by: Patrick Anderson | January 23, 2018
LakeSouth Holdings v Amazon, Costco, & Ace Hardware
According to federal complaints filed on January 17, 2018, a large number of innovative and novel umbrella products sold through popular retailers were stolen from a Westlake, Texas inventor. The patent owner alleges that over a dozen companies legitimately paid for rights to use the patented technology, but major retailers like Amazon, Costco, and Ace want to free ride on the backs of hardworking smaller entities and inventors. In fact, LakeSouth alleges that Amazon specifically has access to authorized, licensed products to offer its customers, but chooses to cannibalize the property owner and licensed manufacturer’s efforts by also carrying pirated goods.
As is commonly the case, licensing was not the inventor’s first choice. Initially, the inventor operated a company called World Factory, Inc., which made and sold umbrellas. However, after spending years successfully defending validity of the patents through a series of re-examinations and Inter Partes Reviews, World Factory was forced to divest the patents to LakeSouth, presumably for the latter’s expertise in licensing. In particular, World Factory spent an additional eight years—on top of the three years—demonstrating the patentability of its invention at the USPTO. And then if that wasn’t good enough, LakeSouth was forced to deal with an erroneously filed Inter Partes Review in 2016, which tied up the assets for an additional six months until the Patent Trial and Appeal Board finally rejected the petition.
LakeSouth alleges that all three companies have been aware of the patents since at least 2014. A typical tactic from large entities is to delay licensing discussions to “run out the clock.” If the patent owner cannot maintain the financing necessary to fight ongoing battles in other venues, then large concerns like Amazon benefit substantially while taking on few, if any, expenses. However, such a strategy carries risks that are often discounted. In this case, LakeSouth will be seeking enhanced damages for willful infringement against all of these alleged intellectual property thieves.
Every Tuesday, IP Wire will highlight significant cases of intellectual trespass by some of the world’s the largest and most powerful companies. These illegal acts hamper commercialization efforts, as research and educational institutions simply lack the resources to compete with massive incumbents. In the case of public universities, public funds create technology and property rights, only to be stolen by massive incumbent organizations. In other cases, property rights stem from research by publicly subsidized, not-for-profit organizations. Companies who illegally use this technology without compensation are, in effect, stealing from the public, while entities that dare assert their rights are vilified in the media. IP Wire’s mission, and we choose to accept, is to get out in front of these stories and expose these actions for what they are: harmful and illegal.