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"Patent Markings" Lawsuits Could Run Into the Trillions
bizwriter writes "The latest legal bugaboo facing manufacturers is the false patent marking suit. Using what has been until recently an obscure type of legal action, individuals and enterprising law firms have targeted large manufacturers with lawsuits that can easily run million of dollars — in a case involving a drink cup manufacturer, over $10 trillion — for incorrectly including patent numbers on products. Some companies named in such suits are 3M, Cisco, Pfizer, Monster Cable, and Merck. Even expired patent numbers can be actionable." Sounds like a perfect opportunity for some enlightened appeals court to inject some sense into the debate. What do you think the chances are? Note: if ever there were a page that cries out for the Readability bookmarklet, this is it.
How about we look over patents carefully and allow -anyone- to file a prior art question without going to court but rather put all patent applications online for say ~30 days and open it up to debates for anyone to say that its had prior art which gets looked through before it becomes approved.
Taxation is legalized theft, no more, no less.
I wish (US) copyright law worked this way around ... right now there's essentially no risk in tacking on a questionable copyright notice.
> The problem for companies is that they might have lost track of what patents
> cover a given product, or might have forgotten to update packaging to remove
> numbers of patents that had expired.
Don't "lose track". Don't "forget". Or don't mark (it isn't required). Problem solved.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
Why is it that editors around here seem to think that laws are made by the courts? This one is a great example - saying it is an opportunity for the Federal Appeals court to do something. Like what? They get to rule based on law. If we need the law changed, the court can't do that - it needs to go to the legislative branch for that.
I still say Monster Cable deserves to be sued to bankrupcy. Same with Best Buy (Worst Buy) and Microsoft.
I'm just wondering who patented this business method. Sheer brilliance, proving that American ingenuity still leads the world.
Oh, and you people who think a court is going to shoot this down? Only of the judges aren't lawyers.
Lacking <sarcasm> tags,
"At $500 each, that would be $500 million. Get to 10 million and you’re at $1 billion."
I never knew that 5,000 million was 1 billion.
Never going to happen.
In the eyes of the Federal Gov, upholding patents and IPs are so important, it would be considered National Security to protect them. Seriously, what the hell does America have that's worth selling? Nothing except services and IP. We hardly manufacture anything anymore.
Life is not for the lazy.
Let's hope all this patents chaos in the US (and the US trying to push their patents in other countries) doesn't end up in war in some years. I'll like to see US enforcing their patents this way on Russia / China / etc.
- Human knowledge belongs to the world
> Sounds like a perfect opportunity for some enlightened appeals court to
> inject some sense into the debate.
No, it's a perfect opportunity for an enlightened Congress to correct the law. Oh. Wait...
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
You mean you can patent snake oil?
Wikipedia entry," In one experiment, audiophile listeners could not distinguish between short Monster cables and ordinary coat hangers.[8] Another reviewer concluded that "16-gauge lamp cord and Monster [speaker] cable are indistinguishable from each other with music."[9]
From the article, these are suits against companies claiming patent protection on products when they don't in fact have it.
That's the opposite of claiming patent protection for something you don't have rights to, ie, patent trolling.
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
The problem for companies is that they might have lost track of what patents cover a given product, or might have forgotten to update packaging to remove numbers of patents that had expired.
I see no reason to claim this is trolling as the article does (yeah i read it, find the guy that patented RTFA and have him sue me). Marking a product with a patent number is a claim not that you will sue someone for producing a similar item, but a claim that you clearly have legal grounds to do so. Marking a product with an irrelevant patent number then is essentially extortion (i'm unsure if the term 'extortion' can apply to pressuring one into inaction. If there is a more appropriate term, let me know please). Any company putting a patent number on a product has a responsibility to make sure their claim is valid. Not updating packaging perfectly on time should certainly be a more forgivable offense, but totally forgetting what patents cover your products is just unacceptable. How many seperate patents or products could any given company have? I realize the number could get quite high, but nothing a simple database even such as SQlite can't handle. Patents are a legal construct designed to give an innovator a monopoly long enough to capitalize on innovations. I don't know why it would ever need to even be said explicitly but if you are unsure, don't make claims that have legal implications.
