Patent Humor:
So when Monster Cable Corp. sent a cease-and-desist letter to Blue Jeans Cable, Inc., alleging that the latter's "Tartan" brand cables infringed various patents belonging to Monster, they may have bitten off more than they can chew. Tuns out that Kurt Denke, President of Blue Jeans, was a lawyer in a former life, and the reply that he sent back to Monster makes for some pretty interesting reading.
After graduating from the University of Pennsylvania Law School in 1985, I spent nineteen years in litigation practice, with a focus upon federal litigation involving large damages and complex issues. My first seven years were spent primarily on the defense side, where I developed an intense frustration with insurance carriers who would settle meritless claims for nuisance value when the better long-term view would have been to fight against vexatious litigation as a matter of principle. In plaintiffs' practice, likewise, I was always a strong advocate of standing upon principle and taking cases all the way to judgment, even when substantial offers of settlement were on the table. I am "uncompromising" in the most literal sense of the word. If Monster Cable proceeds with litigation against me I will pursue the same merits-driven approach; I do not compromise with bullies and I would rather spend fifty thousand dollars on defense than give you a dollar of unmerited settlement funds. As for signing a licensing agreement for intellectual property which I have not infringed: that will not happen, under any circumstances, whether it makes economic sense or not.
And speaking of patent humor: If any of you happen to find yourself in Philadelphia on Friday [STEPHEN COLBERT, TAKE NOTE!!] I'm going to be playing over at Doc Watson's bar (11th betw Locust and Walnut) at a Temple Law School "Happy Hour," (5-7 PM), and will present the WORLD PREMIERE PERFORMANCE of "Francis Barnes' Underwear," surely the greatest (because the only) rock and roll song based upon a 19th century patent law case from the Supreme Court. (As you patent aficianados might have guess from the title, the song explicates Egbert v. Lippmann, 104 US 333 (1881), a case holding that an inventor's placement of a single corset-spring into his girlfriend's corset constituted a "public use" of the new spring design). Come on down!
I am currently representing a plaintiff in a case involving copyrights and trademarks in jewelry designs. Obviously, we think our case has merit. The defendants' counsel has convinced the other side that they are going to get the case dismissed on summary judgment. We disagree. So far so good -- we can disagree on the merits.
Only problem is, the items we are complaining about are only a small part of the defendants' line. Last year they sold about $10,000 worth. So far, they have spent, by my estimation, about $250,000 in fees.
Does this make any economic sense? What's the point of spending so much to defend such a small economic position?
Contrast this with some other defendants who quickly settled for a relatively small amount and an injunction. Costs them much less, and they can concentrate on the rest of their business.
(I of course understand that one does not want to attract numerous nuisance suits -- there is a detterrence value to standing firm. But what is that value?)
Having said that, Mr. Denke clearly has a substantial ego, but is also pretty funny. I got a kick out of this, though I doubt the same can be said for Monster:
"Not only am I unintimidated by litigation; I sometimes rather miss it."
As I noted at my blog he seems to have a pretty reasonable case simply through looking at a different monster cable patent that has now expired.
This seems to be a legal extortion attempt which looks like its going to get enough publicity as to backfire and harm the would be extortionists
I live that every day.
In the long-term view, if other attorneys started to get the hint, you would pay less over the long haul. You keep rolling over, and Plaintiff's attorneys know that all they have to do is demand your policy limits, you'll pay them something, and that's that. You tell them no, and tell them you want to depose 10 people and hit them with significant discovery, things change quickly.
I loved this guy's response.
Besides as much as I have some reservations of lawyers, I like Denke's pluck. Reminds me of the scene out of out of Dirty Harry -- "...You feeling lucky, Punk?"
I'll remember that the next time I see someone complaining about a company cutting corners or failing to act in a 'community friendly' manner.
After all, why bother upholding principles when there's a quick buck to be made?
YES. How much public exposure would this publicity had cost other similar small companies? I am certain this is bring enough attentions to them and their brand, that stick it out til bitter end can be a worthwhile strategy.
I knew of them before, as they are sponser of AVS forum, a popular home theater forum. They position themselves as a "reasonable" priced, good quality, "Made in USA," A/V cable provider. I am cheap, so I buy my cables from monoprice.com , but if they can some clueless buyers who currently buy Monster cables because of this publicity ...
I was not complaining, just pointing out that the defendants' strategy is not well thought out.
My client happily pays our fees, because we give value in protecting their IP. The primary value to our client is maintaining the exclusivity in its name and designs, and achieving published opinions upholding their IP rights. The monetary recovery is secondary.
The short answer is that there are principles and there are principles. Some issues have an overriding moral dimension -- such as whether a company should perpetuate racism or dump toxic chemicals in the local river. There principle should beat out profits.
In other areas, "principle" is just a synonym for being stubborn. Although the facts of this dispute are not that clear, it seems that the revolve around design patents for cable. Design patents by definition protect the ornamental look of a product. So the issue is whether one company that sells cable should use an ornamental look which another company claims to have rights -- rights granted by the U.S. Patent Office.
