Absurd Lawsuits

Factual Questions
1

What is your (the group as a whole) stance on lawsuits presented against a patent holder for the rights to the secret behind the patent.

Allow me to elaborate:

If I were to make a cleaning product and patent it and make my fortune of of it, and then another company claimed that my superior product put him out of business and demanded access to my formula for the purpose of duplication, would this be a frivolous lawsuit?

Another variation: If I were to build my own computers and sell them to the public, and they become quite popular, would someone have the right to sue me if I made it impossible to use any other vendor’s monitor with my computer because they wanted to reap more profits for selling their monitors?
I will state my reason for asking later.

2

First, I agree with you on the lawsuits. We live in a free market society, and everyone should be allowed to use their ideas and inventions as they see fit. If another company can’t put out a product to remain competitive, they need to light a fire under their R&D people.

Second, I should point out a problem with your second example. Things like computers (and other electronics products) tend to be modular. People expect that. They don’t want to be told that if they by an IBM CPU, they must have an IBM monitor, an IBM keyboard, an IBM soundcard and speakers, and so on. If they don’t have that freedom, they’ll look elsewhere. No one expects any one company to know how to make the best (or most cost-effective) version of all these things. That is a danger, I think, that Microsoft is susceptible to. The latest versions of their software has to run on the latest version of their operating system. An operating system that is more flexible might be able to take over the market.

“The day after tomorrow is the third day of the rest of your life.” -George Carlin

3

I can see your second point’s direction, however i don’t feel anyone has the right to tell me how I wish to build my product. If I choose to limit the usability with modular components (the way, say, IBM did, or the older Mac’s) that is my problem. I don’t think people have the right to sue me to force me to comply with their whims.

Overall your last statement said it best, that a more flexible product might gain prevelence. and that is the chouice of the consumers, not of the legal system.

To deal with men by force is as impractical as to deal with nature by persuasion.

4

BurnMeUp, for your cleaning product example, in the US the patent holder would win. The US doesn’t allow for compulsory licenses. If it turns out that your patented cleaning product is superior and therefore puts another company out of business, the other company will have little recourse to patent law. (This assumes that you compete fairly - that you merely sold your product and the market decided it was better).

For your variation, if you manage to create some variety of physical or software method to insure exclusivity of your own monitors, you shouldn’t get in trouble. You aren’t obligated to be nice to competitors. What you can’t use are unfair means to insure exclusivity.

The more facts you toss out, the better the answers you can get.

You must give up your secret to get a patent on it. In the US, a patent gives a patent holder the right to exclude others from making, using, selling, importing to the US or offering to import to the US the patented invention. In the US this is very little deviated from. In other countries, it is possible to receive compulsory licenses - you can make the patent holder let you make the patented invention.

5

Burn, you are absolutely correct (as far as I know). I was just pointing out that there are other things to be considered than the legal implications.

6

It should be pointed out that there is nothing stopping anyone from sueing you for the most trivial reasons in most, if not all of the states and in Federal Court. Even if the case is thrown out, you’ll end up spending a couple of thousand dollars. And if it goes to trial, you’ll spend $10,000 easy if you plan on winning. You could turn around and sue the guy claiming he had a nusance suit but it would take years and years, especially if he appealed and you would spend more than you won.

Every time congress or one of the states tries to remedy this, the Democrats have a conisption fit, so don’t look for it to be fixed in our lifetime.

Jim Petty
A Snappy message should appear here

7

Well, then let’s just say you agree with the fact that the people presenting the suit shouldn’t win. I just realized my question made it sound like I was asking if they could sue you, I was rather referring to the question of, would they have grounds to win, or should they feel like they have the right to sue you.

Now was all know the root of capitalism is competition and the growth of your own choice of industry. What is you purposely priced your products below the competitiors and took a loss (that you were capable of taking) just to hurt their business? It is unlawful for you to sell your products at a loss?

To deal with men by force is as impractical as to deal with nature by persuasion.

