[Federal Register Volume 61, Number 144 (Thursday, July 25, 1996)]
[Notices]
[Pages 38747-38750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18856]
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FEDERAL TRADE COMMISSION
[File No. 962-3002]
Syncronys Softcorp; Rainer Poertner; Daniel G. Taylor; Wendell
Brown; Proposed Consent Agreement With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair or deceptive acts or practices and unfair methods of
competition, this consent agreement, accepted subject to final
Commission approval, would prohibit, among other things, the Culver
City, California-based computer software manufacturer and three of its
officers from making performance claims about their SoftRAM and
SoftRAM\95\ software programs or about any substantially similar
product unless the claims were true and substantiated. The respondents
are also prohibited from making any claims that a product intended to
improve computer performance had been licensed, endorsed, authorized,
or certified by any person or organization unless those claims were
true. The consent agreement settles allegations that the respondents
misrepresented and/or failed to substantiate the performance of these
two products, which were advertised and promoted for their purported
ability to improve the performance of personal computers using
Microsoft, Inc.'s Windows and Windows 95 programs.
DATES: Comments must be received on or before September 23, 1996.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Michael Bloom, Federal Trade Commission, New York Regional Office, 150
William Street, Suite 1300, New York, NY 10038. (212) 264-1201.
Robin Eichen, Federal Trade Commission, New York Regional Office, 150
William Street, Suite 1300, New York, NY 10038. (212) 264-1250.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission has conducted an investigation of
certain acts and practices of Syncronys Softcorp, a corporation, Rainer
Poertner, Daniel G. Taylor, and Wendell Brown, individually and as
officers of the corporation (``proposed respondents''). Proposed
respondents, having been represented by counsel, are willing to enter
into an agreement containing a consent order resolving the allegations
contained in the draft complaint. Therefore,
It is hereby agreed by and between Syncronys Softcorp, by its duly
authorized officers, and Rainer Poertner, Daniel G. Taylor, and Wendell
Brown, individually and as officers of the corporation, and counsel for
the Federal Trade Commission that:
1.a. Proposed respondent Syncronys Softcorp is a Nevada corporation
with its principal office or place of business at 3958 Ince Boulevard,
Culver City, California 90232.
1.b. Proposed respondent Rainer Poertner is an officer of the
corporate respondent. Individually or in concert with others, he
formulates, directs, or controls the policies, acts, or practices of
the corporation, including the acts or practices alleged in the draft
complaint. His principal office or place of business is the same as
that of Syncronys Softcorp.
1.c. Proposed respondent Daniel G. Taylor is an officer of the
corporate respondent. Individually or in concert with others, he
formulates, directs, or controls the policies, acts, or practices of
the corporation, including the acts or practices alleged in the draft
complaint. His principal office or place of business is the same as
that of Syncronys Softcorp.
[[Page 38748]]
1.d. Proposed respondent Wendell Brown is an officer of the
corporate respondent. Individually or in concert with others, he
formulates, directs, or controls the policies, acts, or practices of
the corporation, including the acts or practices alleged in the draft
complaint. His principal office or place of business is the same as
that of Syncronys Softcorp.
2. Proposed respondents admit all the jurisdictional facts set
forth in the draft complaint.
3. Proposed respondents waive:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law; and
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission, it, together with the draft
complaint, will be placed on the public record for a period of sixty
(60) days and information about it publicly released. The Commission
thereafter may either withdraw its acceptance of this agreement and so
notify proposed respondents, in which event it will take such action as
it may consider appropriate, or issue and serve its complaint (in such
form as the circumstances may require) and decision in disposition of
the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondents that the law has been
violated as alleged in the draft complaint, or that the facts as
alleged in the draft complaint, other than the jurisdictional facts,
are true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to
proposed respondents, (1) issue its complaint corresponding in form and
substance with the draft complaint and its decision containing the
following order in disposition of the proceeding, and (2) make
information about it public. When so entered, the order shall have the
same force and effect and may be altered, modified, or set aside in the
same manner and within the same time provided by statute for other
orders. The order shall become final upon service. Delivery of the
complaint and the decision and order to proposed respondents by any
means specified in Section 4.4 of the Commission's Rules shall
constitute service. Proposed respondents waive any right they may have
to any other manner of service. The complaint may be used in construing
the terms of the order. No agreement, understanding, representation, or
interpretation not contained in the order or in the agreement may be
used to vary or contradict the terms of the order.