The real trolls here are the companies putting false numbers on products.
I have no sympathy with those who claim intellectual property - sure, these lawsuits are filed by scum, but they're filed against people who claim to own ideas. I hope these are long, plentiful, painful lawsuits for both sides.
For every problem, there is at least one solution that is simple, neat, and wrong.
Specifically if the RIAA issues a DMCA takedown notice because they noticed that your garage band's website has MP3s on it, but they were your garage band's songs, you should be able to sue them for $500 for every file they claimed was infringing! I wonder if you could get away with it under this law...
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Note: if ever there were a page that cries out for the Readibility bookmarklet, this is it.
Just skimmed over this: looks pretty awesome.
I don't understand the hubbub about expired patent markings. (1) It costs $ to create new dies for production, so such a requirement just costs companies more, which they have to pass along to customers. (2) Someone looking up the patent can see that it's expired, or is going to expire soon, and hey, here's a large part of the engineering behind the product, we can copy this instead of re-engineering it. That's part of why patents exist, to make that information public.
If a company falsely labels its products with imaginary patent numbers, they deserve to be sued into oblivion. It's outright lying to the public, and an attempt at intimidating would-be competitors. It's wrong and should be punished harshly.
Patents are overused as is, and one of the reasons they are often misused (eg against open source) is because it's easy and relatively risk free. If the costs of misuse can be increased dramatically, many companies may think twice before doing it.
to read Slashdot with an ad-blocker, then? That's basically what you're advocating with your "readability" bookmarklet.
Note: I agree that their site is unbearable to read as-is.
Hail Eris, full of mischief...
E pluribus sanguinem
These suits are against companies asserting patent rights over things that the DO NOT own patents for. The basic defense being offered is "I've done it so much, I couldn't possibly pay the penalty. So the only option is to not hold me accountable!" That basically says that if a robber robs enough people he shouldn't be put in prison. (Sort of the like the banks in America.)
This puts a penalty on asserting patent rights all over the place when you don't have them. Asserting a patent right, blocks competitors who might produce the same thing cheaper.
If companies have to pay a penalty for not keeping track of their patent assertions, then they will be more circumspect in asserting them. That means less frivolous patents.
Substantive, meaningful patents actually work well. The problem is incentives to overwhelm the system which is what is currently being done.
This is simple a case of false advertising. The companies that are being sued labelled their products wrong. "Oh I forgot". Yeah, likely story. I see they did NOT forget to put the patent claim on the product. How odd is that eh?
If it is going to cost the likes of Monster Cable a few millions or even bankrupt them to get false patent claims of products, then I am all for it, and the people bringing these cases making a fortune? Well sometimes the person who cleans up the system gets paid.
Say that someone found a way to make serious money of prosecuting companies sending fake copyright take down notices, would we be against that as well? No.
Sometimes you need to cheer on the slime to get rid of the scum.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Since the premise of the whole thing is that the plaintiff is a friend of "our Lord the King" or the US Government and the defendant submitted false claims to it, and the plaintiff is not personally harmed, there is no need to award the plaintiff any damages. Problems solved, just rule that any damages awarded will go to the aggrieved party, or the US government in this case. Once the lawyers know they are not going to be getting a piece of the award, they will go find some one else to screw^h^h^h^h^h sue.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
That's what us old-timers call fraud. It's not OK, no matter how the apologists here may try to spin it. Yes, sometimes it's not cheap or easy to comply with the law - but that doesn't make complying with the law optional no matter how much you wish it was.
Sometimes I wonder if the people who post here think about what they're saying - or if they just scan the article enough to formulate a (weak) opposing point and rush to post it. There's only one thing worse than a patent troll and that's corporations trolling with patents they don't own. If corporations can destroy people for violating their patents, what do you think should be the proper punishment for claiming patents that you don't own?
