Small Business Advice On Shaking Down Others With Patent Threats

Legal Issues

from the misplaced-focus dept

Jesse Calderon writes in to point to ask our opinion on this article in Fortune Small Business from someone who runs a business that makes portable wine tote devices. The entire article is about the importance of the company’s patents, and how they spend a not insignificant part of their budget getting new patents and defending their existing ones — sending out cease and desist letters and even filing a few lawsuits. The company has even sent people to Chinese factories with their totes, asking the factories to design copycat items, and then threatening the factories that say they can (they claim that they’ve had “eight cash settlements” using this practice). There are a few different ways of looking at this. First, it seems like a lot of money that could be spent on continuing innovation that’s being wasted on preventing any competition from hitting the market and entrapping factories in order to get cash out of them. Second, is that even the guy admits that these things are really fashion items — and the fashion industry has historically thrived by not bothering with intellectual property issues and focusing instead on building brand recognition and continually innovating. You can obviously sympathize with the company, who admits there’s really nothing at all special about their totes other than the patents they have on them — but there are lots of businesses in this world that have to learn how to compete, and it’s hard to see why one firm should deserve a monopoly on the product. If the company worked on building up their brand recognition (and we have no problem with them using trademark laws to stop copycat products that confuse customers by copying their brand), brand loyalty and continually innovating their product line, then they shouldn’t have to worry about sending private investigators into Chinese factories to try to shake them down for cash.