As noted here, “Ayn Rand’s newsletters used to end with a “Horror File” of monstrous but true quotations.”
Along those lines, it’s time to collect some choice trademark horror stories in one place. The main post will be here, on the Mises Blog, but I’ll cross-post the initial post here too. But look there for updates (or to add suggestions in the comments). (Update: I might as well also list here similar examples from patent, copyright, and even trade secret. See below.)
As noted in Trademark versus Copyright and Patent, or: Is All IP Evil?, it’s not only patent and copyright that are unlibertarian and unjust. Modern trademark law is as well. I deal with tradmark rights on pp. 58-59 of Against Intellectual Property, and also in some detail in Reply to Van Dun: Non-Aggression and Title Transfer (esp. pp. 59-63). In my view, extensions of trademark law–rights against “trademark dilution” and cybersquatting, etc.–are obviously invalid. Further, federal trademark law is problematic since it is not authorized in the Constitution.
But even if federal trademark law were abolished, as well as modern extensions such as rights against trademark dilution, even common law trademark is problematic, for three primary reasons. First, it is enforced by the state, which gets everything wrong. Second (see First), the test of “consumer confusion” is usually applied ridiculously, treating consumers like indiscriminating idiots. Third, and worst of all, the right at issue is the right of the defrauded consumer, not the competitor. Trademark law ought to be reformed by abolishing the right of trademark “owners” to sue “infringers” (except perhaps as proxy for customers, when consent can be presumed or proved–as I discuss in this interview: Free Talk Live Interview on Reducing IP Costs (Jan. 20, 2010)), and treating this as a case of the customer’s right to sue a vendor who defrauds him as to the nature of the good purchased. Some might argue that this is only a minor change, but it is not: such a change would make it clear that “knockoffs” are usually not a violation of anyone’s rights: the buyer of a $10 “Rolex” is almost never defrauded–he knows what he’s getting. Yet by giving an enforceable trademark right to the user of a mark, he can sue knockoff companies even though their customers are not defrauded and in fact are perfectly happy to buy the knockoff products.
The other fallacy is the view at work here that there is no such thing as reputation, or even identity, absent trademark law. But this is incorrect. Of course people and firms can have reputations even if trademark law is nonexistent. All that is required is that people be able to identify other people and firms, and communicate. Pro-trademark arguments often implicitly assume that this is not possible, absent state-enforced trademark law, which is ridiculous.
In any event, on to a collection of trademark outrages for the horror files (some of these are also listed in Reducing the Cost of IP Law):
- Court Says U Of Southern California Only One Who Can Use USC; Sorry U Of South Carolina
- Who Dat? America’s National Football League causes outrage over catchphrase ban
- What’s Next–Trademarking Language? Don’t be *Ridiculous*!
- South Butt David versus North Face Goliath
- Lou Carlozo, Teen’s charity name draws the McIre of McDonald’s, Wallet Pop (Jan. 17, 2010) (McDonadl’s claims Lauren McClusky’s use of “McFest” for the name of a series of charity concerts she puts on infringes its “McFamily” brand)
- Budweiser trademark dispute (see also Chip Wood, A Bully-Boy Beer Brewer, Straight Talk (Oct. 16, 2007))
- 9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After All, Against Monopoly (Sept. 26, 2007)
- Kinsella, Trademarks and Free Speech, Mises Blog (Aug. 8, 2007)
- idem, Beemer must be next… (BMW, Trademarks, and the letter “M”), Mises Blog (Mar. 20, 2007)
- idem, Hypocritical Apple (Trademark), Mises Blog (Jan. 11, 2007)
- ECJ: “Parmesian” Infringes PDO for “Parmigiano Reggiano,” I/P Updates (Feb. 27, 2008)
- Mike Masnick, Engadget Mobile Threatened For Using T-Mobile’s Trademarked Magenta, Techdirt (Mar. 31, 2008)
Taken (in part) from my article Radical Patent Reform Is Not on the Way, Appendix: Examples of Outrageous Patents and Judgments:
Examples of (at least apparently) ridiculous patents and patent applications abound (more at PatentLawPractice):
- Amazon’s “one-click” patent, asserted against rival Barnes & Noble;
- Cendant’s assertion that Amazon violated Cendant’s patent monopoly on recommending books to customers (since settled);
- The attempt of Dustin Stamper, Bush’s Top Economist, to secure a patent regarding an application for a System And Method For Multi-State Tax Analysis, which claims “a method, comprising: creating one or more alternate entity structures based on a base entity structure, the base entity structure comprising one or more entities; determining a tax liability for each alternate entity structure and the base entity structure; and generating a result based on comparing each of the determined tax liabilities”;
- Apple’s patent application for digital Karaoke;
- the suit against Facebook by the holder of a patent for a “system for creating a community for users with common interests to interact in”;
- the “absurdly broad patent [issued to Blackboard] for common uses of technology if that technology is employed in the context of education” (see also Patent Office Rejects Blackboard E-Learning Patent One Month After It Wins Lawsuit, Techdirt (Mar. 31, 2008);
- Compton’s (now Encyclopedia Britannica’s) patent that “broadly cover[s] any multimedia database allowing users to simultaneously search for text, graphics, and sounds — basic features found in virtually every multimedia product on the market”;
- Carfax’s patent on a “method for perusing selected vehicles having a clean title history”;
- Acacia’s patent for putting a unique transaction number on a receipt;
- Pat. No. 6,368,227, covering swinging sideways on a swing;
The Supreme Court, in the 1882 case Atlantic Works v. Brady, 107 US 192, itself lists examples of patents issued to “gadgets that obviously have had no place in the constitutional scheme of advancing scientific knowledge … the simplest of devices.” These included
- a particular doorknob made of clay rather than metal or wood, where differently shaped doorknobs had previously been made of clay;
- making collars of parchment paper where linen paper and linen had previously been used;
- a method for preserving fish by freezing them in a container that operates in the same manner as an ice-cream freezer.
- rubber caps put on wood pencils to serve as erasers;
- inserting a piece of rubber in a slot in the end of a wood pencil to serve as an eraser;
- a stamp for impressing initials in the side of a plug of tobacco;
- a hose reel of large diameter so that water may flow through the hose while it is wound on the reel;
- putting rollers on a machine to make it movable;
- using flat cord instead of round cord for the loop at the end of suspenders;
- placing rubber hand grips on bicycle handlebars;
- an oval rather than cylindrical toilet paper roll, to facilitate tearing off strips.
Below are a few notable or recent examples of large, significant, troubling, or apparently outrageous injunctions, damages awards, and the like:
- In Stent Patent War, Boston Scientific Caves (Again), Agrees to Pay Johnson & Johnson $1.725 Billion to Settle Three Cases;
- Qualcomm has been enjoined from importing chips that help conserve power in cell phones (discussion; latest developments). See also Eric Bangeman, ITC to Bar Import of New Handsets in Patent Dustup, ars technica (June 7, 2007); Nokia’s Patent-Licensing Case against Qualcomm Dropped by Dutch Court, engadget (Nov. 14, 2007); Broadcom Wins Major Injunction against Qualcomm, engadget (Dec. 31, 2007); ITC Upholds Ruling, Reiterates that Nokia Didn’t Violate Qualcomm Patents, engadget (Feb. 29, 2008).
- Texas-Sized Patent Win, Texas Lawyer (Feb. 21, 2008). A New Jersey doctor was awarded $432 Million as a “reasonable royalty” against Boston Scientific for infringing his “Method and Apparatus for Managing Macromolecular Distribution.”
- Smartphones Patented … Just About Everyone Sued 1 Minute After Patent Issued, Techdirt (Jan. 24, 2008).
- Farmer David Reaps What He Has Sown: A Patent Suit, Patent Baristas (Feb. 13, 2008) Even though “the practice of saving seeds after a harvest to plant the next season is as old as farming itself,” patents prevent farmers from saving patented seeds.