Nonsense. Materials may be made before the patent expires. What about stuff a few years old that didn't sell at the regular price and is now being sold off for a low price? CD players for example. Should patent numbers be removed before selling? Of course not.
In any event, this whole suing because of patents no longer being valid is nonsensical. Anyone who cares about the patents in a product, will look them up. No need to be pedantic about some patent not being valid any more.
As seems will be the case with the Tennenbaum vs RIAA case, these companies will probably be able to argue that the amounts are unreasonable and unconstitutional, so although these values seem ridiculous and inflated there are some nets in place to manage the claim amounts. And although this may require large legal fees, the companies that are shipping millions or billions of a product should be large enough to absorb this, or have legal teams on hand already.
www.RacquetUp.org - Helping Detroit Youth
in a case involving a drink cup manufacturer, over $10 trillion
Fact checking please? Do we really think it's possible that a lawsuit against a drink cup manufacturer can equate roughly 3/4ths of the GDP of the United States economy?
All these qui tam actions might be lawyers trying to make a buck, but I feel they are basically beneficial because :
(a) they help out small producers that actually know their own patents, and
(b) they highlight the underlying meaninglessness of the patent system.
We must also remember that judges will weigh the social costs for the various violations. For example, I'd expect that the 21 billion Solo Cup lids case is rather "open and shut", as all those lids were falsely market, but the actual damages are rather small. How many people were wrongfully dissuaded from creating competing lids? I'd hope the court awards Attorney Matthew Pequignot a couple million dollars, but not more.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
Live by the sword, die by the sword.
.. copyrights never expire.
I'm sure you can sue for false DMCA takedown notices, but tracking down all those false ones will require more than $500 per incident. Imagine a false DMCA takedown notice earns the victim $10k just like abusive collections practices do. We'd most likely still see most victims just sit around and suffer quietly rather than fight.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
since the slave script is all worthless unbacked stuff anyway why not have the Solo cup company issue a "10 trillon" note and give it to the us treasury. better a worthless note from a reputable us company than from that IMF/UN cabal. Solo goes about business as usual, the "national debt" gets paid off and everyone walks away happy.
All these qui tam cases actually benefit society by making companies comply with the laws, the only problem is lawyers are going after poorly labeled cups instead of Amazon's 1-click patent.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
The whole point of qui tam actions are to encourage people to bring the suits in the first place. They do this with Medicaid fraud in many states, for example. The state might not have the resources to closely examine all possible instances of fraud, or private parties might have better information. So by giving people a cut off the award, you give them an incentive to look for the fraud and to bring it to the government's attention.
"Anyone who [rips a CD] is probably engaging in copyright infringement." - David O. Carson
Here is a link to the court's decision. It is not a judgment against Solo, but a denial of their request to dismiss the case.
The judge argues the problem of incorrect markings here:
The plaintiff, i.e. the "troll", has not yet made his case. In order to prevail he has to prove that Solo used the incorrect markings "for the purpose of deceiving the public." That remains to be determined.
But therein, it is not clear to me what's really going on here with Solo (for example). It seems that laziness about cleaning up one's patent markings has a distinct reward, i.e. to scare off copy-cat competitors (which is exactly the kind of subsequent activity that the publicly filed/expired patent is intended to encourage). I'm not so sure that these are just mistakes, and in fact, I find it unlikely that there isn't some willfulness here. The corporate counsels that insist on taking advantage of adding the patent markings don't consider the correctness of removing them once they are no longer valid???
It may take a crack of the whip to clean up the rampant "laziness" that leaves these wrong and discouraging markings in use.
If you are generating IP reading other peoples patents is a liability because you risk making the infringement "willful" which carries significantly higher penalties... I would wager that they are marked to make it harder to argue for non-willful infringement.
Or don't mark (it isn't required).
Yeah, but is that really what we want? At least if they include markings, they let you know that they think this product is covered by a patent. That is much better than a submarine patent that is hidden somewhere in the bottom drawer of a filing cabinet.