This is hardly an issue of great moral dimension. A company presumably can do a good business without using the challenged ornamental design. Or, it can say, Screw You, I am keeping my design, and go sue me.
I don't think it is a great sell out of principle to calculate that it makes more economic sense to use a different design and avoid the costs of litigation.
(Just so you understand, stubborness is not a bad thing. We make much more fees litigating against a stubborn defendant than a rational one.)
It is wrong to put temptation in the path of a corporation,
For fear they should succumb and go astray;
So when you are demanded to desist or be bankrupted,
You will find it better policy to say: --
We never pay any troll license fees,
No matter how trifling the cost;
For the end of that game is oppression and shame,
And the defendant that pays it is lost!
I wrote back saying you're right they are confusingly similar, but as you can see my client's trademark was registered 30 days before yours!
He wrote back saying they weren't so similar after all.
I agree with you here Bored Lawyer. But where can I see this calculation? Did you do it? If so, can you walk me through the numbers?
But look at the example I gave. For that one defendant, the items accused of infringement represented @10k per year in sales -- a tiny fraction of its business.
The litigation costs to date, I estimate, are $250k and probably will end up being double that if we take the case to trial.
Seems to me that, absent some outside consideration (multiple nuisance suits you want to deter, pubilcity you want to garner) that it would make much more economic sense to settle early on -- say for $20k plus an injunction not to repeat the infringement.
Sounds like the girlfriend has a slander suit available to her.
tim maguire, the statute of limitations has long since run on the slander case. The corset springs case is Egbert v. Lippmann, 104 U. S. 333 (1881). The best part of the case is the dissent.
I don't think it is a great sell out of principle to calculate that it makes more economic sense to use a different design and avoid the costs of litigation.
Sure -- if the design really does, in fact, infringe (or is similar enough to convince a court). But since Denke is apparently running his own company here, if that's how he wants to run it, he can.
Moreover, if the existing design is unlikely to infringe, then Monster may be trying to bully a competitor using the legal system, and in that case they could be expected to do so regardless of what the connector looked like, using superior legal resources to carry out the action until the competitor capitulates to a settlement and licensing terms. Denke and BJC would have to accept the initial cost of the settlement, and alter the company's prices to accommodate the ongoing deduction from its revenue.
In that case, your proposed strategy fails, and Denke has made a good decision in demanding that Monster drop the claim or carry it forward to judgment.
Wouldn't many of these problems diminish if we had a loser pays system? The client who spent $250,000 defending a principle would get his expenses back if he won and the plaintiff might think twice about suing in the future. It would be a win-win.
Letting it be known that you are willing to die in the last ditch could easily save the company far more than the suit costs.
I thought the reply was hilarious.
I've seen similar BS in many shapes and forms.
Perhaps. Or perhaps not. Depends on how many other potential plaintiffs there are waiting in the wings.
That's why I said "could"
Suspect the man on the spot -- the letter writer -- has far superior information than we do. Perhaps we should trust his judgment in the absence of reason to doubt it.
What do you play? Both instrument and general style.
I can't speak for him but I, for one, do believe in fiduciary duties toward shareholders. If you don't, I'd advise not practicing in Delaware.
http://www.myspace.com/davidgpost
DavidP
Sure, if enough shareholders disagree they can vote me out as President or CEO. But does that mean I'm _obliged_ not to look more than six months into the future?
Ask: what's the client/matter number, and when would you like it by?
Welcome to law.
I had just this situation a week ago, and I said thanks, but no thanks. Not writing it, even though I need the job and the money.
It's not just an ethics question. If you file a frivolous complaint, like this one, you're looking at a lot more trouble than just a fuzzy area of ethics. I'm not getting sanctioned by the court, or the state bar, simply because my client (or my boss, in this case) has a bug up his or her butt and wants me to file a complaint with little or no legal basis.
ANYTHING that discomforts Monster is red meat for the technical community. That simple act by Blue Jeans will get them more business in the next month than they've had up to now. Couldn't ask for better advertising.
If it's your own money to waste (like in this case), then go ahead and waste it. But don't get surprised if shareholders (where there are shareholders) take you to court over pissing away their money on lawsuits over pique.
Balancing long-term value against short-term value is a legitimate basis of decision - just don't call it "principle." The content of the fiduciary duties and when exactly principle and those duties can work together is too complicated for me to understand, much less explain. I just know that, when there is a clear choice between principle and shareholder value, you need more than a vague appeal to morality to discharge your duty.
If a board's view of the shareholders' interest conflicts with their own, of course they can vote him out, and that's their only remedy. But in a case of breach of fiduciary duties (like wasting money on a vengeful defense), the shareholders do have actual statutory and common-law remedies available.
