENT ORDER, ETC., INJ EGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 90:12. Complaint, May 6: 1975 - Decision, ,Ian. 11. 1977 Consent order requiring a Mesquite, Tex., idea promotion firm, among other things to cease misrepresenting the nature and value of its services; misrepresenting its ability to successfully promote ideas, inventions, or products; to its clients. Further. respondents are required to disclose, in contracts and promotional material, the lack of confidentiality afforded its clients' ideas. the ramifications of contracting with respondents prior to contacting an independent patent attorney, and the amount of monies earned by previous clients through respondents' endeavors. The order additionally requires a ten day cooling-off period before the ' execution of contracts and prohibits respondents from accepting any fee other than a percentage of royalties resulting from its effort.

Appearances For the Commission: Paul W. Turley, John J. Hemrick and Richard H Gateley.

For the respondents: Melvyn Carson Bruder and Jack Kanz, Dallas,Tex. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believ!" that Idea Research and Development, Inc., a corporation, and Kells BlakelyShanks amiJack Earnest Trout, individually and as offcers of said corporation, and Walter Glenn Ford, individually and as an employee of said corporation, hereinafter sometimes referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would he in the public interest, hereby issues its complaint stating its charges in that respect as follows:

1. DEFINITIONS PARAGRAPH L For purposes of this complaint the foil owing definitions shaii apply:

A. "Idea" shaii mean any idea, invention or product; Complaint 89 F.

entered into an B. "Client" shall mean any party that has agreement with respondents for the "promotion" of an "idea; C. "Financial gain" shall mean an amount of money greater than the amount of money paid by a "client" to respondents. D. . ' Promotion" shall mean the evaluation, development, manufactiirfng, marketing or otherwise contributing to the success or growth of an "idea.

II. RESPONDENTS PAR. 2. Respondent Idea Research and Development, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, with its principal office and place of business located at 3318 Interstate 30 East, Mesquite, Texas. Respondent Kells Blakely Shanks is an individual and an offcer of corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. His address is 10347 Plummer, Dallas, Texas.

Respondent Jack Earnest Trout is an individual and an offcer of corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent including the acts arid practices hereinafter set forth. His address is 9033 Thorn ton Freeway East, Mesquite, Texas. Respondent Walter Glenn Ford is an individual and an employee of corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. His address is 821 Vinecrest Lane, Richardson, Texas.

III. NATURE OF TRADE AND COMMERCE PAR. 3. Respondents are now and have been engaged in the advertising, offering for sale and sale of contracts for future services in connection with the evaluation, development, manufacturing and marketing of ideas. The consideration required by respondents is and has been generally between $750.00 and $1, 200. 00. IV. JURISDICTION PAR. 4. In the course and conduct of their business as aforesaid, respondents now cause, and have caused, their advertising materials, contracts, and various business papers to be transmitted through the United States mail and other interstate instrumentalities from their place of business in the State of Texas to their places of business IDEA RESEARCH AND DEVELOPMENT INC., ET AL. Complaint agents, representatives, employees, clients and prospective clients in various other States of the United States and the District of CGlum and now maintain anrloperate and have maintained and operated: places of business and have made substantial sales of their agreements to clients in various States of the United States, and maintain and at all times mentioned herein have maintainea,. a substantial course oftrade in or affecting commerce, as defined in the Federal Trade Commission Act.

PAR. 5. In the course and conduct oftheir aforesaid business, and at all times mentioned herein, respondents are, and have been, in substantial competition, in commerce, with corporations, firms and individuals offering contracts for future services in connection with the evaluation, development, manufacturing and marketing of ideas. V. ACTS AND PRACTICES PAR. 6. In the further course and conduct of their aforesaid business, respondents now cause and have caused the dissemination of advertisements in various publications of general circulation, the broadcast of radio and television advertisements, the distribution of advertising materials to members of the public, and are now making and have made sales presentations by means of oral and written statements. -By and through such means, respondents have made and area.makingRespondentsrepresentationspossess thethat:ability to recognize ideas which may result in financial gains;

B. Respondents possess engineering and marketing expertise necessary for the development and promotion of ideas. C. Hespondents possess adequate knowledge to provide legal protection for clients' ideas. D. Respondents have the ability to obtaI!'f manufilcturi!)K COn, tracts for their clients; .

