Owning the Intangible/Sports Patents

Sport Patents: Hurting Not Helping
by Andrew Clark

Introduction

Many people know when popular athletes deal with the law. For example, everyone heard about Tiger Woods and his recent scandal. But, few hear of when the companies that make their equipment are involved in lawsuits, akin to when Riddell Inc sued Schutt Sports. In the sports world, this is common. Lawsuits arise when one company feels that another infringed on their patent of a certain piece of equipment.

Patents would promote innovation in the perfect world. Sadly, the world is not perfect, thus patents often hinder progress. . “A new study challenges the traditional view that patents foster innovation, suggesting instead that they may hinder technological progress, economic activity and societal wealth” (ImpactLab, 2009). Brad Feld (2010), a MIT graduate and founder of Feld Technologies, agrees that patents possibly slow down innovation.

How do patents work? There are three kinds of patents according to the United States Patent Office:

Utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof; Design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture; and Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant (USPTO 2005).

To receive the patent, the inventor must send a written application to the USPTO for approval. Once that application meets the requirements and all fees are paid, the application undergoes examination. The application is then published pending the result of the examination (USPTO, 2005). Then, the inventor of the patent receives exclusive rights to their work, preventing others from creating and distributing the product. Patents must be renewed throughout the years, but the patent expires after a period of twenty years (USPTO, 2005). Patents cases arise in the sports world dealing with the equipment used.

Companies become worried that someone else is going to use their product, and they won’t get any credit or profit from it. This becomes an issue in sports because manufacturing companies look for lawsuits rather than improve on the equipment that already exists; that way the company does not have to spend money on research and development for a new product. The helmet industry, specifically for American football, has to deal with patent law due to a heightened awareness of concussions, and patenting certain products leads to patent lawsuits. Companies are in a competition to create the best helmet, balancing protection and mobility. In doing so, they patent their designs and sue other companies for infringing on their designs. Not only does this pertain to American football and helmets, but to all sports with equipment used. If it is an object in the sport, it is most likely patented. Although sports have new technologies and equipment to prevent athletes from injuries, patents on the equipment hinders progress towards superior athlete protection and performance.

Lawsuits

The whole nation knows when a popular athlete gets in trouble with the law. But, few know when the companies that create the equipment the athletes use get involved in lawsuits. Multiple cases arise in all sports; the few mentioned here just scratch the surface. Companies are out trying to find a way to gain a monopoly or gain a substantial profit by destroying competition instead of innovating and producing improved sporting equipment, resulting in the hindrance of sports.

Since Tiger Woods was mentioned earlier, why not start with the sport of golf? The case of Callaway Golf Company v. Acushnet Company dealt with a patent on the design of the golf ball. Callaway was able to create a golf ball that could travel far and sustain a lot of damage, “qualities not typically combined in one ball.” (Weiner, 2009). Callaway accused Acushnet for patent infringement when some of Acushnet’s Titleist-brand golf balls performed similar to that of Callaway’s golf balls (Weiner, 2009). Acushnet may have made enough changes and improved the ball in other ways, but since they were in competition with Callaway, Callaway wanted to get them out of the picture. If an innovation on golf balls improved the sport, why not let it be widely used?

Another case arose, but this time in the sport of lacrosse. Warrior Sports Inc. filed a lawsuit against the NCAA because of a patent relating to the size of the stick used in the sport of lacrosse. The NCAA decided to change the regulation size of the lacrosse sticks used in the sport, therefore making the sticks Warrior Sports create illegal. Furthermore, a different company had rights to a patent similar to the new regulation size, meaning that companies like Warrior Sports would violate that patent if they made lacrosse sticks to the specified dimension (Wild, 2009). The NCAA asked that company if they would license other manufacturers to use the patent, but that company did not cooperate (Wild, 2009). That other company was essentially attempting to create a monopoly for lacrosse sticks by not allowing others to use the patent. They hurt the advancement of the sport by forcing the NCAA to make changes in rules again and prevented the athletes from having a broader range of superior equipment. The NCAA made changes to the regulation size of stick because they believed it made the game play of the sport of lacrosse better (Wild, 2009). The longer stick sizes made it difficult for one to get the ball out of the opponent’s stick, so the athletes would hit each other harder, resulting in more injuries. However, the patent obtained by that other company just threw a stick in the gears.

Football is arguably the most popular sport in America, so it can’t be left out. A case between Riddell Inc. and Schutt Sports, two popular manufacturers of American football helmets which are widely used in all levels of competition, ranging from junior leagues all the way to the NFL. Recently, Riddell filed a lawsuit against Schutt claiming that the DNA and Ion helmets created by Schutt infringed on Riddell’s patent dealing with concussion prevention. Schutt lost the case and it hurt them dearly, costing them twenty-nine million dollars (Sachdev, 2010). Schutt Sports had to file for bankruptcy thanks to the cost of the case and the problematic economy.

