Invention Is Often the Mother of Litigation
A plastic track for toy cars and a windshield wiper that sweeps intermittently seem pretty insignificant in the world of business. But both have created big legal headaches lately for some of the nation’s largest corporations.
Those products were the subject of patent infringement lawsuits, and all appear to be heading toward multimillion-dollar paydays for the people who contend that they first patented those ideas.
Profit, it seems, is the father of invention. Or, at the very least, it is behind the growing push to protect patents, ideas, copyrights, brand names and trademarks from a crowd of outsiders who wish to adopt them as their own.
The owners of patents and other things that fall into the category of “intellectual property” are becoming more aggressive in going after those who appear to be infringing on their rights. Add a change in the way patent infringement suits are tried--some contend that the change favors the patent holder--and you get more lawsuits and some David-vs.-Goliath-style victories for inventors.
“What a patent or a trademark gives you is a legal monopoly,” said Richard P. Sybert, a lawyer specializing in intellectual property cases at the Los Angeles firm of Sheppard, Mullin, Richter & Hampton.
“These things have tremendous market value,” Sybert said. “The bottom line is there is a lot of money at stake, and when you have a lot of money at stake you find a lot of lawyers and a lot of lawsuits.”
Two of the latest cases involve lone inventors who fought for years in courts to prove the validity of their patents.
In a KO reminiscent of the way James (Buster) Douglas flattened heavyweight boxing champ Mike Tyson, former university Prof. Robert W. Kearns in January came out on top in a 12-year legal match with Ford Motor Co.
A Detroit jury ruled that Ford had infringed on Kearns’ patent for a windshield wiper system that allows the driver to select an occasional sweep of the glass or the more brisk action available previously. The jury will reconvene later this month to decide how much Ford must pay.
Kearns also has filed suit against several other major auto makers that equip their cars with intermittent wipers.
In the second case, smaller cars were involved--or, rather, the flexible plastic track that carries a very successful line of miniature metal vehicles called Hot Wheels, which are manufactured by Mattel.
A federal judge in Chicago early this month upheld a $24.8-million jury verdict against Mattel and awarded interest that could amount to as much as $45 million. In his 12-year-old lawsuit, inventor Jerome Lemelson claimed that Mattel willfully infringed on his patent while the Hawthorne-based toy manufacturer contended that its track was different from the one Lemelson patented.
Mattel said it plans to appeal the decision.
Some cases have been even bigger.
In what is believed to be the largest settlement so far in patent litigation, Procter & Gamble wrested a $125-million settlement last year from three competitors it sued for copying its formula to produce soft cookies that are both crispy and chewy. Keebler, Nabisco Brands and Frito-Lay all changed their formulas shortly after the suits were filed, Procter & Gamble said.
But that could be dwarfed by damages in Polaroid’s 1986 patent-infringement victory over Kodak for its foray into the instant-photography field. A second trial to determine damages ended late last year and the judge is still deciding how much to award. Some observers believe that damages could top $2 billion.
Increasingly, patents, copyrights, trademarks and other intellectual property have been viewed as “assets that have an independent value,” said Bruce O. Baumgartner, who specializes in intellectual property litigation for the Cleveland-based law firm of Baker & Hostetler.
“There is more of an awareness by the average citizen that we’re talking about companies that have developed a substantial body of rights and a substantial body of knowledge--and these are good things,” he said.
When existing laws failed to protect their clients from counterfeiters in the late 1970s, Baker & Hostetler devised an aggressive strategy of going after everyone involved in producing and selling unlicensed copies of their products, starting with Snoopy and the other Peanuts characters. In one of the most extreme cases, the firm won about $6,500 in damages from a Los Angeles retailer convicted of selling one counterfeit Snoopy charm worth $8.
“Snoopy got the reputation of being the tough guy on the block,” Baumgartner said.
The rights of those who own patents and other intellectual property were greatly strengthened by Congress and the courts in the 1980s, patent experts said.
Before the 1980s, “a patent was often called ‘a license to litigate,’ ” said John Wiley, a UCLA law school professor and a patent law expert. Patent holders had little confidence that they could win infringement suits because U.S. Circuit Court judges all over the country would decide cases on appeal differently--some pro-patent, some against, he said.
But among its patent bolstering moves, Congress in 1981 decided to funnel nearly all appeals through the Court of Appeals for the Federal Circuit in Washington so that a uniform standard would be applied to patent cases.
Many patent lawyers say that juries have tended to favor the inventor, as has the appeals court.
“The CAFC has been, most observers agree, a strongly pro-patent court,” Wiley said. Such a stance “is in harmony with a number of changes in the economy. In particular, the United States is not as cocky about its technological lead as it was in the ‘50s, ‘60s and ‘70s.”
Not everyone agrees.
“I’ve heard that said, but I’m inclined to take that with a grain of salt,” Sybert said. “They (the CAFC) give people a fair shake and they base their decision on the facts.”
Mattel appears to be betting that Sybert is right.
In its recent news release responding to the jury verdict against it, Mattel emphasized that the decision “resulted from a jury trial” and added that the appeal would be to the CAFC, which “regularly deals with complicated patent infringement issues.”