E. Respondents have the ability to obtain financial gains for their clients, including but not limited to potential income to be derived by their clients from sales, licensing or royalty agreements. PAR. 7. By and through the statements and representations alleged in Paragraph 6 herein, respondents have represented and are now representing, directly or by implication, that clients wil have their ideas reviewed and evaluated by qualified and appropriately licensed persons; that clients receive legal protection for their ideas; that clients' ideas wil be manufactured and marketed; and as a result of contracting with respondents, clients will receive a financial gain. PAR. 8. In truth and in fact, few, if any, of respondents' clients have their ideas reviewed and evaluated by qualified and appropriately Complaint 89 F.T.C. licensed persons; receive legal protection for their ideas; have their ideas manufactured or marketed; or receive a financial gain as a result of contracting with respondents. Therefore, the acts and practices alleged in Paragraph 7 herein are deceptive, false, misleading and unfair.

PAR. 9. In the further course and conduct of their aforesaid business, respondents have failed to protect clients' investments and have failed to disclose facts concerning the probability that such clients will receive a financial gain as a result of contracting with respondents.

Since few, if any, of respondents' clients receive or have received financial gains as a result of contracting with respondents, respondents know or should have known that their clients' investments are unprotected and that their clients will not obtain financial gains. Therefore, respondents, by inducing their clients to pay substantial sums of money without adequate protection for such clients' investments and without a disclosure of facts concerning the probability of a client receiving a financial gain which if known to certain prospective clients, would likely affect their decision of whether to execute contracts with respondents, are engaging in unfair acts or practices constituting a continuing violation of Section 5 of the Federal Trade Commission Act (15. l:. c. 15). PAR. 10. In the further course and conduct of their aforesaid business, respondents have represented, directly or indirectly, that their clients' ideas have adequate legal protection. Respondents have failed to disclose to their clients the degree of legal protection being afforded the clients' ideas and the risk involved in contracting with respondents concerning potential patent rights. Such disclosures include, but are not limited to:

A. Respondents fail to disclose that they afford no legal protection recognized by the United States Patent Office. Respondents fail to disclose that the ordinary course of conduct of their business may be construed by the United States Patent Office to constitute publication of the clients' idea. Respondents fail to disclose that publication of an unprotected idea for a period of one year or more may constitute a waiver of any patentable rights the client may have.

D. Respondents fail to disclose that their clients must maintain the confidentiality of their ideas.

Respondents' failure to disclose such consequences in language calculated to be readily understood by their clients is a failure to disclose material facts which if known to prospective clients would likely affect their decision of whether to execute contracts with IDEA RESEARCH AND DEVELOPMENT,INC , ET AL. ;SD Decision and Order respondents. Respondents' aforesaid failure to disclose material facts is an unfair act or practice in violation of Section 5 of the Federal Trade Commission Act.

AR. t. Respondents as aforesaid have been and are now failing to disclose material facts while using other false, misleading, deceptive or unfair acts or practices, to induce persons to pay over to respondents substantial sums of money for contracts whose value to the said persons for services by respondents was and is virtually worthless. Respondents have received the said sums and have failed to offer to refund and refuse to refund such money to such persons. The use by respondents of the aforesaid practices and their continued retention of the said sums, as aforesaid, is an unfair act or practice and a continuing violation of Section 5 of the Federal Trade Commission Act (15 U. c. 45).

