Industry reps sent us an email yesterday drawing our attention to several lawsuits that have been brought against JT USA and Kee Action Sports involving patents.
Some media have gone the ‘titillating headline’ route in describing the lawsuits, making it sound as if the companies mentioned are embroiled in some high-level wrong doing involving paintball patents. (Nothing wrong with titillating headlines – we’re guilty of enjoying the same pleasure over here at 68Caliber. However, we believe that the responsible thing to do in such cases is to make sure that the content of the article fully explains the situation – a responsibility that does not seem to be respected by all paintball media outlets).
In fact, Kee and JT have gotten caught up in the latest of what can only be described as ‘nuisance patent lawsuits’.
Back in September, the Wall Street Journal brought this latest round of somewhat scammy litigation to our attention with an article entitled “New Breed of Patent Claim Bedevils Product Makers”
Here’s the summary: it is illegal to place expired patent numbers on product and/or to place patent numbers on product that isn’t covered by a patent.
The leading example in the WSJ piece involves Brooks Brothers Ties. (Yes, ties, like the ones you wear around your neck). An enterprising attorney realized that the ties were being marketed with an attached expired patent number and then threatened legal action against the company, which decided to go to court rather than settle.
The courts ultimately made a ruling that changed the way awards are given in such cases, ruling that instead of being able to recover $500 for the infraction, those who bring such lawsuits can recover $500 PER OFFENSE. In this case, that means PER TIE.
Anyone have any idea how many ties Brooks Brothers sold with the verboten patent number on them? (According to WSJ “Brooks Brothers had erroneously marked 120 different styles of ties…”. That’s styles, not ties. You do the math. If BB made only 1,000 each of the 120 different styles, and you multiply it by $500 per tie, you’re talking 60 million dollars.)
Following the ruling on fines,
According to Chicago-based merchant bank Ocean Tomo, which tracks patent suits, nearly 350 federal lawsuits have been filed since the December appellate court ruling. – WSJ
Legions of people are scouring the countryside, examining everything from toothpaste tubes to bow ties, so that they can bring largely frivolous lawsuits against companys that, for the most part, have done nothing wrong – with the exception of failing to update their packaging.
The upshot of it is that several large law firms have taken up the mantle of this quest and are adding to that pile of 350 lawsuits as quickly as they can.
Kee Action Sports, which has acquired numerous companies over the years, including JT Racing/JT USA, is probably a victim of allowing this packaging issue fall through the cracks.
But the headlines surrounding this issue (Kee Involved in Patent Lawsuit or some such) – which make it sound as if the company was guilty of some high crime – does not describe reality: all Kee did (if in fact they did anything wrong) was probably fail to take an expired patent number off of some of its masks and other product. Consumers are not harmed by the presence of the printed number, the product has not changed and no one’s patents were infringed.
Other paintball companies with patents – expired or otherwise – would do themselves a good turn by checking their expiration dates and making plans to remove this “damaging” information from their products and packaging at the appropriate times.
Read the WSJ piece for a really good overview of the situation.
Bill,
first of all, thank you for coming to 68Caliber and commenting. All thoughtful, considered and respectful communication is welcomed here.
Two things – without taking issue with the position you’ve taken. Paintball, as an industry, has been victimized for years by IP issues being wielded as clubs rather than scalpels. The blame rests squarely on two parties – business interests within our own community and with the USPTO which turned into the wild west following the switch to becoming a profit center for the government. Some parties within the industry took full advantage of the “opportunities” presented and obtained a writ to lay waste the competition, based in many cases on patents that were overly broad, demonstrably based on prior art or that used claim language the completely violated the requirement that “anyone skilled in the art &c”. On the whole, paintball is now gun shy of IP issues and views anyone utilizing it (rightly or wrongly) as engaging in unsavory practices.
Secondly. The primary issue being addressed in the commentary was the scads of people running around checking patent number expirations for the sole purpose of making a quick buck off of someone else’s thoughtlessness, examining products that they might otherwise have absolutely no interest in.
My personal inclination now is to inform the offending company that there are predators out on the street – which I would consider to be the FIRST action anyone ought to take in such circumstances. Going after companies that are still printing granted (though expired) patent numbers for quality product ought to only become a threatened legal action IF there is a genuine competitive concern and IF the offender fails to take action FOLLOWING a friendly, no threats, communication. Otherwise such actions become nothing but a tool to engage in what many (myself included) would consider to be an underhanded action.
In paintball’s circumstances, no one is trading off the value of their IP; I’ve been in this industry since 1983 and have NEVER heard a single customer say “I want that one because it has a patent number printed on it”. Patents come and go so fast in this industry that no one keeps track of them on the consumer side. All they know on the street is that they CAN’T purchase a product or maintenance parts for a product because someone else dropped the patent bomb on the manufacturer (and there’s cases to back up the statement that 95% of them are settled not because anything has been determined on the validity of the IP but because the defending company can not afford the legal actions.)
Finally, you said:
You’re right. If – manufacturers rely on to protect their ability to turn a profit in the course of bringing innovative products to market were true, the suits wouldn’t be scammy. Sadly, for the most part, that isn’t the case in this industry.
Yeah, and o.k., obviously I’m biased since I represent Blenheim, but still . . . ask yourself whether any company that spends hundreds of thousands of dollars to decide what color cardboard to use on a package is actually ignorant about the duration of a design or utility patent. Seriously.
This lawsuits may seem like a nuisance until you consider that most of the targets have aggressively policed the marketplace to deter competitors from marketing products that could deflect any portion of their customer base. The threat of receiving a cease-and-desist letter is enough to chill competition and innovation – who wants to invest time or money in bringing a product to market only to have some attorney advise that further marketing will result in a multi-million dollar liability exposure?
The net result: the monopolies that patents are supposed to guarantee remain unchallenged for YEARS beyond the date when the offending companies lost any legal right to demand exclusivity. Congress’ enactment of the False Marking Act was intended to deter this conduct by granting any member of the public the right to function as a whistle-blower, in a manner of speaking, and by offering such whistle-blower a financial incentive to protect the public.
These cases are NOT all that lucrative: most settle after plaintiff’s counsel have invested time and money in research and litigation. Meanwhile, the companies that try to cast themselves as blameless are accustomed to spending millions on advertising, compliance, and packaging to eek out every last hundredth of a cent of profit per unit. Yet they claim to be utterly unaware of the genuine status of the patents marked on their products and/or packages. Patents are granted with finite and non-extendable terms: you know on the date you are issued a patent when it will cease to have any validity. A further irony arises if you consider WHY a patent is on a product or package in the first place: the number is placed there to permit the patent holder to recover attorneys fees and punitive damages in a civil suit against anyone who infringes the patent.
These lawsuits aren’t “scammy.” They are a valid aspect of the same statutory scheme that manufacturers rely on to protect their ability to turn a profit in the course of bringing innovative products to market.