7. Proposed respondents have read the draft complaint and consent
order. They understand that they may be liable for civil penalties in
the amount provided by law and other appropriate relief for each
violation of the order after it becomes final.
Order
Definitions
For purposes of this order, the following definitions shall apply:
1. ``Random access memory (RAM)'' is the primary working memory in
a computer. The instructions provided by a computer program and the
data being worked on are stored in RAM while the program is running.
Additional RAM, measured in megabytes (``MBs''), can be purchased in
the form of microchips that are physically inserted into a computer.
2. ``Compression technology'' is a process which allows more
information to reside in RAM. Compression technology eliminates
redundant data by utilizing various recipes for analyzing and
transforming it.
3. ``Windows 95'' refers to the Windows 95 software operating
system manufactured by Microsoft, Inc.
4. ``Substantially similar product'' shall mean any software
product that uses or purports to use compression technology and that is
intended or purports to increase the amount of RAM in a computer or to
accomplish any effect similar to one that would be caused by increasing
the amount of RAM in a computer. These effects include, but are not
limited to, increase in speed of computer operations, increase in size
or number of applications that can be run simultaneously, and expansion
of systems resources or reduction or elimination of ``insufficient
memory'' errors or messages.
5. ``Competent and reliable scientific evidence'' shall mean tests,
analyses, research, studies, or other evidence based on the expertise
of professionals in the relevant area, that has been conducted and
evaluated in an objective manner by persons qualified to do so, using
procedures generally accepted in the profession to yield accurate and
reliable results.
6. Unless otherwise specified, ``respondents'' shall mean Syncronys
Softcorp, a corporation, its successors and assigns and its officers;
Rainer Poertner, Daniel G. Taylor, and Wendell Brown, individually and
as officers of the corporation and each of the above's agents,
representatives, and employees.
7. ``In or affecting commerce'' shall mean as defined in Section 4
of the Federal Trade Commission Act, 15 U.S.C. 44.
I
It is ordered that respondents, directly or through any
corporation, subsidiary, division, or other device, in connection with
the manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of SoftRAM95 or any substantially similar
product in or affecting commerce, shall not misrepresent, in any
manner, expressly or by implication, that:
A. Such product increases RAM in a computer using Windows 95 to a
greater extent than other software products;
B. Such product uses compression technology to increase the RAM
available to a computer using Windows 95 or achieves RAM compression
ratios of up to five times or higher in a computer using Windows 95;
C. Such product produces the effect of increasing the RAM available
to a computer using Windows 95;
D. Use of such product in a computer will speed up Windows 95;
E. Use of such product will permit a Windows 95 user to run larger
applications on a computer or to open more applications simultaneously;
F. Use of such product with Windows 95 will result in expanded
systems resources on a computer and will substantially reduce or
eliminate the occurrence of computer screen messages that indicate that
the computer has insufficient memory to run the user's application(s);
or
G. Microsoft, Inc. has licensed, endorsed, or otherwise approved
such product for use with Windows 95.
II
It is further ordered that respondents, directly or through any
corporation, subsidiary, division, or other device, in connection with
the manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of SoftRAM, SoftRAM95, or any substantially
similar product in or affecting commerce, shall not make any
representation, in any manner, expressly or by implication, about the
[[Page 38749]]
relative or absolute performance, attributes, benefits, or
effectiveness of such product, unless such representation is true and,
at the time of making such representation, respondents possess and rely
upon competent and reliable evidence, which when appropriate must be
competent and reliable scientific evidence, that substantiates the
representation.
III
It is further ordered that respondents, directly or through any
corporation, subsidiary, division, or other device, in connection with
the manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any product intended to improve the
performance of any computer in or affecting commerce, shall not make
any representation, in any manner, expressly or by implication, that
such product has been authorized, certified, licensed, endorsed, or
otherwise approved by any person or organization, unless such
representation is true.
IV
It is further ordered that respondents, directly or through any
corporation, subsidiary, division, or other device, in connection with
the manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any product intended to improve the
performance of any computer in or affecting commerce, shall not make
any representation, in any manner, expressly or by implication, about
the relative or absolute performance, attributes, benefits, or
effectiveness of such product, unless, at the time it is made,
respondents possess and rely upon competent and reliable evidence,
which when appropriate must be competent and reliable scientific
evidence, that substantiates the representation.