PAR. 12. The use by respondents of the aforementioned unfair, false, misleading and deceptive acts, practices, statements or repre. sentations has had and now has, a capacity and tendency to mislead and deceive a substantial portion of the purchasing public into erroneous and mistaken beliefs and into the execution of contracts with respondents by reason of said erroneous and mistaken beliefs. PAR. 13. The aforementioned acts and practices, as herein alleged have caused and are now causing substantial pecuniary losses to persons contracting with respondents and are all to the prejudice and injury of the public and respondents' competitors and have constitut. , and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of Section 5 ofthe Federal Trade Commission Act. DECISION AND ORDER The Commission having issued its comp1ainLoIJ May 6 1975 charging respondents named in the caption hereof with violation of . the Federal Trade Commission Act, and respondents having been served with a copy ofthat complaint; and The Commission having withdrawn the matter from adjudication pursuant to Section 3.25 ofthe Commission s Rules of Practice for the purpose of negotiating a settlement by entry of a consent order; and Respondents and counsel for the complaint having thereafter executed an agreement containing a consent order, an admission by respondents of aJl jurisdictional facts set forth in the complaint, and waivers and an understanding that the agreement does not affect the Commission 8 right to seek consumer redress and provisions as required hy the Commission s Hules; and The Commission having thereafter considered the aforesaid agree. FEm;RAL TRADE COMMISSION DECISIONS Decision and. . Order 89 F. ment and having determined that it provides an adequate basis for appropriate disposition of this proceeding, and having accepted said agreement, and the agreement containing consent order having placed on the public record .fOrii per.iodof sixty (60) days, and having . duly c;nsidered the comments filed thereafter pursuant to Section 25(d) of its Rules, now, in further conformity with the procedure prescribed in its Rules, the following findings, are made, and the following order is entered:

Respondents have waived, without admitting, any rights to contest in the administrative proceeding the findings of fact and conclusions of law made herein. It is expressly provided that said findings shall not be conclusive in any action which may be brought under Section 19(a)(2) of the Federal Trade Commission Act, as amended' (15 57b(a)(2)).

FINDINGS OF FACT 1. Respondent Idea Research and Development, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, with its principal office and place of business located at 3318 Interstate 30 East, Mesquite, Texas. 2. Respondent Kells Blakely Shanks is an individual and an offcer of corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. His address is P. O. Box 28502 Dallas, Texas.

3. Respondent Jack Earnest Trout is an individual and an officer of corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent includjng the acts .and practices hereinafter set forth. His address is 1427 L;;;;cef6t;Borger Texas.

4. Respondent Walter Glenn Ford is an individual and is a former employee of corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. His address is 2202 Delwin Circle, Kileen, Texas.

5. Respondents are now and have been engaged in the advertising, offering for sale and sale of contracts for future services in connection with the evaluation, development, manufacturing and marketing of ideas. The consideration required by respondents is and has been generally between $750 and $1 200. 6. In the course and conduct of their business as aforesaid, respondents now cause, and have caused, their advertising materials, 'on tracts, and various business papers to be transmitted through the , , IDEA Ims;;ARCH AND mNELOPMENT,ING ET AL Decision and Order United States mail and other interstate instrumentalities from their place of business in the State of Texas to their places of business age.ts, rep,.esentatives, employee clients al1dprospective clients in various .other States of the ' United States and the District Columbia, and now maintain and operate and have maintained and operated, places of business and have made substantial sales of their agreements to clients in various States of the United States, and maintain and at all times mentioned herein have maintained, a substantial course oftracle in or affecting commerce, as defined in the Federal Trade Commission Act, 7, In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents are, and have been, in sllbstantial competition, in commerce, with corporations, firms and iridividuals offering contracts for future services in connection with the evaluation, development, manufacturing and marketing of ideas. 8, In the further course and conduct of their aforesaid business respondents now cause and have caused the dissemination of advertisements in various publications of general circulation, the broadcast of radio and television advertisements, the distribution of advertising materials to members of the public, and are now making and have made sales presentations by means of oral and written statements, By and through such means, respondents have made and are making representations that:

A, Respondents possess the ability to recognize ideas which may result in financial gains;

B. Respondents possess engineering and marketing expertise necessary for the development and promotion of ideas; Respondents possess adequate knowledge, to 'provide legal protection for clients ' ideas;

D. Respondents have the ability to obtain manufacturing con, tracts for their clients;

Respondents have the ability to obtain financial gains for their clients, including hut not limited to potential income to be derived by their clients from sales, licensing or royalty agreements. 9, By and through the statements and representations alleged in Paragraph 8 herein, respondents have represented and are now representing, directly or by implication, that clients will have their ideas reviewed and evaluated by qualified and appropriately licensed persons; that clients receive legal protection for their ideas; that clients' ideas will be manufactured and marketed; and as a result of contracting with respondents, clients will receive a financial gain. 10, In truth and in fact, few, if any, of respondents' clients have their ideas reviewed and evaluated by qualified and appropriately Decision and Order 89 FTC licensed persons; receive legal protection for their ideas; have their ideas manufac ured or marketed; or receive a financial gain as a result of contracting with respondents.

