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Source link: http://archive.mises.org/11600/the-patent-copyright-trademark-and-trade-secret-horror-files/

The Patent, Copyright, Trademark, and Trade Secret Horror Files

February 3, 2010 by

As noted here, “Ayn Rand’s newsletters used to end with a “Horror File” of monstrous but true quotations.”cen

Along those lines, it’s time to collect some choice trademark horror stories in one place. I’ll update this from time to time; feel free to add suggestions in the commcents. (Update: I have modified this post to also include outrageous examples from patent, copyright, and trade secret law. See below.)


As noted in Trademark versus Copyright and Patent, or: Is All IP Evil?, it’s not only patent and copyright that are unlibertarian and unjust. Modern trademark law is as well. I deal with tradmark rights on pp. 58-59 of Against Intellectual Property, and also in some detail in Reply to Van Dun: Non-Aggression and Title Transfer (esp. pp. 59-63). In my view, extensions of trademark law–rights against “trademark dilution” and cybersquatting, etc.–are obviously invalid. Further, federal trademark law is problematic since it is not authorized in the Constitution.

But even if federal trademark law were abolished, as well as modern extensions such as rights against trademark dilution, even common law trademark is problematic, for three primary reasons. First, it is enforced by the state, which gets everything wrong. Second (see First), the test of “consumer confusion” is usually applied ridiculously, treating consumers like indiscriminating idiots. Third, and worst of all, the right at issue is the right of the defrauded consumer, not the competitor. Trademark law ought to be reformed by abolishing the right of trademark “owners” to sue “infringers” (except perhaps as proxy for customers, when consent can be presumed or proved–as I discuss in this interview: Free Talk Live Interview on Reducing IP Costs (Jan. 20, 2010)), and treating this as a case of the customer’s right to sue a vendor who defrauds him as to the nature of the good purchased. Some might argue that this is only a minor change, but it is not: such a change would make it clear that “knockoffs” are usually not a violation of anyone’s rights: the buyer of a $10 “Rolex” is almost never defrauded–he knows what he’s getting. Yet by giving an enforceable trademark right to the user of a mark, he can sue knockoff companies even though their customers are not defrauded and in fact are perfectly happy to buy the knockoff products.

The other fallacy is the view at work here that there is no such thing as reputation, or even identity, absent trademark law. But this is incorrect. Of course people and firms can have reputations even if trademark law is nonexistent. All that is required is that people be able to identify other people and firms, and communicate. Pro-trademark arguments often implicitly assume that this is not possible, absent state-enforced trademark law, which is ridiculous.

In any event, on to a collection of trademark outrages for the horror files (some of these are also listed in Reducing the Cost of IP Law):


Taken (in part) from my article Radical Patent Reform Is Not on the Way, Appendix: Examples of Outrageous Patents and Judgments:

Examples of (at least apparently) ridiculous patents and patent applications abound (more at PatentLawPractice):

The Supreme Court, in the 1882 case Atlantic Works v. Brady, 107 US 192, itself lists examples of patents issued to “gadgets that obviously have had no place in the constitutional scheme of advancing scientific knowledge … the simplest of devices.” These included

  • a particular doorknob made of clay rather than metal or wood, where differently shaped doorknobs had previously been made of clay;
  • making collars of parchment paper where linen paper and linen had previously been used;
  • a method for preserving fish by freezing them in a container that operates in the same manner as an ice-cream freezer.
  • rubber caps put on wood pencils to serve as erasers;
  • inserting a piece of rubber in a slot in the end of a wood pencil to serve as an eraser;
  • a stamp for impressing initials in the side of a plug of tobacco;
  • a hose reel of large diameter so that water may flow through the hose while it is wound on the reel;
  • putting rollers on a machine to make it movable;
  • using flat cord instead of round cord for the loop at the end of suspenders;
  • placing rubber hand grips on bicycle handlebars;
  • an oval rather than cylindrical toilet paper roll, to facilitate tearing off strips.