Incidentally, BJC's RCA audio cables are about $32 for 3', not $50 as someone cited above. You can still beat that, but unlike Monster, they'll tell you exactly what you're paying for, using language appropriate to electrical engineering rather than language appropriate to wine tasting. (Monster's prices for a 1M RCA cable run from $20 to $200, the latter of course ensuring that the signal is sent with all its notes of oak and berry and a cocoa peppery finish intact.)
What you overlook is analyzing the cost to the first company to litigate. Why does it make sense for THEM to spend $200,000 in legal fees to shut down a competitor who sells $10,000 a year in the product line at issue?
Surely you would agree that it would make sense to at least adopt a strong posture in response to the first demand letter, to force the potential plaintiff to evaluate whether IT really wants to spend large sums prosecuting the case?
Yes! I know a defendant as his own lawyer is a fool, but Denke seems qualifed. If Denke does so then what is his cost? Mostly the opportunity cost for not performing his regular functions. He's down leveraged to be able to take the fight to Monster so that they will consider backing off.
What a society we live in.
It would seem that any critique of such a view would have to be premised on the proposition that that there are things shareholders find of greater value than money, and they could be expected to willingly change money for so that an increase in those underlying things could be regarded as fulfilling ones obligation rather than increase in financial returns stated as monetary units. But if taking such a larger view of what shareholders might value is prohibited, Weimar Germany has to be the preferable route.
It seems to me that it's just as reasonable to prefer an economy in which there is less extortion as it is to prefer an economy in which there is less inflation. If an executive can't act out of a preference for one sort of economy, I don't understand why an executive can prefer the other. Both situations regard not taking the annual report as reflecting all of reality and looking beyond it to see how the company and its shareholders interact with a context over a longer term. If executives aren't permitted to see extortion as potentially reducing their long-term value and to use short-term measures (that may cost over the short term) to counter it, why isn't the same true of inflation?
Worse, it encourages this type of bullying. And the phenomenon spreads.
The effect widens and soon everyone is hit by the financial and social reality that everyone is paying the bullies--and doing whatever they can to avoid the bullying
So in the short term you wind up not paying much, but in the long term('long' may not be the right word, as the bullying spreads the rate of overall damage accelerates), you wind up paying a lot anyway--and you get to enjoy being bullied every day.
There's only one way to get rid of bullies, and BoredLawyer isn't advocating it.
My fault, i was looking at a 3' bundled component video cable. Regardless, you can get an RG-59 coax component cable for less than 5 bucks without breakin a sweat. And if you insist on 24k gold connectors (in case you're AV system is subject to the periodic monsoon season) you shouldnt pay more than $20 for sure. But dont. If your gold plating chips off and your connector rusts, spend another 5 bucks. If this happens 4 times over the course of your lifetime you must be abusing your connectors in some way i am not familiar with (and probably dont want to know).
I just thought I'd chime in...
I happen to be an employee at Blue Jeans Cable. For what it is worth to you, Kurt was a federal litigator for almost 20 years. He's got several very high profile IP attorneys that he can call at any time - for FREE because they happen to be close friends. I've heard him tell tales of "beating up" on the EPA, The State of Washington, and others.
Actually, BJC has 8 employees and no shareholders. We are a small cable manufacturer in Seattle. The info that Monster cable sent us was ridiculously insufficient. The line drawings sent had no scale, no measurements, no reference to materials or colors, and did not really resemble anything that we sell except in a VERY general way (functional dimensions).
As far as the cost of our products... If you were to compare our cables part for part, quality for quality, you'd see the value. There is a difference between "consumer grade" and "broadcast grade" cable. Blue Jeans Cable sells the latter. Our Tartan line (the one that has Monster in a snit) is our cheap, chinese made economy line. I would put the quality of the Tartan cable up with anything you'll find at the big bhox stores (Best Buy, Circuit City, etc...). There are other things to consider other than price, and our customers know this.
FYI - I am a Professional Audio Engineer of over 20 years, as well as a former non-destructive testing engineer and metallurgist in the aerospace industry.
Whether they could fight the suit entirely based on principle (in the face of economic considerations) is an interesting question. Seems to me that courts are not going to be wild about telling companies that they have to settle a meritless suit simply because it doesn't make economic sense. Such a decision would not only spark a wave of frivolous lawsuits, but would encourage disturbing ethical lapses on the part of the bar.
When the board of a company reasonably considers a claim against it to be meritless, I'd be surprised if courts would allow waste claims. Breaches of care, loyalty, or good faith would of course be another question.
Here is a gadget blog post on the suit with a photo of the two cables.
To get some idea of just how worthless Monster Cables are, you can read this other gadget blog post.
Finally, while people might be able to make a reasonable claim that gold tips and other stuff improve the transmission of analog signals over a cable, the new digital cables will not benefit one iota from such silliness. DVI, HDMI, etc are all digital. Either the ones and zeros show up or they don't. You get a picture or you do not. There isn't the same sort of gradual degradation with digital that we expect with analog. Any HDMI cable that is certified to the standard will work as good as any other regardless of the price.