1l" In the further COUTS';' and cOhduct of their aforesaid business, respondents have failed to protect clients' investments and have failed to disclose facts concerning the probability that such clients will receive a financial gain as a result of contracting with respondents.

12. Since few, if any, of respondents' clients receive or have received financial gains as a result of contracting with respondents respondents know or should have known that their clients' investments are unprotected and that their clients will not obtain financial gains.

13. In the further course and conduct of their aforesaid business, respondents have represented, directly or indirectly, that their clients' ideas have adequate legal protection. Respondents have failed to disclose to their clients the degree of legal protection being afforded the clients' ideas and the risk involved in contracting with respondents concerning potential patent rights. Such disclosures include, but are not limited to:

A. Respondents fail to disclose that they provided no greater protection than that provided by compliance with the document disclosure program of the United States Patent Office. R. Respondents fail to disclose that the ordinary course of conduct of their business may be construed by the United States Patent Office to constitute publication of the clients' idea. C. Respondents fail to disclose that publication of an unprotected idea for a period of one year or more may constitute a waiver of any patentable rights the client may have. c D. Respondents fail to disclose that their clients must maintain the confidentiality oftheir ideas.

14. Respondents' failure to disclose such consequences in language calculated to be readily understood by their clients is a failure to disclose material facts which if known to prospective clients would likely affect their decision of whether to execute contracts with respondents.

15. Respondents as aforesaid have been and are now failing to disclose material facts while using other false, misleading, deceptive or unfair acts or practices, to induce persons to pay over to respondents substantial sums of money for contracts whose value to the said persons for services by respondents was and is virtually worthless. Respondents have received the said sums and have failed to offer to refund and refuse to refund such money to such persons. IDEA RESEARCH AND DEVELOPMENT, INC. , h Decision and Order 16. The use by respondents of the aforementioned unfair, false misleading and deceptive acts, practices, statements or representations has had and now has, capacity and tendency to mislead and deceive. a substantial portion ofthe purchasing public into erroneous and mistaken beliefs and into the execution of contracts with respondents by reason of said errone us and mistaken beliefs. CONCLUSIONS OF LAW 1. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of respondents, and the proceeding is in the public interest.

2. The aforementioned acts and practices have caused and are now causing substantial pecuniary losses to persons contracting with respondents and are alj to the prejudice and injury, of the public and respondents' competitors and have constituted, and now constitute, unfair methods of competition in or affecting commerce and unfair and deceptive acts and practices in or affecting commerce in violation of Section oS of the Federal Trade Commission Act. ORDER Definition., For purposes of this order the following definitions shall apply: A. "Idea" shall mean any idea, invention or product; B. "Client" shall mean any pa"ty that has entered into an agreement with respondents for the "promotion" of an "idea; C. "Financial gain" shall mean an am unr-ofmoneyderived by a client " from a respondent' s "promotion" ofthe client's "idea. D. "Promotion" shall mean the evaluation, development, manufacturing, marketing or otherwise contributing to the success or growth of an "idea.

