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Thursday, 30 September 2010

Who Stole IP Rights in a Pencil Eraser? Not Faber-Castell

It has to be one of the oddest comments that I have encountered in quite a while. The setting is the September 18th issue of The Economist. In the Business section, the magazine presented the kind of article for which it is rightfully reknown. Entitled "The Future of the Pencil" the article recounts the multi-generation saga of Faber-Castell, a German company located near Nuremberg that has been making pencils since 1761. They have done so with such success that the company is described as the world's largest branded pencil manufacturer.

This is no small feat. After all, a pencil is not a pen, and the market seems to be predominently school-age youngsters (although Otto von Bismark and Vincent van Gogh are also mentioned). As such, the company has to convince parents to opt for a branded pencil, when presumably unbranded options (perhaps at a lower price) are available. From the IP perspective, this saga of success spanning four centuries should be equal parts of trademarks and know-how. Sadly, however, the trademark issue is totally ignored in the article. I don't for how long the company has used the epopymous name as the mark for its products. But I have to guess that it reaches back to the 19th century. If this is true, there is a great story here about the longevity and continuing flourishing of this venerable brand.

Instead, the article focuses entirely on the innovative activities of the company. Thus, in 1839, the great grandson of the founder came up with the hexagonal pencil, whose principal virtue is that it effectively prevented the pencil from rolling off the table. Later on, they worked on making more firmer leads and identifying the types of woods that are less likely to break when the pencil is dropped. In more modern times, the company has come up with three major innovations: First, it began use of water-based, environmentally friendly paints. Second, it developed an ergonomic triangular shape that has been well-received by children (presumably they also teach the children the meaning of the term). Third, they added so-called rubbery dots to prevent the pencils from slipping out of the sweaty hands of the children.

All of this seems jolly good, so where is the problem? I quote from the article:
"Faber-Castell's second big innovation was stolen. In 1875 America's Supreme Court ruled that Faber was entitled to put rubber erasers onto the back of its pencils, although another inventor had already patented the idea. The court felt that the idea was too obvious to patent."

What did The Economist mean by "stolen"? I mean, in today's world, the bad guys, at least under one view of things, are the patent trolls, who are accused of seeking to enforce a patent solely for the purposed of extracting "unfair" rents from unsuspecting users of the patented invention. No one would go so far as to say that patent trolls are "stealing" from the third parties who agree to pay the troll a sum to settle. Be that as it may, the pejorative context of the patent troll is exactly the opposite from the Faber situation in the 1870's. All that Faber apparently did was defend itself from an infringement claim by alleging that the patent was invalid. If that is theft, then virtually every defendant in a patent litigation action is candidate to be of a "thief", if it succeeds in invalidating the patent at issue.

I actually looked up the judgment in question, Reckendorfer v. Faber, 92 u.s. 347 (1875). Interestingly, the patentee argued that the court did not have the authority to review a decision by the Patent Commisisoner to accept an invention for patent registration. That argument was rejected, but it seems that if there was any incorporeal larceny going on, it was the attempt by the patentee to prevent the court from reinstating in the public domain an exclusive right that never should have been granted in the first place. If there was any opprobrium to be heaped on the parties in that case, it should have been on the patentee and not on Faber.

I wonder what The Economist intended by its use of the word "stolen". Did it want to intimate that even in the 19th century, corporate America (or corporate Germany) was taking advantage of the legal system to deprive private inventors of their intellectual property rights? If so, how odd. As well, one has to wonder a bit about the nature of the understanding about the patent system that is found in this most august of weekly news magazines.


Anonymous said...

Is it not that the sunlit fields of IP grow most vigorously on carefully tended linguistic soil. And while the odd slip is just like a solitary pebble, a stony soil of carelessly used language is quite another matter: there is first "for which It is rightfully reknown", a phrase rightfully unkown in English ("rightfully renowned" or "of rightful renown" are examples of correct usage - notice the lack of a 'k'!). Also, do we really want to hear those beyond teen-age talk about "more firmer leads"? ...
And as for "stolen" - could not the simple explanation be that Faber thought of it first, implemented it first in Germany, say, and then found on entering the US market that someone else had secured a patent after their first use on the basis of local novelty provisions in the USA?

Anonymous said...

I have just glimpsed over the court decision, but I have the strong feeling of a hindsight analysis. It is of course obvious to put a rubber and a pencil together when you know about it, but the effect of having always a piece of rubber at hand when you are working with the pencil has been overlooked by saying that there is no added effect in the combination.

MaxDrei said...

For me the interest lies in the idea that a mere court is not allowed to interfere with a decision of the Commissioner of the PTO to issue a patent. There are echoes of this "duly issued" mentality in the USA, to this day, 135 years later, manifested still in the notion that only evidence that to a jury is "clear and convincing" will allow a US court to find that a duly issued claim to be embracing something that is obvious.

All very puzzling to any country that addresses patent validity, post-issue, with a competent inter partes process under the rule of law.

Tom said...

A very good post which I thoroughly enjoyed. Clearly there is a lot behind the implement of the dullest pencil pusher.

In my view the word 'stolen' was misused.

On pencil users other than school children and artists, the best story I know (the veracity of which I cannot vouch for) concerns the space race. NASA needed its astronauts to be able write notes. Ball points or Biros did not function well in zero gravity so NASA invested substantially in R&D to solve this issue. Either NASA or one of the pen manufacturers came up with the solution - a pumped ball point where positive pressure drove the ink not just gravity. This pen wrote well in zero gravity. These innovative (and perhaps patented?) pens were used by the astronauts and sold as a pen used in space which would write upside down. The Russian cosmonauts faced the same challenge which was solved by giving them pencils.

Anonymous said...

I'm afraid the NASA space pen story, while cute, is false:

Anonymous said...

They didn't steal; they merely borrowed.

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