- Apple, Starbucks Sued over Custom Music Gift Cards, AppleInsider (Feb. 20, 2008) A Utah couple sue Apple and Starbucks over their “‘Song of the Day’ promotion, which offers Starbucks customers a iTunes gift card for a complimentary, pre-selected song download.” The suit is based on a patent on a “retail point of sale for online merchandising” which allows customers to buy a gift card from a brick-and-mortar store and then go home and redeem the card online.
- Apple Sued Over Caller ID on the iPhone, Techdirt (Feb. 27, 2008). The patent is on “matching up the phone number of an incoming call with a local contact database to display who is calling.”
- The new 802.11n Wi-Fi standard (which promises to significantly increase Wi-Fi speed and range) is in jeopardy due to patent threats. See Bill Ray, Next Generation Wi-Fi Mired in Patent Fears, The Register (Sept. 21, 2007).
- SanDisk Sues 25 Companies for Patent Infringement: “Suits have been filed against 25 companies by the SanDisk corporation this week, as the company looks to stop businesses from shipping products it alleges are infringing on its work. SanDisk has filed suits against everyone from MP3 player manufacturers to USB hard drive creators. The list of defendants is staggering, and MacWorld notes if Sandisk succeeds it could have repercussions outside of the courtroom.… The court … complaints could affect the prices and availability of products made by companies targeted in the suit if SanDisk wins and the companies are barred from importing products into the U.S.”
- Patent Office Upholds Tivo’s “Time Warp” Patent, EchoStar Not so Happy, engadget (Nov. 29, 2007); see also Tivo Inc. v. EchoStar Communications Corp. (S. D. Tex., Dec. 2, 2006); and TiVo Wins on Appeal: Permanent Injunction against EchoStar to be Reinstated, Patently-O (Jan. 31, 2008).
- Jacqui Cheng, U R SUED: Patent Holding Company Targets 131 Companies over SMS patents, ars technica (Nov. 13, 2007).
- The International Trade Commission (ITC) may ban imports of many popular hard drives that “are alleged to infringe on patents owned by California residents Steven and Mary Reiber related to a ‘Dissipative ceramic bonding tool tip.'” Jacqui Cheng, Hard Times for Hard Drives: US May Ban Popular Imports, ars technica (Oct. 11, 2007).
- The VoIP phone service Vonage may be put out of business by patents. Sprint recently won a patent case against Vonage in which $69.5 million was awarded in damages. Sprint had planned “to ask the court to permanently ban Vonage from using its patented technology,” but the case was subsequently settled for $80 million. However, in a separate patent lawsuit between Verizon and Vonage, the jury found that Vonage had violated three Verizon patents, and awarded Verizon $58 million in damages plus ongoing royalties. Vonage claims it has developed workarounds for two of the patents. See Kim Hart, Sprint Wins Patent Case Against Vonage: Reston Firm Awarded $69.5 Million in Second Blow to Internet Phone Company, Washington Post (Sept. 26, 2007); Peter Svensson, Vonage Settles Patent Suit with Sprint, BusinessWeek (Oct. 8, 2007). Latest: Vonage Settles with Verizon, Owes Up to $117.5 Million; Vonage, Nortel Call a Truce — No Cash Changing Hands, engadget (Dec. 31, 2007).
- Kinsella, Revolutionary Television Design Killed by Patents (2007).
- BlackBerry’s manufacturer, RIM, was forced to cough up $612.5 million after NTP used patent law to threaten to shut RIM down.
- Microsoft was on the receiving end of a $1.5 billion jury verdict for infringing an MP3 patent held by Alcatel-Lucent (which was recently overturned).
- After Kodak sought more than $1 billion in damages from Sun Microsystems for patent infringement, Kodak finally settled for $92 million. (And according to one colleague, the verdict resulted “in the immediate shutdown of Kodak’s entire instant photography division, with the immediate loss of 800 jobs. And, some say, the eventual failure of Polaroid due to lack of any real competition to keep them on their toes!”)
