solocupWhen a company deceives the consuming public, or exercises anti-competitive business practices in order to gain market share, we usually punish them. This is why a Washington attorney, in March of 2007, sued Solo Cup, and then Gillette, for claiming their products were protected by patents when in fact they were not. The story of Matthew Pequignot is not new. He found an archived legal hole that allows any citizen to sue on behalf of the government if they can prove that a company is guilty of “false markings” - or stamping a product with a patent number when that patent is long expired. Pequignot discovered that a number of companies had been taking advantage of such “scare tactics”, and through the legal hole, sued on behalf of the government using the “false markings” rule, the first individual to do so. The payoff is healthy - with damages calculated similar to copyright law - up to $500 per violation.

In March, a U.S. District Judge concluded that the law was constitutional (to let an individual sue on behalf of the government), and in May the Justice Department intervened on behalf of another individual trying to follow in Pequignot’s footsteps. So, if federal judges and the government believes the law is constitutional, and that such a case is worthy to pursue, then why does every person I speak to, and every article I read, denounce the cases as “frivolous” and deem the attorneys suing on behalf of the government in such cases as “looking to collect an easy payoff”. For an example, read this article from the Courier Journal.

I’d like not to touch on any personal dilemmas attorneys may have in pursuing a certain case, but instead on the legitimate and necessary function that laws fighting anti-competitive practices serve . . . especially with regard to intellectual property.  It is the inherent characteristic of intellectual property law that it may be easily abused.  In effect, it hands a monopoly to IP owners, and therefore IP law and antitrust law butt heads often.  After all, one protects competition, while the other protects a single competitor.  For this reason, laws similar to the one Pequignot triggered are important in balancing this clash and leveling the potential abuses that may occur when monopolies are exercised.  It is important to note that the U.S. intellectual property law system, its reputation and continuance, depends on laws that curtail its abuse . . . much like the “false markings” rule. 

Thoughts?


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This entry was posted on Tuesday, June 16th, 2009 at 7:54 am.
Categories: Trademark Trends ~ by Ian McClure.

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