A New Species of Patent Troll 258
Geoffrey.landis writes "According to the Wall Street Journal, there's a new species of patent troll out there. These new trolls sue companies that sell products with an expired patent number on them. That's right, it's against the law to sell a product that's marked with an expired patent number. The potential fine? $500. Per violation. And some of the companies have patent numbers on old plastic molds that have made literally billions of copies. Using whistle-blower laws, 'anyone can file a claim on behalf of the government, and plaintiffs must split any fine award evenly with it.' You've been warned."
Activision Hit with Incorrect Markings As Well (Score:4, Informative)
Wildly Overblown (Score:5, Informative)
The emerging case law on this kind of action is putting the damper on a lot of get-rich-quick schemes. First, the potential damages are up to $500 per violation. Courts are not handing down massive damage awards; quite the opposite, in fact. It's likely that most of these cases will end up with damages assessed at some fractions of a dollar or even fractions of a cent per violation. $500 per violation is a cap on damages, not a target.
Second, the courts are setting a fairly high bar for the 'intent to deceive the public' element of false marking. The majority of these cases are the result of typos or failing to retool an assembly line the moment a patent expires.
Good (Score:4, Informative)
As others have noted, incorrect patent marking stifles innovation.
Letting the public enforce this is efficient. It reminds me of how certain forms of illegal stock trading were discouraged. Certain stockholders are not allowed to engage in something called "short swing trading". If they do, and are caught, they have to give all their profits from the trade to the company. The brilliant way Congress and the SEC came up with to enforce this was to make it so any shareholder can sue on behalf of the corporation. If the shareholder wins (and he always does, because the people who aren't allowed to do these trades are the same set of people that have to report all their trades to the SEC, and so their illegal short swing trades will quickly come to light), the illegal trader has to pay the shareholder's attorney fees. Finally, in the most brilliant part of all, the shareholder only has to be one at the time of filing the suit--not at the time of the illegal trade.
Net result: law firms get the SEC data, run programs to identify short swing traders, go out and buy one share of stock in the company, and sue.
To make it worse, profits are calculated in a way that is very unfavorable to the defendant. Suppose you bought stock at 100/share, later sold that all at 90/share, then later bought the same amount at 80/share, and then sold that at 70/share. You've had a net loss of 20/share, right? That's what you bank account reflects--but that's not how the court calculates it. The court finds the lowest you paid and the highest you sold for and matches them. Repeat until as much is matched as possible. So, the court would just look at that 90/share sale and the later 80/share purchase, and order you to pay 10/share to the company. The remaining 100/share purchase and 70/share sale are ignored. So in addition to losing in reality 20/share on your transactions, and having to pay plaintiff's attorney fees, you also have to pay 10/share to the company!
This has made short swing trading so scary that among those who have to report their trades it virtually stopped shortly after these rules went into effect.
Re:Editors, please clearly define which side to ha (Score:5, Informative)
Re:Warehouse Ploy? (Score:3, Informative)
Re:Editors, please clearly define which side to ha (Score:5, Informative)
Re:Editors, please clearly define which side to ha (Score:3, Informative)
When this law was written, looking up the patent likely meant somebody taking a horseback ride to Washington D.C. to the patent office and paying a patent clerk to locate the patent and bring it out for inspection. At the time, the law made perfect sense. However, technological progress has rendered the law unnecessary and absurd.
And this, friends, is a perfect example of why EVERY law should be required to have a sunset clause after which time it is abandoned if not explicitly renewed. The fact that all these archaic laws are still on the books is embarrassing. Important laws will, of course, be renewed. Unimportant laws won't. This would also effectively cap the number of laws that can exist at any given time, which would be a good thing.
Re:Editors, please clearly define which side to ha (Score:3, Informative)
Also, from the summary:"it's against the law to sell a product that's marked with an expired patent number." Do I smell legislatively forced obsolescence? Does this mean I can't sell old tools in a garage sale, without the mentioned patent trolls coming after me?
Tis why you don't make business decisions on a comment on a summary of a summary.
To answer your question: no. This is similar to legislative bounties on other business practices that the state doesn't like, such as the ADA. I'm not going to get in to whether or not it is a good idea, but the notion that grandma selling dead gramp's tools is going to be hauled up on patent charges at her garage sale is silly. This is about claiming false "ownership" of IP.
There may be good policy reasons why we don't want to put a bounty on people who falsely claim to be in possession of state-sponsored idea rights. But it is important to cast what is going on here correctly: it is about (mostly, as in any IP, this is complex) about companies falsely claiming to own IP that they don't.
Some complaints in the original article ring true - manufacturing from an old mold, simple forgetfulness, etc.
Well, those arguments don't work well for most categories of business (try the "I forgot" argument in your next contract dispute). I don't see why there should be a difference for people claiming government protection on objects they sell.
Some of the hinted arguments I've seen (to be fair, not so much in that article) are even more bullshit - this should be allowed because they were true at one time, so we should be able to keep claiming it.
Bite me. Insofar as using a state-imprimatur for a monopoly on something should be allowed at all, it has to be honest. Even hippies should like this - state ain't gettin' no (or at least suboptimal) rent.
Libertarians should be much more up in arms. I guess anarcho-capitalists should applaud the chumming of the waters.
Anyone who live in the present world, however, should think this a good thing. It is pretty narrow: don't claim you have a government monopoly that you don't, and we're enabling bounty hunters to fuck you up if you do. Real producers with a problem on their etching molds will fix it; those that are exploiting it won't.
And for anyone who wants to claim "ZOMB, this will raise costs!", get back to me when you've come up with accounting that internalizes the overall cost of patents, before you start worrying about the costs of correcting lies about patents.