Since you have the relevant patent numbers, any semi-competent competitor can go online, look up the patent, and see what exactly is covered by it. If the patent is expired, or simply doesn't apply to your competing product, you'll be able to see it right there. Basically, there is no harm done, so I don't see how you could ask for millions or billions of damage.
If I intend to produce a product and decide not to or to alter the product due to someone falsely claiming they own a patent I should be able to sue and recover both real and punitive damages.
Recently our sour Supreme Court declared that corporations would be treated as real persons. Lies and false claims make real persons liable to punishments. Bailiff! Wack their peepees!!!
If a company can be sued for these quantities of money, effectively bankrupting any company on Earth, shouldn't the companies have people that make absolutely sure that all of this patent stuff is correct?
If the risks are that high, why not mitigate that risk by having a few people keep and maintain this is check? If you could get sued for $2Billion, having 10 people in a company, even at $1Million each is a big cost savings measure for the company.
Companies spend lots of time and money to make sure they won't get sued into oblivion for stupid shit, yet they didn't CYA?
Note: if ever there were a page that cries out for the Readibility bookmarklet, this is it.
irony: n. An obvious spelling error in the most salient part of a complaint about poor readability.
The legal precedent allowing this to happen is cutting the legs out from under both the greedy corporations and the patent system as a whole. It's very slightly negating the value of a patent because it increases the cost of compliance. And the precedent is allowing any lawyer to litigate against the fraudulent patent claims, essentially out-sourcing government investigations to groups of greedy patent lawyers.
This re-directs the attention of a much maligned sector of lawyers while alleviating some pressure from the broken patent system and increasing government power while taking it from corporations.
Even though the thought of a bunch of lawyers getting rich for investigating patent fraud is quite annoying, this is really a good thing.
Downloading pirated stuff is not legal, either, and yet most people will admit it's ridiculous to charge a person a million dollars for copyright infringement. Same thing here. The basic idea (fining the wrongdoer) is fine, the problem of fueling a litigation happy system with huge amounts of money is the problem. This could easily be solved at the "report this to the relevant bureaucracy and get $100 for your time" level, with well defined fines and without wasting the time of the law system and paying huge amount of money to lawyers or those who found out the infringement.
>Don't "lose track". Don't "forget". Or don't mark (it isn't required). Problem solved.
It's not that easy. If you don't mark it, you are not actively protecting your patent and that potentially limits your claims in case some one infringes the patent. Marking the item with the patent # is like erecting a 'Private Property, No Trespassing' sign
One could start to wonder: What causes the US legal system to be all screwed up? Is it lobbyists who pay off politicians to make crazy laws who then gets transfered to the legal system, or is it court precedence that eventually turns into laws? I for one wonder how much time and resources the US courts waste every year on people suing each other for the pure benefit of earning some easy cash. I'm sure I could sue a tool manufacturer for not placing a warning on the hammer, that it could hurt my finger if i miss the nail. It's sorry to see such degeneration of what some might call "civilization". What ever happened to common sense?
Complying with the law has always been optional. Consequences are another matter.
the Solo case [...] It is not a judgment against Solo [...] has to prove that Solo [...] what's really going on here with Solo
Solo, Solo, Solo.
The fat corporate cats seem more like Greed(o).
Sorry. I'll see myself to the door.
I don't see a problem whatsoever with this. If it's patented, it's patented. If it's not, you're interfering with trade and innovation by claiming it is.
It's no different than plagiarism or copying [usually open-source] code and claiming it as your own work ... passing off someone's (copyrighted, which is automatic) work as your own, and putting your own copyright mark on it. That's not legal either.
In this case, they are claiming a patent that they don't own (anymore, or never will, in the case of fraudulent "patent pending" marks) as their own. Expired patents belong to me, you, everyone. Yet by their subterfuge, they intend deny us our right to the patent.
Like the topic says ... live by the sword, die by the sword.