A representative of Riddell claimed that he “was not aware during the course of the case that the consequences of winning would be so severe against his opponent.” (Sachdev, 2010). How could Riddell not know? Schutt was a major competitor at the time, meaning that Riddell looked for a way to hurt the competition and create a monopoly. Later that year, Riddell brought another lawsuit against Schutt, but it concerned shoulder pads instead. Schutt Sports then claimed, “Riddell is "inundating" it with suits in an effort to drive it out of the market and essentially enjoy a monopoly.” (Sachdev, 2010). The case concerning the shoulder pads “twisted the dagger” in the Schutt company, ultimately forcing Schutt out of the competition. Clearly, Riddell focused on trying to drive their competitor Schutt out of business instead of creating superior equipment for American football.

Companies battle each other in every industry. They will use patents to gain a competitive edge instead of using patents to protect their design, which is clearly a case in the sporting industry. Companies make their patent broad enough to the point where they can sue competitors for producing a product too similar and possibly force their competitor out of business, which grants more power to one company. In the sports world, companies only look to solidify a good position in the industry financially instead of advancing the sport with better equipment or technologies; patents only help them achieve that. Both the industry and the athletes suffer because of such problems. Sometimes that even puts the physical health of the player in danger due to sub-par or outdated equipment.

Concussions

Most concussions happen when an athlete experiences a severe blow to the head, and the severity of symptoms may vary depending on the strength of the hit. Concussions are fairly common in American football because of the big hits. One of the most important issues of player safety in football is concussion prevention, but the number of concussions in the National Football League this year has increased drastically. Controversies over helmet patents hurt the players because the company’s greed comes before the safety of the athletes.

What are some of the symptoms of a concussion? According to a fact sheet put together by the NCAA for student-athletes:

You can’t see a concussion, but you might notice some of the symptoms right away. Other symptoms can show up hours or days after the injury. Concussion symptoms include: Amnesia, Confusion, Headache, Loss of consciousness, balance problems or dizziness, Double or fuzzy vision, Sensitivity to light or noise, Nausea (feeling that you might vomit), Feeling sluggish, foggy or groggy, Feeling unusually irritable, Concentration or memory problems (forgetting game plays, facts, meeting times), Slowed reaction time (NCAA, 2010).

It is dangerous when an athlete does not report that they may have a concussion; many athletes do not for fear of losing playing time. However, concussions are a brain injury and need to be taken seriously.

In the Nation Football League this year, the numbers of concussions have increased drastically from past years. “There has been an average of over 100 reported concussions every season in the NFL …” (Schermick, 2010). Through week six of the seventeen regular week season, nearly fifty concussions have been reported. An NFL graphic during the Sunday Night Football game of week six compared the number concussions through week six, and the fifty concussions at that point surpassed the previous year by about ten.

It is possible that the concussions are not all the fault of the player’s electrifying hits. A new helmet was introduced into the NFL this year which could possibly contribute to concussions. The increased number of concussions can be related to a patent because this new helmet had to be created in a way so it avoided patent infringement. Therefore, replacements for key safety features could have been made, and those replacement parts may not have performed as well as the parts featured in another patent. The possibility of an infringement lawsuit placed a lot of concern on a company, and that forced them to create an inadequate helmet.

It is obvious that new equipment is needed given all of these problems. But, the new equipment needs to focus on player protection rather than avoiding a lawsuit. It is the case that helmet patents are literally hurting the NFL and its players more than ever. Companies could concentrate more on player protection if the possibility of patent infringement did not exist.

Hindering Innovation

Society believes that patents foster innovation, but patents actually do the opposite. Patents affect all sorts of manufacturers, so troubles with patents in one industry can relate to patent trouble in the sports industry. Patents can place a lot of restrictions on a certain product with all of the specifications and claims that can go into it, which then creates difficulties for other companies to make a product of their own in the same industry. Conducted studies have actually shown that the patent slows down progress. Patent litigation has even been called a “Legalized Blood Sport” (Tabb, 2010). Although patents are supposed to foster innovation, there are restrictions and even experiments that prove otherwise.

Companies can and do put as many claims as possible on their patents. All of these claims become restrictions for other companies because they cannot use any part of their patent. Take Riddell’s helmet mentioned in the earlier Riddell Inc. v Schutt Sports case. The patent number for Riddell’s helmet is 6934971 and it has seventy-three claims with specifications about the helmet (Ide, Infusino, Kraemer, Withnall, & Bayne, 2005). Some claims continue building off each other as well. What if a company patents a crucial piece of the invention and there seems to be no other way for competitors to create around it? Or, what if they put so many claims or restriction on it that it becomes difficult for competitors to make their own product without legal issues? Theoretically, that company could drive out competitors that try to create a product in the same industry and enjoy a monopoly over their industry in such cases.