E. "Future services," shall include any arrangement whereby one party pays or contracts to pay a sum of money in the belief that he may receive, as a result of such arrangement, the delivery Or performance, at least partly in the future, of any service, benefit promotion, sum of money, or similar thing of value; the term shall include, but shall not be limited to, any arrangement whereby one party pays or contracts to pay a sum of money in the belief that he may receive a financial gain as a result of such arrangement. "AL TRADE COMMISSION DECISIONS Decision and Order 89 F. It is ordered, That respondents, Idea Research and Development, Inc., a corporation, and its offcers, and Kells Blakely Shanks and Jack Earnest Trout, individually and as offcers of said corporation and Walter Glenn Ford, individually and as a former employee of said- c5rporation, their successors and assigns. and respondents agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, offering for sale or sale of contracts for future services in the promotion of ideas, or any other future services, in or affecting commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing, directly or indirectly, by any means, th;lt: A. Respondents possess ability in the field of engineering unless they retain a licensed engineer who shall provide a written evaluation of each client' s idea. Respondents shail provide a copy of said evaluation which the client may retain.

B. A client mayor can obtain legal protection for his idea unless respondents retain an attorney or agent licensed by the United States Patent Offce who renders a written opinion on such client's idea. Respondents shall provide a copy of said opinion which the client may retain.

C. Any party mayor wil receive a financial gain as a result of contracting with respondents except ' as allowed by Subparagraphs A and B of Paragraph 4 of this order.

2. Representing, directly or indirectly, by any means, that respondents possess the abilty to promote ideas that wiil or may result in financial gains for their clients. 3. Failing to prominently display the following, notice in two or . more locations in those portions of respondents' business.premises most frequented by prospective clients and in each location' where clients sign contracts or other binding instruments. Such notice shall be considered prominently displayed only if so positioned as to be easily observed and read by respondents' clients and prospective clients:

NOTICE BY PROCEEDING WITHOUT THE ADVICE OF AN INDEPENDENT PATENT ATTORNEY, YOU MA Y LOSE ANY RIGHTS YOU MIGHT IIA VE IN YOUR IDEA, INVENTION OR PRODUCT OR EXPOSE YOURSELF TO A COSTLY PATI';NT INFRINGEMENT LAWSUIT. THEHEFORE, PRIOR TO SIGNING ANY AGREEMENT WITH US YOU SHOULD AND ARE ENCOURAGED TO CONSULT AN INDEPENDENT PATENT ATTOHNEY.

IDEA RESEARCH AND DEVELOPMENT INC., l!' Decision and Order 4. Failing to make the following disclosures on the contract or other binding instrument to be executed by prospective clients. Said disclosures shall be in more conspicuous print than all other hmguag in said instrument, but in no case shall they be smaller than 12 point upper case typec Said. disclosures and instrument shall be delivered to prospective clients at least 10 days prior to the time prospective clients execute said instrument. The disclosures shall be in the following form set off from the text of the instrument by a black border and immediately above the line for the prospective clients' signatures:

NOTICE (A) SINCE WE BEGAN DOING BUISNESS, WE HAVE CONTRACTED TO PROMOTE IIEAS, INVENTIONS, OR PRODUCTS FOR (NumlJr) CLIENTS. SINCE JULY 1 , 1975, WE IIA VE CONTRAGfED WITH (Number) CLIENTS. AS A RESULT OF OUR SERVICES 1. (Number) OF OUR CLIENTS EARNED NOTHING. 2. (Number) OF OUR CLIENTS EARNED $100-$4!J9. 3. (Number) OF OUR CLIENTS EARNED $500-$1000. 4. (Number) OF OUR CLIENTS EARNED OVER $1000. (B) WITHOUT PATENT PROTECTION RECOGNIZED BY THE UNITED STATES PATENT OFFICE, YOU MAY LOSE THE OPPORTUNITY TO OBTAIN FINANCIAL BENEFIT FROM YOUR IDEA. WE DO NOT PROVIDE ANY LEGAL PROTECTION RECOGNIZED BY THE UNITED STATES PAT- ENT OFFICE.

(C) BECAUSE THERE WILL BE NO PATENT PROTECTION FOR YOUR IDEA, SERIOUS CONSEQUENCES COULD RESULT FROM YOUR CON- TRACTING WITH US, INCLUDING, (1) When we disclose information concerning your idea to persons/manufacturers/marketers outside our company, such disclosure may be interpreted by the United States Patent Offce as a "publication of your idea.