V
It is further ordered that respondents shall, for five (5) years
after the last date of dissemination of any representation covered by
this order, maintain and, within ten (10) business days of their
receipt of a written request, make available to the Federal Trade
Commission for inspection and copying:
A. All advertisements and promotional materials containing the
representation;
B. All materials that were relied upon in disseminating the
representation; and
C. All tests, reports, studies, surveys, demonstrations, or other
evidence in their possession or control that contradict, qualify, or
call into question the representation, or the basis relied upon for the
representation, including complaints and other communications with
consumers or with governmental or consumer protection organizations.
VI
It is further ordered that respondent Syncronys Softcorp and its
successors and assigns shall deliver a copy of this order to all
current and future principals, officers, directors, and managers, and
to all current and future employees, agents, and representatives having
responsibilities with respect to the subject matter of this order, and
shall secure from each such person a signed and dated statement
acknowledging receipt of the order. Respondent Syncronys Softcorp and
its successors and assigns shall deliver this order to current
personnel within thirty (30) days after the date of service of this
order, and to future personnel within thirty (30) days after the person
assumes such position or responsibilities.
VII
It is further ordered that respondent Syncronys Softcorp and its
successors and assigns shall notify the Commission at least thirty (30)
days prior to any change in the corporation that may affect compliance
obligations arising under this order, including but not limited to a
dissolution, assignment, sale, merger, or other action that would
result in the emergence of a successor corporation; the creation or
dissolution of a subsidiary, parent, or affiliate that engages in any
acts or practices subject to this order; the proposed filing of a
bankruptcy petition; or a change in the corporate name or address.
Provided, however, that, with respect to any proposed change in the
corporation about which respondents learn less than thirty (30) days
prior to the date such action is to take place, respondents shall
notify the Commission as soon as is practicable after obtaining such
knowledge. All notices required by this Part shall be sent by certified
mail to the Associate Director, Division of Enforcement, Bureau of
Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.
VIII
It is further ordered that respondents Rainer Poertner, Daniel G.
Taylor, and Wendell Brown, for a period of five (5) years after the
date of issuance of this order, shall each notify the Commission of the
discontinuance of his current business or employment, or of his
affiliation with any company engaged in the manufacturing, labeling,
advertising, promotion, offering for sale, sale, or distribution of any
product intended to improve the performance of any computer in or
affecting commerce. The notice shall include respondent's new business
address and telephone number and a description of the nature of the
business or employment and his duties and responsibilities. All notices
required by this Part shall be sent by certified mail to the Associate
Director, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, Washington, D.C. 20580.
IX
It is further ordered that respondents shall, within sixty (60)
days after the date of service of this order, and at such other times
as the Federal Trade Commission may require, file with the Commission a
report, in writing, setting forth in detail the manner and form in
which they have complied with this order.
X
This order will terminate twenty (20) years from the date of its
issuance, or twenty (20) years from the most recent date that the
United States or the Federal Trade Commission files a complaint (with
or without an accompanying consent decree) in federal court alleging
any violation of the order, whichever comes later; provided, however,
that the filing of such a complaint will not affect the duration of:
A. Any Part in this order that terminates in less than twenty (20)
years;
B. This order's application to any respondent that is not named as
a defendant in such complaint; and
C. This order if such complaint is filed after the order has
terminated pursuant to this Part.
Provided, further, that if such complaint is dismissed or a federal
court rules that the respondent did not violate any provision of the
order, and the dismissal or ruling is either not appealed or upheld on
appeal, then the order will terminate according to this Part as though
the complaint had never been filed, except that the order will not
terminate between the date such complaint is filed and the later of the
deadline for appealing such dismissal or ruling and the date such
dismissal or ruling is upheld on appeal.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from Syncronys Softcorp, Rainer Poertner, Daniel
G. Taylor, and Wendell Brown. The proposed respondents are marketers of
computer
[[Page 38750]]
software products, including SoftRAM and SoftRAM95.
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement and take other appropriate action or make
final the agreement's proposed order.