Below are a few notable or recent examples of large, significant, troubling, or apparently outrageous injunctions, damages awards, and the like:


Some of these are also listed in Reducing the Cost of IP Law:

See also:

Trade Secret

Even trade secret law, the least objectionable of the four main types of IP, has been corrupted by the state.


Update: see also Recent IP Horror Stories and Outrages: Tolkien, Greens, Photographers.


Havvy February 3, 2010 at 5:52 pm

Feels like non-blog.mises.org material; Note how the newsletter *ended* with the quotes. The quotes were not the entirety of the material.

danq February 3, 2010 at 6:33 pm

Havvy, it doesn’t matter.

Stephan Kinsella is one of the very few free-market capitalists who admit that copyrights and patents were always and are a protectionist government grant and not a form of property.

It’s very rare to find libertarians and “free-market” conservatives who don’t ignore the existence of 200 years of history – almost all of them claim the Founding Fathers “supported” “intellectual property rights”.

This used to be in the Constitution Party platform. Also, I recently read something by the Heritage Foundation attacking open-source software (a voluntary licensing system) using this same flawed argument.

Stephan Kinsella, Mises.org, LewRockwell.com, we are very grateful to have you and your honesty on this issue.

Deefburger February 4, 2010 at 9:55 am

“The other fallacy is the view at work here that there is no such thing as reputation, or even identity, absent trademark law. But this is incorrect. Of course people and firms can have reputations even if trademark law is nonexistent. All that is required is that people be able to identify other people and firms, and communicate. Pro-trademark arguments often implicitly assume that this is not possible, absent state-enforced trademark law, which is ridiculous.”

Ok, so how does the consumer identify if there is no protection of identifying attributes?

For instance, suppose there is no Trademark law. I buy some paint from a local paint store for my living room wall that is in a can marked Kinsella’s DuraPaint – Pale Ivory. I paint my walls and I like it, but it is not enough and I need more. So I go back to the paint store and they are closed. Not wanting to leave my living room unfinished, I go to the next town over and find a paint store that has a can of Kinsella’s DuraPaint – Pale Ivory.

I get it home, finish the job, and when the paint dries I discover that it is not the same stuff.

How would I know before the purchace? How would the store owner know? How would the paint distributor know? What attributes constitute identity besides the actual results of use of the product or service? How do I as a consumer even know who it is I have a fraud claim against if I can’t tell which paint manufacturer it was that made the paint I used first?

More to the point, where is there fraud?

Both paints are fine paints. The only difference is in the color when they are dry. Both paint stores are fine paint stores and the quality of their paint is generally good. The distributor(s) don’t know either and may distribute Kinsella’s DuraPaint thinking it’s the same stuff.

But the two manufacturers are making different paint under the same name, trademark, and label. Which form of identity determines who the paint came from that does not involve the use or testing of the product to determine?

No one has committed fraud. But the consumer is suffering loss because of the lack of certain identity.

Stephan Kinsella February 4, 2010 at 10:29 am

Deef’s “Kinsella’s Dura Paint” example is not a good one. In the example, “Kinsella’s” means something–it identifies the paint as coming from a certain source, a certain manufacturer or company. You don’t need the state or IP law to be able to have communication, language, meaning, and identification. If there really was a second Kinsella selling the same stuff (a ridiculous example since when people go into business they *want* to have their own name!–you don’t see everyone choosing a white car, do you? or everyone naming their son John, do you? They have the right to; the horror of imagining a world with all Johns and all white cars! something must be done!!) — if you had this problem then the first Kinsella would just find a way to distingusih “Stephan Kinsella’s” paint, or “Kinsella’s paint*” (*: Kinsella Inc. located at ____ address, not to be confused with Kinsella#2 located at ___)

And the stores themselves would have an interst in carrying distinctively named goods, precisely so customers like you don’t get burned and come complaining to them.

