Thursday, September 10, 2015

Deja vu all over again: threats against buyers of patented products

The caption of the famous Selden car case which found Henry Ford did not infringe the Selden patent is -- Columbia Motor Car Co. et al. v. C.A. Duerr & Co. et al., 184 F. 893 (2d Cir. 1911). -- If you are wondering, C. A. Duerr and Company was Ford’s New York distributor.

Ford and a Ford customer were separately sued.

Flash forward one hundred or so years and look at the recent Pfizer case in England:

From Bloomberg:

Pfizer Inc. was accused by a U.K. judge of making “groundless threats” of legal action against British doctors and drugstores if they prescribed or sold a generic version of its best-selling Lyrica treatment.
Judge Richard Arnold issued the rebuke as he ruled that Allergan Plc’s Actavis unit didn’t infringe Pfizer patents with its version of the drug pregalbin.
Pfizer “cannot justify the threat” in letters and e-mails to British health authorities and pharmacy groups that they may have been breaking the law by offering a generic version, Arnold said. Some of the messages were “calculated to have a chilling effect on the willingness of pharmacies to stock and dispense generic pregalbin.”


**From LBE's article in Intellectual Property Today titled "Looking Backward"

The beginning of the decision reads: “The subject is most important; the interests involved, of great magnitude; the record phenomenally long; and the questions presented, complex.” The decision continued: “During this long time the [...] art made marked advances along different lines, and when, in [...], the patent was granted, it disclosed nothing new. Others had then made the patentee’s discovery and had reduced it to practice in ignorance of what he had done. While he withheld his patent, the public learned from independent inventors all that it could teach. For the monopoly granted by his patent he had nothing to offer in return. The public gained absolutely nothing from his invention, whatever it was. Fromthe point of view of public interest it were even better that the patent had never been granted.”

The patent in question is not to a business method, nor even to such a thing as BT’s claim to a hyperlink. It is not a patent to Lemelson. The patent in question is US 549,160 issued in 1895 to a Rochester lawyer named George B. Selden and the decision in question is Columbia Motor Car Co. v. C. A. Duerr, 184 F. 893 (CA 2 1911), which found, among other things, that Henry Ford’s cars did not fall within the scope of the patent, mainly because Ford’s cars employed an engine different from that disclosed in the ‘160 patent.


Henry Ford tried to join [ALAM] in 1903, but was rebuffed. In one version of the story, his 1903 application was denied on the basis his company was more an ‘assembler of parts’ than a true ‘manufacturer’. Although somewhat debated, the real issue was price fixing of the cars, rather than the technology per se. Unlike today’s rather tame times, there was a real issue of lawsuits against buyers. ALAM ran ads “Do Not Buy a Lawsuit with Your Automobile” and Ford, in turn, took out ads took offering to indemnify both buyers and sellers of his cars from any lawsuits claiming Selden patent infringement.

Of the patent suit itself, Ford lost at trial, but established noninfringement on appeal. More so than in today’s patent suits, the news of his victory was a big deal. Ford was quoted: “Probably nothing so well advertised the Ford car and the Ford Motor Company as did this suit.” After the appellate decision on the Selden patent, Ford looked to market forces to solve business problems, much as certain software entrepreneurs wish in the year 2001. However, Ford was not a continuous innovator; for example, in 1922 he remarked “It is strange how just as soon as an article becomes successful, somebody starts to think that it would be more successful if only it were different. There is a tendency to keep monkeying with styles and to spoil a good thing by changing it.”

From footnote 4 of the IPT article:

To the extent that Selden’s idea was not to build such a vehicle but to wait around for someone else to do so and then cash in on his patent, there is relation to Edward Bellamy’s “Looking Backward” (1888), which was published between the application (1879) and issuance (1895) of Selden’s patent: “Living in luxury, and occupied only with the pursuit of pleasures and refinements of life, I derived the means of support from the labor of others, rendering no sort of service in return.” “In the United States there was not, after the beginning of the last quarter of the century, any opportunity whatever for individual enterprise in any important field of industry, unless backed by great capital.”

One notes "patent troll" issues can involve threats against buyers of patented technology.


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