8
      • The US government can grant compulsory licenses when the item in question is considered to be of national security importance. It would have to be a really good cleaner, though.
      • The bad news: anybody can sue you for anything, and even if you win and the judge tells them to pay your legal costs, if they ain’t got nuthin’, you won’t get nuthin’. IIRC a certain light aircraft company had 204 lawsuits between 1982 and 1986, over liability issues. All were dismissed, but the average cost of defense was $80,000 per case. - MC
9

One point that I haven’t seen mentioned yet in this thread is frivolous PATENTS. The U.S. patent system worked fairly well in the 19th century and most of this one, but the digital age is starting to expose some of its flaws.
For example, suppose I file a new claim- my “invention” is a cure for cancer that is taken orally. Under current U.S. patent law, I don’t usually have to actually present the patent office with a tablet that shrinks people’s tumors. I merely have to say, “This is a manufactured agent that is taken orally, for purposes of curing cancer.” I use the broadest definition of my “invention” that I can come up with without intersection of previous patents. The patent office then searches their files for “cancer cure, taken orally”, and if they don’t find it, I may get my patent.
It’s the job of the patent office to examine all claims and to cancel all stupid claims, such as the one I’m making. For a claim to be good, it has to be new, it cannot be obvious, and the inventor must be the first person who invents it (you can’t “reinvent the wheel” and expect a patent).
The definition of what is “obvious” is highly subjective. So there are plenty of fights between the patent office and people like me who file claims for what may be “obvious” patents. There are a multitude of appeals that are available to me in this process, and my lawyer can create many headaches for the patent examiner- who is usually rated by the Patent Office by the number of claims that they process! Plus, the search for existing technology may be difficult. There is an obvious limit to the technical knowledge of the people in the U.S. patent office, and patent scammers take advantage of the government’s technical illiteracy by simply being the first doofus to file a patent application for something that shouldn’t really be patentable, since it exists already or is too broad in scope.
Having filed a patent, I sit back and wait for someone to find a genuine cure for cancer. If it happens before my 20-year exclusive patent rights expire, I will have the legal right to block it. I can come out of the woodwork and extort the highest license fee I can get from the true inventor.
You might laugh at this contrived example, but that is the way U.S. patent law works. The example I used was for a medical patent, but the most common type of frivolous patent is when people patent stuff that has to do with the Internet. Real developments in digital technology are being hampered by technological parasites who come out of nowhere with patents they should never have gotten. It’s a scam that’s a bit like domain-name squatting.

(from “How can they patent that?” in Salon Magazine.)
One patent war that is currently raging involves the people at www.mp3.com . In January, the owners of www.sightsound.com sent a cease-and-desist letter to mp3.com which referenced U.S. patents 5191573 and 5675734. Essentially, these patents cover the sale of music files “in download form” over the Internet:

Essentially, the patent could be interpreted as pertaining to any attempt to transfer files over any type of network. The patent was filed in 1993, but file transfers (albeit not involving money) already were commonplace before then (in the parlance of patent law, existing technology that may intersect a patent definition is referred to as “prior art”).
As the holders of these two patents, Sightsound.com demanded royalties from mp3.com of 1% of all its digital music sales. Since no music is actually SOLD at mp3.com (their revenue comes from advertisements) they may have outweasled the weasels on that point alone. (I’m not sure what the present status of the MP3.com/sightsound.com fight is.)
In general, however, frivolous patents constitute a serious injustice to all of the real, hard-working inventors out there who are the genuine creators of new ideas and processes.

10

What is illegal is to use your monopoly power in one market to gain market share in another. In relation to BurnMeUp’s second example, if the computer manufacturer was deemed to have a monopoly on the computer market, then suddenly decided to be in the monitor market, and so modified their computer so it no longer worked with the other monitors, well, yes that would be illegal. To me that seems reasonable. In a similar vein, Microsoft forcing people to have Explorer if they want Windows, may be illegal as well. That’s what’s being decided in federal courts right now. It seems pretty clear cut to me, but Microsoft argues that Explorer is not a separate product, and that Windows is not a monopoly. It’s a hard sell, but they have excellent lawyers.