(2) "Publication" for a period of one year or ;nare of...idea whichh?g no legal protection rccogni:r..d by the United States Patent Offce will result in the loss of any patentable ri#hts you may have. (D) YOU SHOULD TREAT YOUR IDEA AS A CONFIDENTIAL SUBJECT IN ORDER TO A VOID LOSING ANY PATENT RIGHTS YOU MAY HAVE. (E) BY PROCEEDING WITHOUT THE ADVIC ; OF AN INDEPENDENT PATENT ATTORNEY YOU MAY LOSE ANY RIGHTS YOU MIGHT HAVE IN YOUR IDEA, INVENTION OR PRODUCT OR EXPOSE YOURSELF TO A COSTLY PATENT INFRINGEMENT LAWSUIT. YOU SHOULD AND ARE ENCOURAGED TO CONSULT AN INDEPENDENT PATENT ATTORNEY BEFORE YOU SIGN THIS AGREEMENT (F) TODAY IS (Date) WE CANNOT ASK YOU TO SIGN AN AGREEMENT UNTIL 10 BUSINESS DAYS HAVE ELAPSED WHICH WILL BE ON (Month/Day/Year).

, (Name of Customer), hereby acknowledge receipt of a copy of this agreement on the date specified below.

Decision and Order 89 F. Customer s Signature Date 5. Executing contracts or other agreements with a client prior to expiration of the lO-day period disclosed in accordance with Paragraph,! herein. .

. 6. - Failing to retain executed copies of all disclosures required by Paragraph 4 of this order for a period of three (3) years after such disclosure is maderegardless of whether prospective clients ultimately execute contracts. Respondents shall make accurate statistical disclosures required by this paragraph and maintain records for a period of five (5) years suffcient to verify the accuracy of each disclosure. Accurate disclosures, given without comment, as required by Paragraph 4 of this order, shall not be deemed a violation of Paragraph 1 of this order.

7. Failng, in all pamphlets, brochures and other promotional materials to make the following disclosures in the manner and form provided for herein.

A. In all printed advertisements, the notice shail be conspicuously placed in print at least as large as the largest print in the advertising material other than respondent's name and shail state: (Number) % of our clients have earned at least $100 as a result of our efforts to promote their ideas.

B. In all advertisements broadcast by radio, or television, the above-required notice shail be read at the end ofthe advertisement a rate of speed at least as slow as the slowest part of the advertisement.

e. At the time respondents submit advertising to any newspaper or other written medium, they shail provide a copy oLthej:Ollowing .. notice to each such medium:

NOTICE (Name of Respondent) has entered into a Consent Agreement with the Federal Trade Commission. A copy of the Commission News Release is available from (Name of Respondent) upon request.

D. At the time respondents submit advertising to any ractio television station, they shall provide a copy ofthe following notice to each such station:

NOTICE (Name of Respondent) has entered into a Consent Agreement with the Federa! IDEA RESEARCH AND DEVELOPMENT,INC.. ET AL. Decision and Order Trade Commission. A copy of the news release is available on request. Your attention is directed to an ageement between the Federal Trade Commission and the Federal Communications Commission dated April 27 1972. . 8. F9'filing to maintain for a period of three (3) years after any of their advertisements are disseminated:

(A) records disclosing the date or dates each such advertisement was published;

(B) records disclosing the name and address of the newspapers, other publications or broadcast media disseminating said advertisement; and (C) copies or scripts of all of their advertisements published or disseminated by any media.

9. Failng to utilze one written contract or other binding instrument which shall constitute the entire agreement between the parties. In addition to the disclosures required under I'aragraph 4 herein each such instrument shall contain the following provision: (Name or Respondent) agrees to present to the client a11 materials due to the client pertaining to the promotion of said client' s idea within 90 days of the date this agreement is executed, and it is hereby further agreed that time is of the essence. If such materials are not presented to the client within the 90 day period it is hereby mutually agreed between (Name of Respondent) and the client whose signature appears below that this agreement is rescinded in its entirety. 10. It is further ordered, That respondents cease and desist from: A. Including in any contract or other document any waiver, limitation or condition on the right of a client to rescind an agreement under any provision of this order. B. Misrepresenting the right of a client to rescind an agreement under any provision of this order or any applicable statute or regulation.

