Learning from the past to protect the future: The biggest intellectual property blunders in history.
The World Intellectual Property Organization (WIPO) defines intellectual property (IP) as creations of the mind. This includes inventions, literary works, art, names and images used for commercial purposes. IP is protected by means of patents, copyrights and trademarks, and these ensure that the creator of the IP experiences financial gain from it.
But making mistakes when filing for IP protection can damage your chances of ever getting any benefit from your creations. The business world is chock-full of stories about companies losing out on IP because they made a fatal error. Here’s a look at some of them!
Google vs Art+Com
Terra Vision is a program fairly similar to Google Earth. It was a virtual representation of Earth created from satellite images, developed by the German architectural firm Art+Com. The idea behind it was conceived in the 1990s. The inventors had filed for a patent for Terra Vision in Germany back in December 1995, and they were also awarded a patent for their invention in the United States in 2013.
To popularize its program, Art+Com traveled to Silicon Valley where the creators of Terra Vision Joachim Sauter and Juri Muller met software engineer Brian McClendon before his stint at Google. The creators claimed that McClendon picked up the algorithm behind Terra Vision and used it to create Google Earth which was launched in 2001.
Based on this claim, Art+Com filed a lawsuit against Google in 2014. It was during the proceedings of this case that Art+Com revealed how they had been in touch with Google about a deal related to the sale of Terra Vision’s patent since 2006. But, according to Art+Com, Google lowballed their technology, i.e. offered much less money than the asking price, and thus it never ended up selling. The case was eventually won by Google since the technology behind Terra Vision had been displayed by a third party publicly in 1994—a year before they received the patent in Germany.
Barbie vs Bratz
Another memorable case to discuss here is the IP dispute between Barbie’s manufacturer Mattel and the owner of Bratz dolls MGA Entertainment that occurred in 2008. The reason behind this dispute was that the creator of Bratz, Carter Bryant, had been working on the Bratz dolls while he was employed by Mattel. He sold the idea for the Bratz dolls to MGA Entertainment two weeks before he quit Mattel. This, according to Mattel, was the theft of their IP. But Bryant claimed that the idea came to him at his parents’ house, between his various stints at Mattel.
The Bratz dolls were huge right from the start and made US$1 billion in revenue each year. They were probably the first competition Barbie saw in years, which explains why Mattel decided to sue. The initial lawsuit was won by Mattel and required MGA Entertainment to pay the company US$100 million in damages. It also required MGA Entertainment to hand over the rights of the Bratz franchise to Mattel.
However, MGA Entertainment wasn’t going to go down without a fight. They went to an appeals court, and the case was retried in 2010. This time, the court found that Mattel had no grounds to claim copyright infringement. Instead, the trial concluded that Mattel had stolen trade secrets from MGA Entertainment and owed it US$309 million in damages.
Xerox vs Apple
In 1979, Xerox invited the co-founder of Apple, Steve Jobs, and some Apple engineers to visit the Palo Alto Research Company (PARC). This was a company that worked on new and innovative products that Xerox could eventually make money from. During his visit, Jobs got to try out the personal computer created by PARC.
This computer (unlike others at the time) came with a mouse that could be used to move between different windows and had an interface with icons on the screen, all of which made Jobs quite excited. Unfortunately, the computer didn’t generate the same reaction in Xerox. Instead of innovating on it further, Xerox shut down its production because of a lack of market performance in 1981.
Soon after, Jobs and the team at Apple began working on a personal computer with the same features. In 1983, Apple launched Lisa, a computer with a mouse and a graphical user interface (GUI). This computer was fairly similar to what the PARC personal computer had. Thus, Xerox filed a copyright lawsuit against Apple for US$150 million in 1989. However, the courts didn’t find there to be a justifiable case and thus dismissed the complaint. The case lacked legal validity because Xerox didn’t actually own the idea of a mouse, and as far as the GUI was concerned, Apple had made so many developments to the interface that it could no longer be called a copy.
What does this teach us about IP?
What you may have noticed in all three of these cases is that IP rules are very specific in how they cover creations. In Art+Com’s case, the fact that their invention had been displayed in public before they got a patent for it brought the case crumbling down. In Mattel’s, it was the fact that the creator, albeit an ex-employee of the company, had created Bratz when he was not working with them. And finally, in Xerox’s case, the company had no claim over the mouse since it was someone else’s invention. When it came to the GUI, significant changes had been made to the “copy” so that it could no longer be considered an infringement.
Art+Com’s story tells us to always make sure that we never disclose our ideas in public before filing for IP protection. In Mattel’s case, it teaches us that a business doesn’t own any of the ideas that an employee came up with outside the course of their employment. And finally, Xerox’s case tells us that someone can very well take your idea and build something much better with it if you let them peek under the hood. It was invariably Xerox’s fault that they failed to do anything with the idea, otherwise, they might have ended up with a much better computer than Apple eventually created.
Make sure to keep these lessons in mind so that your startup doesn’t end up repeating the mistakes these giant companies made.
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Header image courtesy of Envato