InventHelp Likely to Lose Bid to Partially Dismiss Fraud Suit

InventHelp appears unlikely to succeed in its bid to partially dismiss a proposed class lawsuit alleging that it duped aspiring inventors into purchasing services it didn’t and never intended to provide, based on a magistrate’s report and recommendation.

Magistrate Judge Patricia L. Dodge recommended the U.S. District Court for the Western District of Pennsylvania deny InventHelp’s motion to dismiss a count alleging that it and its affiliated entities failed to make disclosures required under the American Inventors Protection Act, Monday.

The plaintiffs adequately alleged that they didn’t receive the mandatory disclosures, and InventHelp’s argument in support of dismissing the omission claim was barred by the doctrine of judicial estoppel, Dodge said.

The doctrine of judicial estoppel enables a court to prohibit a party from taking inconsistent positions in different matters where those inconsistencies could suggest that a court has been misled.

In a separate, but related action, InventHelp won dismissal of some of the plaintiff’s allegations “on the basis that InventHelp and Western InventHelp were separate entities whose AIPA disclosure numbers would be different.”

But now, InventHelp was asking the court “to excuse the lack of disclosures from Western InventHelp” and another related defendant “on the ground that these entities did not have to submit disclosures under the AIPA,” Dodge said.

AIPA requires invention promoters to disclose, among other things, the total number of inventions they’ve evaluated, along with the number of those inventions that have received positive evaluations.

Plaintiffs Geta Miclaus and Vim and Kevin Byrne claim that InventHelp gave them false and misleadingly positive figures to induce them to purchase services agreements costing between $13,500 and $30,000 based on false representations that their proposals were eligible for patents.

If customers are unable to afford the more costly services, the plaintiffs claim that InventHelp directs them to lender Universal Payment Corporation, which the plaintiffs allege is an associated entity with no physical address.

Even if Dodge was willing to entertain InventHelp’s argument that the affiliated entities aren’t subject to the requirements because they don’t hold themselves out as invention promoters, it’s a point the plaintiffs dispute, and it wouldn’t be appropriate to resolve on a motion to dismiss, she said.

Although InventHelp argued that disclosures by affiliate Western InventHelp were “actually disclosures made pursuant to California’s Invention Development Services Contract, not the AIPA,” Dodge similarly said the issue couldn’t be resolved at such an early stage of the litigation.

InventHelp, also known as Invention Submission Corporation, and related defendants are represented by K&L Gates LLP. Plaintiffs are represented by Oxman Law Group, PLLC.

The case is Miclaus v. Invention Submission Corp., W.D. Pa., No. 2:18-cv-01022, report and recommendation 3/8/21.