LEARJET 35 FLC WERE OBSERVED BY ARTCC RADAR CTLR BELOW ASSIGNED CRUISING ALT TO WHICH THE FLC RESPONDED THAT THEY WERE HAVING AUTOPLT PROBS AFTER RETURNING TO ASSIGNED.

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ACFT RPTED ON FREQ LEVEL AT FL370; AND MODE C WAS INDICATING FL370 AT THAT TIME. (NOTE: FOR ACFT IN LEVEL FLT AT THEIR ASSIGNED CRUISE ALT; CTR RADAR WILL NOT DISPLAY A DEV OF LESS THAN 250 FT ABOVE OR BELOW THAT ALT.) A FEW MINS AFTER THE PLT CHKED IN; I NOTICED THE MODE C RPTING FL367 INSTEAD OF FL370. THIS IS NOT UNCOMMON -- OUR RADAR OFTEN DISPLAYS AN INCORRECT ALT FOR 5-12 SECONDS FOR A NUMBER OF REASONS WHICH HAVE NOTHING TO DO WITH THE ACFT'S ACTUAL ALT. IN THIS CASE; THERE WERE NO ACFT IN IMMEDIATE CONFLICTION; SO I ELECTED TO NOT CHK WITH THE PLT RIGHT AWAY SINCE ERRONEOUS (BUT BRIEF) MODE C READOUTS ARE COMMON. AFTER A COUPLE MORE RADAR SWEEPS; I OBSERVED THE READOUT AT FL366; AND I ADVISED THE PLT THAT 'MODE C INDICATES 400 FT LOW; MAINTAIN FL370.' THE PLT ADVISED THAT THEY APPEARED TO HAVE HAD A PROB WITH THE AUTOPLT; AND THEY WERE CLBING BACK TO FL370. THERE WAS NO LOSS OF SEPARATION. THE NEAREST ACFT WAS STILL ALMOST 2 MINS AWAY AT FL350 WHEN THE MODE C AGAIN INDICATED FL370.