11

But, if the company that made the computer also made their own monitors in the first place should that be a problem?

Personally I think for Capitalism to work properly, the govenrment should not place limits on how a person descides to sell, market or create their product as long as it is not misleading.

ALso, the example that you cannot have windows without IE is false, you can install anything else you want, it just comes preinstalled, like the way that AOL, MSN, Compuserev, and Prodigy are also preinstalled (at least the connection software is) with Windows.

If I were to manufacture a car why would I have to include a competitors engine because I was selling more units?

If I were Coke and if I were selling more than Pepsi and Pepsi felt that my cornering certain Fast Food markets was a monopoly on fast food markets, would I be forced to make them share?

Deep down, anti-trust lawsuits go against what America’s freedom is supposed to stand for, the freedom to create, the freedom to sell items for your own profit. There is no gaurentee that if I were to try to sell hanburgers and suddenly an McDonalds chain opened in my neighborhood that I could sue them to have them closed down or limit their growth so I could catch up.

This is America and no one owes anyone the right to make a living. Competition is based on the idea that someone wins and someone loses.

We need to stop prosecuting winners and let the losers learn to grow, change, innovate or go out of business.

To deal with men by force is as impractical as to deal with nature by persuasion.

12

About the OP’s computer example, the answer depends on when you decided that your systems should not work with your competitors’.

If you design a new computer that uses completely non-standard hardware and software, and just start selling it, there’s no legal action that anyone can take to stop you. Even if everyone junks their IBMs and buys new “Weirdo 2000” PCs from you, driving your competitors out of business, they have no legal grounds to sue you because you didn’t do anything illegal.

But on the other hand, let’s say you start out selling plain vanilla PCs. Yours are the cheapest around, so after several years, 75% of home computers sold in the USA are built by your company. If you then announce that all your PCs will use nonstandard monitors-- built only by your company-- competitors can start suing you.

Tactics like these are what the Justice Department calls “predatory”-- they’re designed to force competitors out of the market. This mainly applies to companies who control a large portion of their market already; smaller players may try similar tricks, but very seldom do they have the leverage to take unfair advantage.

13

Pepsi owns Taco Bell, Pizza Hut and Kentucky Fried Chicken, so that was probably a bad example. However, it reminded me of something. When Pepsi bought those chains, Wendy’s and Burger King both sold Pepsi, and announced that when their contracts with Pepsi expired they would buy from Coke rather than “the competition”. Pepsi sued the two burger chains and Coke. And lost. But it still cost Wendy’s, Burger King and Coke money.

BTW Royal Crown Cola, 7UP and Dr. Pepper have been on the verge of winning a couple of law suits against the Big Two–mainly dealing with pricing tactics and pop machine contracts, but Coke and Pepsi settled before trials could start. That doesn’t mean that Coke and Pepsi thought they would lose the trial (although in the one case a new stlye pop machine was only being sold to Coke or Pepsi, no one else per contracts with those companies–The Big Two had zero chance of winning) what it means was, what they lost in negotioation was worth less than what it would cost to go to trial.

THere was a case in Akron, Ohio where the West Point Market fought, and won, in court a racial descrimination suit brought by the Federal Goverment. How trivial was the Goverment’s case? The NAACP backed the West Point Market. One of the three individuals who filed the complaint turned down the job then joined the suit later after the original two complaintants sued. The original two never applied for a job, their suit was based on the fact that the job openings weren’t advertized well enough in the minority areas. THe west Point Market won in Federal Court and won all appeals. The total bill was over $800,000 dollars for their defense. It would have been far, far, cheaper to cave in and settle the suit.

The resturant I used to be a assistant manager at went out of business, in part, because of a suit by the Federal Goverment. Even though the case was thrown out of court by a Federal Judge as being “contrary to law”, the company had spent of $17,000 on the case and defending the appeal in the Court of Appeals.