- In another recent case, Freedom Wireless obtained a $150 million damages award against Boston Communications Group, Inc., which at the time had revenues of only about $100 million. In this case, the judge also refused to stay the injunction issues against BCGI (and by extension, its customers) pending appeal.
- Smith International was forced to pay Hughes Tool Company $204.8 million for infringement upon Hughes’s patent for an “O-ring seal” rock bit, which led to Smith filing for chapter 11 bankruptcy protection (this was in 1986, when $200 million was considered a large patent verdict).
- As of March 2003, the top 5 patent infringement damage awards ranged from $873 million (Polaroid v. Kodak, 1991) to $204.8 million (Hughes Tool v. Smith International, 1986). The top 5 patent settlements ranged from $1 billion to $300 million. Damage Awards and Settlements, IP Today (March 2003); see also Gregory Aharonian, Patent/Copyright Infringement Lawsuits/Licensing Awards. Sadly, a $200 million verdict seems normal nowadays. The recent $156 million patent-infringement verdict against AT&T, for example — which could possibly be trebled by the judge — now looks like small potatoes.
- Other recent cases include a $1.67 billion patent infringement verdict in favor of Johnson & Johnson against Abbott; a $400 million settlement paid to Abbot, by Medtronic, regarding stent devices; and a $716 million settlement paid to Johnson & Johnson by Boston Scientific (cardiac stents again).
Some of these are also listed in Reducing the Cost of IP Law:
- RIAA Wants $1.5 Million Per CD Copied, Slashdot (Jan. 30, 2008);
- Ford Slaps Brand Enthusiasts, Returns Love With Legal Punch, AdRants (Jan. 14, 2008) (Ford Motor Company claims that they hold the rights to any image of a Ford vehicle, even if it’s a picture you took of your own car);
- Jacqueline L. Salmon, NFL Pulls Plug On Big-Screen Church Parties For Super Bowl, Washington Post (Feb. 1, 2008) (NFL prohibits churches from having Super Bowl gatherings on TV sets or screens larger than 55 inches);
- Internet pirates could be banned from web, Telegraph (Feb. 12, 2008) (British proposal to punish individuals who illegally download music by banning them from the Internet); John Tehranian, Infringement Nation: Copyright Reform and the Law/Norm Gap, Utah L. Rev. (forthcoming; SSRN);
- Cory Doctorow, Infringement Nation: we are all mega-crooks, Boing Boing (Nov. 17, 2007);
- Court Says You Can Copyright A Cease-And-Desist Letter, Techdirt (Jan. 25, 2008);
- Kinsella, Battling the Copyright Monster, Mises Blog (June 19, 2006);
- dem, Copyright Kills Amazing Music Project, Mises Blog (Jan. 2, 2008);
- idem, “Fair Use” and Copyright, Mises Blog (Aug. 17, 2007);
- idem, Copyrights and Dancing, Mises Blog (Feb. 20, 2007);
- idem, The “tolerated use” of copyrighted works, Mises Blog (Oct. 27, 2006);
- idem, Copyright and Birthday Cakes, Mises Blog (June 16, 2005);
- idem, Heroic Google Fighting Copyright Morass, Mises Blog (June 2, 2005);
- idem, Copyright Gone Mad, Mises Blog (Apr. 14, 2005);
- idem, Copyright and Freedom of Speech, Mises Blog (Nov. 8, 2004).
- Joost Smiers & Marieke van Schijndel, Imagine a World Without Copyright, International Herald Tribune (Sat. Oct. 8, 2005);
- Jessica Litman, Revising Copyright Law for the Information Age, 75 Oreg. L. Rev. 19 (1996);
- Kinsella, Copyrights in Fashion Designs?, Mises Blog (Sep. 27, 2006);
- Kinsella, Britain’s Copyright Laws, Based on a 300-Year-Old Statute, Desperately Need Reshaping for the Digital Age, Mises Blog (Nov. 2, 2006).
- For a humorous parody of copyright abuses by the RIAA, see CD Liner Notes of the Distant Present, Something Awful (Jan. 3, 2008).
Even trade secret law, the least objectionable of the four main types of IP, has been corrupted by the state.