Who wins? The lawyers, of course. Enough so that entire law firms can take early retirement with multiple vacation homes, yachts and country club memberships.
What does the public get? Probably $3.50 off on their next purchase of a Monster cable, but you have to fill out a form with your name, address, and phone, email address, and SSN. Oh, and you still have your receipt, right?
Citing revenue numbers and not profits is just a low blow.
I'm sure McDonalds are a bunch of big boys and can handle it. Not really sure how this is a low blow...
I know coffee is cheap, but time, labor, energy, buildings, equipment, management, and lawyers are not. McDonald's does not "make" $1.3M/day selling coffee, they just collect that much, based on estimates of annualized sales and the list price of a cup of coffee.
Care to cite your source?
$1.3M in daily profits from coffee would not be remotely shocking for a company with over 31,000 locations and 47 million customers daily. The gross margins on coffee are around 60% (look at Starbucks income statement if you need proof) and McDonalds EBIT margin in 2008/09 was 29.8%. McDonalds had revenues around $30 billion last year. If they really made $1.3M on coffee per day in profit that means their annual coffee sales were around $1.6 billion or if the gross margin is used the number is more like $780 million in sales. Big numbers but quite reasonable given McDonalds revenues and the amount of coffee they sell. Starbucks revenues by comparison were just under $10 billion last year as a quick sanity check so $1.6 billion in coffee sales from McDonalds sounds pretty reasonable. I'm actually a little surprised it's not higher.
And even "collect" is a stretch, because not every cup of coffee sells at list price, and not every cent of every transaction is necessarily collected by McDonalds (e.g. credit card processing fees).
The percent of losses due to these factors is minor (2-4% at most is typical in the industry) and without question quite well known to McDonalds accountants. It is accounted for (indirectly) in their financial statements so any numbers you look at will have factored this in already.
Disclosure: I am a certified accountant.
Loser pays actually helps a lot more than you're describing. It makes it enormously more feasible for attorneys to take cases on contingency, especially obviously ridiculous ones.
EVERY attorney I've ever spoken with (and that is a lot of them) has told me that if a case goes to court there is at minimum a 10% chance they will lose the case no matter how iron clad their argument. Even being correct is no guarantee that you will win once the case gets to a judge/jury. If we have a loser pays system that is a pretty substantial risk for a party who can't afford to lose.
Don't get me wrong, I think there should be some form of loser pays in the system - we just have to be careful how it is implemented.
Unconscionable because terms are revealed after the sale in tiny print where they tell you there are no refunds(the only part you really care about) whether you agree to their bullshit terms or not.
I think you'll have a hard time finding any judge who will agree that terms written in black and white on your ticket are unconscionable. You are legally allowed to sell the ticket for at least the face value of the ticket in every state in the US. Some states even allow you to sell it for more than face value.
Unenforceable because the agent selling me the ticket isn't a competent attorney or even a paralegal;
Doesn't have to be. Any two competent adults (presumably you are one) can enter into a binding contract. You also can enter into a contract with a corporation (a legal person) which is what you are doing when you use the ticket. The ticket taker is a legally authorized agent of the corporation for this purpose. Do you really think the lawyers for the NFL/MLB/NBA are so stupid that they haven't thought this out?
In more recent developments, Solo is granted summary judgment. BNet's cited blog post must have missed it.
http://www.williamsmullen.com/rocketdocketiplit/blog.aspx?topic=63&All=null&IsListParentTopic=true
"Last week, in a case it described as one of "practically first impression," the Eastern District of Virginia granted summary judgment in favor of Solo Cup Co. that it was not liable for improper patent marking under 35 U.S.C. 292(a). Pequignot v. Solo Cup Co., No 1:07cv897-LMB/TCB (E.D. Va. July 2, 2009). The Court agreed with Solo that the advice of counsel it received to replace patent-marking molds with non-marking molds in a gradual fashion was reasonable. Solo's overall conduct was held to evidence a lack of intent to deceive the public. The Court also held that an "offense" under the statute is the overall decision to mark improperly, thereby rejecting Pequignot's argument that Solo should be penalized for each and every lid it marked."
