YSL Trademark Dispute Brings to Mind the Direction of Invention and Protection

In 2008, USPTO awarded designer-for-the-rich Louboutin a trademark for shoes with red outsoles. (Does this mean read outsoles would or could only be produced by Louboutin? Does this mean the trademark would be invalidated if Louboutin produced anything other than a shoe with red outsoles?)  We’re about to get some clarification, as YSL’s new Palais pump has Louboutin seeking relief in Manhattan District Court, stating the YSL offering is “causing confusion, mistake and deception among the relevant purchasing public as to the orignin of the infringing footwear.”

This brought to mind a great Dot.Commentary by James Temple over the weekend.

His premise is that the world’s patent systems now serve only the litigators. For one, there is too much time spent by authorities granting patents to non-inventors.  He cited two examples early in the article, that of a Melbourne man who won a patent for a “circular transportation facilitation device,” known to others as a wheel, and the 5-year-old Minnesotan who was granted “exclusive rights to use, sell or license a method for swinging on a swing.”

It’s not about invention anymore. Companies worldwide are geared up for litigation as part of their IP strategy, unfortunately perhaps the most important part.  A recent Virginia court decision is instructive. 01 Communique Laboratory had sued LogMeIn Inc. for infringing a patent on technology related to remote access to personal computers. The court granted LogMeIn’s request for Summary Judgment and dismissed the case. LogMeIn’s press release on the matter stated that it had set aside $8M to defend the case, most of which will probably now end up on the bottom line…or better yet, in R&D.

Perhaps a better indicator of the overwhelming costs associated with protecting IP in today’s marketplace is Googles’ starting bid for the remaining Nortel patents being auctioned in bankruptcy.

Paraphrasing Professor James Bessen in Patent Failure, Temple states “a system designed to encourage innovation by rewarding inventors has been turned against its purpose.  Too often it stifles development, swells product costs and rewards no one but lawyers.”

Valuators need to spend a lot of analytical time assessing organization's financial readiness and emotional willingness to do battle.