Getting sued costa a lot of money, if if you are right. And in most states, you have to sue to get damages to cover your court costs if even if you win. And there is no gurantee that you will and even if you do it could cast more money to wuin that suit that you would get.

Jim Petty
A Snappy message should appear here

14

Burnmeup writes:
Well, then let’s just say you agree with the fact that the people presenting the suit shouldn’t win. I just realized my question made it sound like I was asking if they could sue you, I was rather referring to the question of, would they have grounds to win, or should they feel like they have the right to sue you.
Now was all know the root of capitalism is competition and the growth of your own choice of industry. What is you purposely priced your products below the competitiors and took a loss (that you were capable of taking) just to hurt their business? It is unlawful for you to sell your products at a loss?

In general a company is not allowed to sell their product below cost to hurt a competitor. That is indeed called predatory pricing and is illegal. The main reason this is the case, is to protect consumers. In the free market of America, we still need protection. Let’s say that Company A sells a particular product at a loss, this causes all of the competitors to go out of business. Then Company A can buy all of their production capacity and raise the price of their product to an extreme amount. Without the competition, what keeps prices down?
In the example from AuraSeer, I think the company would be in violation of anit-trust laws if they put competitors out of business. The problem is the scenario given is not so cut and dry.
Even if your computer is used in 75% of America or even the world, you are not exclusive. If you now change the connection to your monitor, thereby causing all other monitors not to work, so what? All of the people that currently own computers can still buy the old monitors and if they do need a new computer and they do not like your monitor, then they can buy a computer from your competitor.
Look at Apple, the new iMac comes with a built in monitor. Can NEC, Sony, or anyone else sue them? Maybe, but could they win? Probably not. Even if Apple were the most popular computer in existence and they made this move, there are still other options. Anti-trust does not usually come into play, unless you are in a monopoly position and use that position to crush your competitors.
Jeffery

I am no lawyer but I play one on this board.

15

StrTrkr777 made a very good point, and the pricing issue does make sense. But let’s say you and a few other companies provides a product for free as free-ware over the net, and suddenly someone comes along and tries to make a profit by selling their version of said product. Is it now illegal because someone descided to sell that product or does the previous availability of free verions of this product by other people set a precidence in the marketplace?

To deal with men by force is as impractical as to deal with nature by persuasion.

16

Does something about this seem unfair? If we assume that the thing being sold isn’t subject to an intellectual property right, then selling it while others give it away isn’t unlawful. If it is subject to an intellectual property right and the seller receives permission, then it still isn’t a problem. For example, let’s say I invent a new computer operating system. Let’s call it Linux. I toss it out there, so that anyone who wants to use it can use it. Why should someone not also be able to sell it to people unwilling to get it for free?

US anti-trust laws require something unfair. I think several of your examples (see your post of 06-06-99 05:19 PM CT) suggest that you think any sort of competition can be outlawed. But, anti-trust law is geared towards unfair competition. Selling a Ford made with all Ford parts isn’t unfair. Microsoft refusing to sell Windows unless you also buy IE might be unfair.
Consider the differences. Ford isn’t a monopoly (although, they do have a monopoly over manufacturing Ford cars, this is a red herring). Microsoft might be a monopoly - something around 90% of PC operating systems are made by MS. Microsoft is fighting upwards of 50 lawsuits all the while trying not to be tagged a monopoly. A monopoly has market power. Consider most personal computers. Few people are prepared to purchase a computer without an operating system installed. Therefore, it seems to me fair to say that a computer manufacturer will go out of business if they only offer computers without an OS. So, that computer company turns to the largest OS provider and asks to purchase an OS program for each computer sold. Imagine that OS provider cackling, “of course, my pretty. But only if you buy this lovely little internet program”. Hmmm. Our intrepid computer manufacturer needs that OS, but plans to install a different internet program. So, to get the desired program, the manufacturer must also purchase an undesired program.
Does this seem the sort of competition that should prevail in the States? If this seems fair, I imagine the electicity industry would fly to Redmond and demand that Bill give them the keys to Microsoft before they turn off all the power in the US (and several other countries).
[/ramble]

17

Burnmeup writes:
StrTrkr777 made a very good point, and the pricing issue does make sense. But let’s say you and a few other companies provides a product for free as free-ware over the net, and suddenly someone comes along and tries to make a profit by selling their version of said product. Is it now illegal because someone descided to sell that product or does the previous availability of free verions of this product by other people set a precidence in the marketplace?