"Solo also prevailed on summary judgment with respect to its fallback position, namely, that even if there were intent to deceive the public, the offenses punishable under the statute are the decisions to mark improperly, not each and every marking of a product. Thus, in an alternative holding, the Court decided that the maximum amount of damages for which Solo could be liable is $1500."
And in a recent article by Law Professor Thomas Field, http://www.ipfrontline.com/printtemplate.asp?id=24082
"The opinion in Pequignot v. Solo Cup Co., 646 F.Supp.2d 790 (E.D. Va. 2009) (Pequignot III), a case resolved last August, and now on appeal, signals a very different, perhaps more typical view of those who seek to recover under section 292(b). There, the court grants summary judgment for Solo because it was unable to find deceptive intent."
hi!
The judge should afford a reasonable grace period after the mark expires. The company's sales data and production reports will show that the company is just selling off its backlog of inventory. I also think the judge should afford some leeway to products, like the Solo lids, that require retooling before the mark can be removed. The article does not suggest that any of this applies though. These companies at best neglected their responsibility, or at worst willfully exploited the law. The question is what is a reasonable penalty. Even the suggested $1 per incident puts the $1.8B Solo Cup Company out of business.
They don't have the patent, it is a lie. You are not allowed to do that. If you start allowing this kind of stuff, well then you get the world we have today. Where filming your kid dancing to prince gets you a lawyer letter.
And no, they did not forget. Companies of these sizes don't forget anything. Or maybe they should spend half of the resources they spend on EULA's on actually checking wether what they are claiming is legal. Oops, that is the EULA's down the drain as well, even more time to check things.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
How about reforming the law to do away with the moronic idea of awarding "punitive damages", or whatever it is called in cases like these, to claimants?
So how do you propose to make large companies pay attention to their bad behavior? The medical bills are pocket change and a company doesn't have a sense of ethics. They exist to make money. That is the ONLY reason most of them exist. If a company misbehaves one way to punish the company is to do so financially - hence, punitive damages.
If you have a better idea I'm sure lots of people would be interested but I'm pretty sure you don't.
In some countries, like the one I live in, payments to claimants are pretty much limited to actual damages and legal fees, maybe with a small bit added on top for things like mental anguish or redress.
Which is an approach that potentially rewards large companies for bad behavior. If the benefit of the bad behavior outweighs the financial cost, the company is going to behave badly. People have died because of this sort of cost/benefit analysis.
And if another company has been naughty and put incorrect markings on their products, they should received reasonable punishment.
Agreed but you don't seem to have a very clear idea of what reasonable might be. A $50,000 fine to McDonalds is not a punishment.
Some of these amounts sound excessive, and in any case, they should be treated as fines and go to the state, not to some random claimant.
Why is the state any more deserving? Besides, the state will take much of it in taxes anyway.
Have the state levy a heavy fine.
The state is levying a heavy fine - it's just paid to an individual instead of the treasury. You seem to be unaware that the judiciary is part of the state. I trust the executive/legislative branches of state less than a plaintiff in a lawsuit to do something useful with the money. Our government is not renowned for their careful use of funds from any source.
The point is not the amount of the fine, but who gets the money.
If you are injured I can't think of anyone better than you to get the money. I'm willing to trust you to put it to good use. I don't trust our government to do the same and the government will get its cut by way of taxes anyway.
If someone benefits, I would rather see it go to the state who will use it for the good of us all (or at least the same "good" they spend other taxes on), rather than some random guy who "got lucky" having an accident.
"Lucky"? You think getting third degree burns, being disfigured, maimed or otherwise badly injured makes you lucky? I think someone confined to a wheelchair for life wouldn't describe themselves as lucky no matter how much money they won in a lawsuit. You have a strange definition of luck my friend...
And I disagree with you that the state is any better to get the money. The state was not injured and probably was not involved and I certainly don't trust the state with any sort of windfall cash.