[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