Deefburger February 4, 2010 at 10:37 am


Peter Surda February 4, 2010 at 10:52 am

Dear Deefburger,

> Ok, so how does the consumer identify if there is
> no protection of identifying attributes?
The ability of a consumer to identify does not depend on “protection” of the identifying attributes. If it was, then I could be legitimately claiming to sell apples while actually giving the customers rocks, merely because there is noone to protect the identifying attributes of apples. In some cases, having a more formal procedure for verifying attributes is advantageous (e.g. certifications), but that still does not imply that anyone “owns” the attributes. Rather, it means that there is a relationship between those attributes and the certification (as defined by the certificate issuer), and those that pretend such a realtionship where there is none are committing fraud. It simply means that the contents of the contract do not correspond to their performance.

Andras February 4, 2010 at 12:08 pm

Does this collection of “ridiculous outrages” say anything about whether “Intellectual Property” is property? Or asked differently:
Does any, even the most ridiculous “application” of property rights (or the violations thereof) question property rights? Why do you stop at “IP” when we can make much bigger lists of just “P”-s as well.
You either do it on a philosophical level (e.g., ethics) or you get lost in the maze of applications, cherry pick and draw false conclusions.

Deefburger February 4, 2010 at 1:05 pm


The difference between one “P” and the other “P” is that one of them is physical material that obeys physical natural laws, and the other is non-physical material and obeys non-physical natural laws. They are not both the same kind of “P”.

Only Physical Material Objects have the physical property of scarcity, which is one of the main differences between physical and non-physical. Physical reality is more limited, and one of the results of physical limitation is scarcity.

If physical objects did not have this physical property, there would not exist a reason for Property in the world, as any thing could be possessed by many at once and at any time.

The questions concerning the non-physics of non-physical reality objects are important to consider in this modern world. Because we now have the ability, though limited, of emulating the non-scarcity of non-physical objects as physical phenomenon that have a greater potential for reproduction, in a manner that is similar to the same reproductive phenomenon exhibited by non-physical material. Digital physical objects have this limited ability.

In addition, our reach in the area of communication has extended even beyond the bounds of our planet. We routinely receive information via satellite and think nothing of it. Yet both the digital nature of our physical transmissions as well as the reach of our transmissions completely change the outlook of the laws that were established before these abilities were realised.

So now we are brought face to face with physical examples of non-physical behaviour that did not exist before. Real books, real film, real images, are real digitally. But these digital objects have the reproducibility of non-physical objects yet still remain physical. They can be moved at the speed of light from one person to another with no loss of content to either person or loss of usefulness in that content.

If we do not thoroughly examine the nature of these things and how they relate to our morals, ethics and economics, we are going to continue to believe things about them that are not true, and create problems instead of solutions.

Worse for us is that we already believe certain things that the new technologies challenge, and these beliefs are already codified in law. So this is a tough row to hoe for everyone.

The first problem is one of value. Value is cited as the reason for the protection, but in reality the value is in the protected object because of the protective law, otherwise the only value is in the utility. But by protecting the non-physical object with a legal fiction, a value that didn’t exist before is created by fiat.

So too we have the problem of digital representation. A digital file is not the same as a physical book or film of the same content. The digital representation costs nothing to produce or reproduce in comparison to the physical book or film. So protection of the now physical digital representation has similar problems as protection of the non-physical original pattern. Enforcement becomes a nightmare, as the digital copy can actually leave the planet and return 10000 miles distant in less than a second. Books and film never had this capability before when the laws were written. There were physical limitations that supported the beliefs in protection.

Shay February 4, 2010 at 1:20 pm

Andras, I think he was simply posting horror stories involving them. Can’t a cigar just be a cigar?

I like Deefburger’s example, despite the criticism it’s received, though of course I’m going to criticize it as well, just more on its own terms.