The Commission's complaint charges that the proposed respondents
made the following unsubstantiated representations about SoftRAM: (1)
SoftRAM uses compression technology to double the random access memory
(``RAM'') available to a computer using any of Microsoft, Inc.'s
Windows 3.0, 3.1, or 3.11 operating systems (collectively ``Windows
3.x''); (2) SoftRAM produces the effect of doubling RAM in a computer
using Windows 3.x; (3) use of SoftRAM will permit a Windows 3.x user to
open more applications simultaneously on a computer; and (4) use of
SoftRAM in a computer using Windows 3.x will substantially reduce or
eliminate the occurrence of computer screen messages that indicate
insufficient memory.
With respect to SoftRAM95, the complaint charges that the
proposed respondents made the following unsubstantiated
representations: (1) SoftRAM95 increases RAM in a computer using
Microsoft, Inc.'s Windows 95 operating system (``Windows 95'') to a
greater extent than other software products; (2) SoftRAM95 uses
compression technology to at least double the RAM available to a
computer using Windows 3.x or Windows 95, and achieves RAM compression
ratios of up to five times and higher in such a computer; (3)
SoftRAM95 produces the effect of at least doubling RAM in a
computer using Windows 3.x or Windows 95; (4) use of SoftRAM95 in
a computer will speed up Windows 3.x or Windows 95; (5) use of
SoftRAM95 will permit a Windows 3.x or Windows 95 user to run
larger applications on a computer, and to open more applications
simultaneously; and (6) use of SoftRAM95 with Windows 3.x or
Windows 95 will result in expanded systems resources on a computer and
will substantially reduce or eliminate the occurrence of computer
screen messages that indicate insufficient memory. The complaint also
charges that claims (1) through (6) are false to the extent that they
apply to use of SoftRAM95 with Windows 95. Further, the complaint
charges that the proposed respondents have falsely represented that
Microsoft, Inc. has licensed, endorsed, or otherwise approved
SoftRAM95 for use with Windows 95.
The proposed consent order contains provisions designed to remedy
the violations charged and to prevent proposed respondents from
engaging in similar acts in the future.
Part I of the proposed order, in connection with SoftRAM95 or
any substantially similar product, prohibits the proposed respondents
from misrepresenting that: (1) such product increases RAM in a computer
using Windows 95 to a greater extent than other software products; (2)
such product uses compression technology to increase the RAM available
to a computer using Windows 95 or achieves RAM compression ratios of up
to five times or higher in a computer using Windows 95; (3) such
product produces the effect of increasing the RAM available to a
computer using Windows 95; (4) use of such product in a computer will
speed up Windows 95; (5) use of such product will permit a Windows 95
user to run larger applications on a computer or to open more
applications simultaneously; (6) use of such product with Windows 95
will result in expanded systems resources on a computer and will
substantially reduce or eliminate the occurrence of computer screen
messages that indicate that the computer has insufficient memory to run
the user's application(s); or (7) Microsoft, Inc. has licensed,
endorsed, or otherwise approved such product for use with Windows 95.
Part II of the proposed order prohibits any representation which
relates to the relative or absolute performance, attributes, benefits,
or effectiveness of SoftRAM, SoftRAM95, or any substantially
similar product, unless such representation is true and proposed
respondents possess and rely upon competent and reliable evidence that
substantiates the representation. Part III of the proposed order
prohibits the proposed respondents from representing that any product
intended to improve the performance of any computer has been
authorized, certified, licensed, endorsed, or otherwise approved by any
person or organization, unless such representation is true. In
addition, Part IV prohibits any representation which relates to the
relative or absolute performance, attributes, benefits, or
effectiveness of any product intended to improve the performance of any
computer, unless proposed respondents possess and rely upon competent
and reliable evidence that substantiates the representation.
The proposed order (Part V) contains recordkeeping requirements for
materials that substantiate, qualify, or contradict covered claims and
requires the proposed respondents to keep and maintain all
advertisements and promotional materials containing any representation
covered by the proposed order. In addition, the proposed order (Part
VI) requires distribution of a copy of the consent decree to current
and future officers and agents. Further, Part VII provides for
Commission notification upon a change in the corporate respondent and
Commission notification when each of the individual respondents changes
his present business or employment (Part VIII). The proposed order also
requires the filing of compliance report(s) (Part IX).
Finally, Part X provides for the termination of the order after
twenty years under certain circumstances.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 96-18856 Filed 7-24-96; 8:45 am]
BILLING CODE 6750-01-U