You ask an interesting question. That is very similar to what Microsoft did with IE. The old versions of browsers (i.e. Mosaic, etc.) were often given away. Then Netscape came along and started giving it away and then started to sell it. Microsoft began giving it away and continues to do so.

Now MS does have a virtual monopoly on the operating system, but not really on the browser. Netscape does not want MS to give IE away, because then Netscape has to give its browser away as well. They say that MS is using resources to product IE and is not making money on it. They claim predatory practices.

Maybe MS should not make IE such an integrated part of Windows, but the giving it away should be allowed. I like that you can download the new version for free. The question is Netscape put the other browser companies out of business, then they were going to sell their browser. Yet because Microsoft has come along and gives away their browser, Netscape complains saying that MS is trying to put them out of business.

In book that I recently read by Anne Wells Branscomb titled “Who Owns Information?”, she discusses how the legal area has not kept pace with the computer industry.

Most of it is decided on a case by case basis. I am not sure your questions have a definite answer.

Jeffery

18

If Microsoft is allowed to Make a browser and to make Windows, why shouldn’t it be allowed to combine the two? It’s their products is it not? If you want to load Netscape, Windows doesn’t stop you. I know many people who load Netscape on Windows. Microsoft is simply including one of it’s products free with another of it’s products (like including one game free when you buys another like many game companies do). Netscape (who by the way holds 49% of the browser market) is just upset that Microsoft is including it for free.

If Netscape created it’s own browser, would it be required to include IE?

To deal with men by force is as impractical as to deal with nature by persuasion.

19

>>Personally I think for Capitalism to work properly, the govenrment should not place limits on how a person descides to sell, market or create their product as long as it is not misleading.<<

Actually, the government puts all kinds of limits on companies. The things is, the limits are supposed to protect the public, and not other companies.

As one other poster pointed out, protecting COMPETITION – which is not the same thing as protecting other companies – is in the public’s best interests. Predatory pricing hurts “competition,” as opposed to “the competition,” (there’s a difference) and is therefore illegal.

If we really lived in an anything goes market place, then I could sell mediocre PCU’s that still trounced the competition, because mine came equipped with an ounce of dope in the CD-ROM drive. I can’t do this, because drugs are illegal, and that is (supposedly) in the public’s best interests.

As far as IE goes-- the courts are going to have to decide whether giving it away for free constitutes underpricing. There’s a good argument for this, because only a big company like Microsoft could afford to give it away.

However, if Microsoft can argue that a browser is now an integral part of a computer-- like a starter motor in a car for example-- then it can probably get away with claiming that the production costs are just built into the computers’ cost.

So a lot of this will hang on exactly what constitutes a computer, ie, what the public’s expectation is.

For the OP’s question: how, in your hypothetical situtation, does a company make it “impossible” to use another company’s monitor? With a complicated plug? Eventually, someone will market an adapter. By programming the computer to detect some kind of component chip in the monitor, and if it can’t detect it, then to erase it’s hard drive?

You can see how the courts would dismiss the first example, but probably determine that the second is not in the public’s best interest. I mean, suppose some doctor accidentally hooked up his computer to an incompatible monitor, and erased all his patient files.

I’m trying to think of a real life example of the second situation, but one isn’t coming to mind.

–Rowan
Shopping is still cheaper than therapy. --my Aunt Franny

20

It is, often, the business community itself that asks for such regulations. The last thing most companies want is an honest-to-goodness completely unregulated, anything-goes marketplace.