Let’s say that some other manufacturer made really cheap paint and gave it the same labels as Kinsella’s, in order to ride on its good name. First off, the normal distributor wouldn’t want to carry it, because it wouldn’t be coming from Kinsella. But let’s say they missed that and it slipped through, or the store was using a shady distributor. A store doesn’t want to get bad paint, because he’ll have returns or lost business. But let’s say this is a shady store. The customer doesn’t want to get bad paint, because he’ll have to repaint, at the very least.

So the customer shouldn’t choose a shady store. If everything is non-shady, and it somehow slips through, it can be traced back, through the distributor, so that the distributor, store, and customer can avoid it in the future. I think this is what Kinsella meant by “communication” as being one essential component. The identification would refer to the customer knowing what store he’s going to, the store knowing what distributor they’re buying from, and the distributor knowing whether they’re dealing with Kinsella’s Paints.

I can’t help but think of Mr. Rockwell’s recent article about losing the ability to even imagine how things could work in the absence of specific laws.

Deefburger February 4, 2010 at 1:47 pm

I agree. My example assumed everyone to be non-shady for that reason. Shady operation is exposed eventually because not everyone in the market is stupid! People talk, they communicate, and a shady operation is temporary at best.

Also, Stephan is right about naming. We have the right to name ourselves whatever we want. But it is bad business to name yourself the same as someone else because unless you are shady, there is no business advantage to it.

And I have posted similar challenges before and Stephan’s arguments against are clear and decisive.

There are other factors to consider in identity besides just the name, there is the place of business, the distribution channels run by other people who know who we are and where we are and what we make or do to name just two.

People are not stupid, generally. Creating or maintaining laws that can only possibly protect the stupid are a waste of time. But it seems that even though technology changes the need for such laws if not outright eliminates their effectiveness, we tend to cling to the fiat values such protections create, in spite of the evidence to the contrary.

Andras February 4, 2010 at 2:18 pm

I can’t see why scarcity is a qualifier. (Though I even argue that it does not exist in the case of IP. IP is scarce!)
If you want to take something, let it be physical or not, you will, independent of scarcity. You need to have something beyond scarcity which prevents you from doing so. What is that and how you enforce it?

Stephan Kinsella February 4, 2010 at 2:29 pm

I’ve already addressed the same issue as in the Kinsella-paint issue in variuos places, e.g. in the Lachmann-burger and Rothbard-burger hypo discussed in AGainst IP and also, in Reply to Van Dun: Non-Aggression and Title Transfer. It gets tiresome to repeat it. We don’t need to reinvent the wheel all the time.

Mark Hubbard February 4, 2010 at 2:30 pm

Interesting article from author Doctorow. He is for copyright, overall, which surprised me from what I knew of him. I’m wondering if his thinking is changing over the years, back toward copyright, but on the premise that in an Internet age, we have to change our thinking on it:

Copyright, companies, individuals and news: the rules of the road – Copyright may not be perfect, but when applied with common sense, it’s the best system we’ve got.


Shay February 4, 2010 at 2:36 pm

Andras, I suggest you read one of the many recent blog discussions here about whether the I in IP stands for Intellectual or Imaginary. These discussions are easy to find; just look for one with 100 or more replies. No need to rehash the discussion yet again here.

Deefburger February 4, 2010 at 3:16 pm

@Mark Hubbard

Finally we agree on something! Yes, indeed the nature of the problem has changed because the nature of real goods has changed. Some of them are digital and easily and cheaply reproducible, when before they could only be reproduced with a large expense in labor and capitol. This has grossly reduced the scarcity argument.

The Xerox copier had a similar impact. It still does, only now we don’t even need a scanner because what we wish to copy is already in a form that requires no effort to access and even less to display.

But what we do as creative individuals is important and valuable. I think the point of all this arguing is really to re-establish where that value is and why it’s there, and then find a reasonable way to monetise it that doesn’t infringe on anyone’s rights.

