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Intellectual Property – so valuable and so broken

Posted by ipelton on: August 17th, 2010

A few recent cases illustrate why intellectual property is so valuable to businesses, and why the system for protecting and enforcing intellectual property rights is far from perfect:

  • YouTube recently won its case against Viacom regarding copyright infringements (although it will of course likely continue on in appeals). The case went to the core of what YouTube is – videos posted from a variety of sources.  YouTube was purchased by Google for more than $1 billion in 2006.  The case was obviously critical for YouTube to defend.  It has been reported that Google has spent more than $100 million to defend the case!  But a system where in the parties spend 100’s of millions of dollars in any case (remember, Viacom has expensive lawyers and the appeal fees will now begin) can be made better.  Do you have any suggestions?
  • MGA, maker of Bratz dolls, has been defending its intellectual property case with Mattel for years and won the last round (again, appeals likely). MGA’s legal fees: also more than $100 million.
  • Subway attempts to own rights to FOOTLONG name for sandwiches. They even sent a cease and desist letter to “Coney Island Drive Inn, a restaurant in Brooksville, Florida, has been selling 12-inch hot dogs — the restaurant calls them “footlongs” — for more than 40 years.” Listen to NPR  story for more; also see my prior blog post about about Subway’s efforts.
  • FBI (yes, that FBI), sends cease and desist letter to Wikipedia regarding their use of the FBI logo in reference materials about the FBI.  Story here.  FBI counsel’s letter here; response here.  Wikipedia page here (no doubt the page has receive far more traffic since this incident was reported than it would have otherwise over the next 10 years combined).  FBI claims that Wikipedia was violating federal statute, but was selectively quoting from that statute and was (in my opinion) misconstruing its intent.

These recent incidents demonstrate that intellectual property is extremely valuable to businesses but that good counsel may be hard to find. And any system that allows the parties to spend tens of millions of dollars in legal fees on a single dispute – no matter how valuable the intellectual property – needs improvement. While I’m sure the lawyers did a great job, when billing by the hour (I don’t know that these attorneys were, but it has not been reported otherwise) the attorneys do not have proper incentive to find the most efficient solution.  What about a fee agreement in which the lawyers get paid MORE if the case gets settled or resolved QUICKER with less work (and with the client’s objectives met)? Those types of agreements do exist, they are just not common yet.  But they provide win-win scenarios for clients and attorneys and should be explored.

Lessons: Protect your intellectual property, it may be incredibly valuable and if someday challenged it could mean everything to your business. Get good, reasonable counsel to work with you to protect your intellectual property – poor decisions about enforcing your rights, or sending out letters that will be fodder for media and the blogs may damage your intellectual property and your brand far more than they ever could have strengthened it.

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