C. Making any representations or takifig-an)', ,,ction which is inconsistent with or detracts from the effectiveness of this oraer. 11. It is further ordered, That respondents shall make all disclosures required by this order accurately, making such disclosures or copies thereof available to the Federal Trade Commission on request, and comply with all contract provisions required by this order. 12. , further ordered. That neither the corporate respondent nor the individual respondents engage in any course of conduct which contravenes the rights of clients or prospective clients provided by this order.

13. It is further ordered, That respondents. upon receipt of a complaint from a client alleging facts that indicate this order may have been violated, rescind the contract where respondents determine, after a good faith investigation, that one or more of the . _ .. Decision and Order 89 F. paragraphs of this order may have been violated in connection with such client' s transaction with respondents. 14. It 'furtherordered:

A. That respondents deliver, by hand Or by certified mail, a copy of this prder to each of their present or future salesmen, independent brok, employees or any other person who sells or promotes the sale of respondents' contracts;

B. That respondents provide each person so described in subparagraph A above with a form returnable to respondents, clearly stating an intention to conform sales practices to the requirements of this order and retain such form for a period ofthree (3) years after it is executed by said persons;

C. That respondents inform each person described in sub-paragraph A above that respondents shall not use any such person, or the services of any such person, until such person agrees to and files notice with respondents to be bound by the provisions contained in this order;

D. That in the event such person will not agree to fie such notice with respondents and be bound by the provisions ' of this order respondents shall not use such person, or the services of such person; E. That respondents institute a program of continuing surveillance adequate to reveal whether the sales practices of each of said persons described in sub-paragraph A conform to the requirements of this order; and F. That respondents discontinue dealing with any person described in sub-paragraph A of this order who engages in the acts or practices prohibited by this order.

15. It is further ordered, That any respondent may accept compensation from a client for the promotion of theclienr.. idea only as a percentage of royalties or other financial gain derived through a respondent' s efforts. A respondent may not accept any other fee or monetary consideration from a client.

16. It is further ordered, That no respondent sell, lease, exchange or otherwise alienate a client's idea or disclose a client's name address, telephone number or other personal data to any party which wil or may request such client to pay a fee or other monetary consideration for the promotion ofthat client' s idea. I? It is further ordered, That in the event the Federal Trade Commission promulgates a Trade Regulation Rule applicable respondents' business that this order shall be deemed modified to the extent it contravenes said Rule.

18. It further ordered, That in the event that corporate respondent merges with another corporation or transfers all or a . . ..

IDEA It.t''.crtuvu .

Decision and Order substantial part of its business, respondents shall require said successor or transferee to fie within thirty (30) days with the Commission a written agreement to be bound by the terms of this order; provided that if respondents wish to present to the Commission !lny reason why said order should not apply in its present form to said successor or transferee, they' shall . submit to. the Commission written statement setting forth said reasons prior to the succession or transfer.

19. It is further ordered, That the individual respondents named herein pramptly natify the Cammissian af the discantinuance af their emplayment with Idea Research & Develapment, Inc., and af their affiiatian with a new business ar emplayment. In additian, the individual respondents named herein shall pramptly natify the Cammissian af their affiiatian with a new business ar emplayment whase principal activities include the advertising, offering far sale ar sale af can tracts far future services and their affiiatian-with a new business ar emplayment in which their awn duties and respansibil. ties invalve the advertising, offering far sale ar sale af cantracts far future services in the promotion of ideas, or any other future services. Such notice shall include respondents' current business address and a statement as to' the nature af the business ar emplayment in which they are engaged as well as a descriptian af their duties and respansibilities.

20. It is further ordered, That respondents natify the Cammissian at least thirty (30) days priar to any proposed change in the carparate respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries ar any other change in the corporation which may affect compliance obligatians arising aut afthe order. 21. It is further ordered, That each respondent shall, within sixty (60) days after service af this order upon it, fie with the Commission a report in writing setting forth in detail tlie m,mner. and formof its compliance with the order to' cease and desist. ) Initial Dccision 89 F.