It’s an argument well worth having.

Sovy Kurosei February 4, 2010 at 3:22 pm

Stephen Kinsella

Farmer David Reaps What He Has Sown: A Patent Suit, Patent Baristas (Feb. 13, 2008) Even though “the practice of saving seeds after a harvest to plant the next season is as old as farming itself,” patents prevent farmers from saving patented seeds.

I read that and what I got from that is that the farmer signed a technology agreement with Monsanto and that he ended up breaking it when he saved seeds from one year to plant in the next year. Wouldn’t this be okay in an anarchist society? Even if patents didn’t exist what would stop Monsanto from just changing the agreement to include a patent-like regime for their seeds just between the buyer and seller? Would they be able to legally enforce it in a capital-anarchist environment?

Although it does remind me of another case with Monsanto. Here is the Wikipedia article on it:


The farmer had his canola contaminated with RoundUp Ready canola. He saved the canola and used it for next year but then Monsanto went after him and the farmer ended up having to destroy all his seeds.

Ben Ranson February 4, 2010 at 4:41 pm

Considering the poor fact checking in Mr. Kinsella’s recent Buddy Holly post, I would discourage Misis.org from publishing further strage and nebulous laundry lists such as this one.

Deefburger February 5, 2010 at 9:02 am

Economics and Law have to be tested and challenged if they are to be sciences. Unfortunately there is no laboratory for experimentation in these sciences, so the only testing and challenge is theoretical and logical.

What makes them difficult is that all of the scientists in these fields are in the petri dish themselves! The ones who consider themselves not in the petri dish too are missing the point.

If we just assumed that the Constitution, as amazing and wonderful a statement of liberty as it is, was perfect on the day of it’s creation, we would not be doing ourselves justice, or science. It is flawed, not by much, but there are flaws. Finding and correcting them furthers the cause and intent of the founders, provided we find more libertarian means of correction, and not allow the degeneration of the law into the same forms of oppression that history has shown to be inevitable when left alone.

Our collective reality has changed greatly since the Constitution’s writing. Many things that the founders could not see comming have arrived and the challenges to the document are many. How are we to resolve these issues correctly, scientifically, if we do not question the wording of the document in modern language and under modern circumstances? How are we to know the original intent if we do not understand the history at the time of it’s writing? How are we to correct it’s protections, fix it’s armour, if we do not attempt to find it’s flaws? How could we re-do what the founders did, unless we understand what liberty is and how it works?

We know now, that not only is Patent and Copyright flawed, but as Austrian Economists we also know that there should have been a fourth separation of power. Not just the Judicial, Executive, and Congressional branches, or the separation of church and state, but also the separation of treasury and state.

International treaties must be dealt with differently too. State sovernty must be left intact as well or we lose the ability to test change over time, by not allowing the independent states to differ in their focus and resolve. Law must be tested for efficacy on a smaller scale before it is incorporated into the more fundamental federal document.

This is some of what we know to be correctable. Doing it from within the petri dish is a major undertaking. Fortunately we are here because we are a bit ahead of the curve in these efforts, and not afraid to look closely and question.

El Tonno April 11, 2010 at 9:24 am


“In the patent arena, the U.S. Congress has set rules for the federal government that differ from those that apply to everyone else. When a patent is infringed for the benefit of the government, the patentee may have rights but cannot sue to stop the infringement. The government’s needs are deemed to override proprietary rights as a matter of public policy.”

El Tonno April 11, 2010 at 9:28 am

Oh yeah… why do they need the patented invention?

…..Federal Reserve Banks want to make their checks harder to counterfeit.


Ned Netterville February 15, 2011 at 12:37 pm

I suggest the addition of Sarah and Bristol Palin’s applications to trademark their names as additions to you list of absurdities.

Stephan Kinsella July 4, 2011 at 1:29 pm

I take back everything I’ve said, there’s a lot more to this than I initially presumed.

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