Experiments have been conducted to determine whether patents hurt or help innovation. Andrew W. Torrance, a professor at the University of Kansas School of Law, and Bill Tomlinson, a professor at the University of California, Irvine, conducted on such experiment. They created a game that put users in a patent and also a non-patent environment. “The Patent Game uses an abstracted and cumulative model of potential innovations, a database of potential innovations, an interactive interface that allows users to invent, make, and sell these innovations, and a network over which users may interact with one another to license, assign, infringe, and enforce patents.” (Tomlinson & Torrance, 2009). Tomlinson even stated that, ““In PatentSim, we found that the patent system did not work to spur innovation.” (ImpactLab, 2009).

Wall Street & Technology editor Larry Tabb calls patenting a “Legalized Blood Sport” (2010). That is understandable considering the fact given above, but what are his reasons? He reported on patent issues concerning trading technology vendors: A few trading technology vendors have been using the judicial system to pummel each other and, by extension, the industry. ESpeed, BrokerTec, Trading Technologies, Reuters and Bloomberg are all hip-deep in this mess. Over the past six or seven years, eSpeed has sued virtually all the bond trading platforms (most recently BrokerTec) in regard to its inter-dealer broker fixed income trading capabilities. Reuters is suing Bloomberg over FX intellectual property infringements. And, most notoriously, Trading Technologies is suing eSpeed and others in a scheme to force the U.S. and, by extension, the global financial futures industry to pay Trading Technology 2.5 cents per futures contract in perpetuity. How can this be allowed to happen? (Tabb, 2010). Because of a patent, the trading technology vendor industry won’t be able to advance for some time with all of the lawsuits that need to be sorted out. Tabb considered that as an industry being “held hostage” (Tabb, 2010). It only makes sense that when patents hurt progress in one industry that patents could hurt progress in other industries, including sports.

Many patents are contained within athletics; some apply to the equipment used by players and others to the actual equipment on the field, e.g. goals and field goal posts. Since Tomlinson’s and Torrance’s experiment showed that patents hinder innovation, the sports industry could be suffering due to the patents. Players won’t have the best equipment because companies sue to protect their product instead of creating superior equipment, all of that thanks to the patent. The selection of equipment players have to choose diminishes as well. While one piece of equipment works well for certain athletes, it may not work well for others because each person is different. Take the patent Riddell Inc has on their helmet that was involved in the earlier lawsuit where one of the claims includes specifications about the chinstrap (Ide, Infusino, Kraemer, Withnall, & Bayne, 2005). How could another company really modify the chinstrap without causing patent infringement? With patents in place on products, competitors find it difficult to create a reasonable substitute without facing a lawsuit. Again, that could relate to the fact that a new helmet is used in the National Football League this year and the number of concussions have increased. What if a situation arises similar to that of the one Tabb reported on? The sports world could not afford that because sports can evolve rapidly, especially contact sports since new medical discoveries can provoke the need for new safety equipment. The heightened awareness of concussions means that helmet manufacturers race to create the next best helmet, one that would either diminish the chance of being concussed or eliminate concussions all together. But, if those companies sue each other over a patent of the ideal helmet, that helmet would not come out. Then the companies are losing money from the lawsuit and the lost profit of the helmet in the market, and players still receive concussions. It becomes a lose-lose situation for all involved, all thanks to a patent.

How Patents “Foster” Innovation

Why do people have the false belief that patents foster innovation? Most claims are about protecting the invention, which helps the company financially but does not necessarily promote innovation and economic growth. Others say that better inventions are created because they have to work around the patent to create something new. That is obviously easier said than done. Phillips is a company “focused on improving people’s lives through timely innovations” and a strong supporter of the patent (2010). The company Phillips states that:

The logic behind patents is straightforward. If a company or an individual can’t protect inventions from being imitated, it doesn’t make economic sense to invest in the research and development (R&D) necessary to achieve these inventions in the first place. In a world without patents, copycats would quickly imitate the process or product. They could bring the novel product to market at a lower price, because they wouldn’t have spent any money on R&D. The innovative company would lose out for its efforts to innovate. Very often, alternative forms to protect an invention such as trade secrets are unpractical. Just as often, the inventor’s ‘first-mover advantage’ in the market is very limited. Patents are, therefore, one of the essential cornerstones supporting innovation, because they reward successful inventors with protection and enable them to recoup their R&D investments (Phillips, 2010).

That is all about benefiting the company and not promoting progress in the overall field.

Phillips later states that, “Very often, the company or person who has made the invention is not best suited to convert the new technology quickly and efficiently into a successful new product on the market.” (2010). This seems to contradict their earlier statement because the patent system would prevent others from placing the product on the market. Without the patent, the outsider could get that new product into the market sooner which could in turn benefit the economy. The Nation Football League could benefit from a new helmet immediately due to the increase of concussion this year.

If patent law were to change, why would a company spend a large chunk of money if someone could just steal it? With the current patent law, the results of research and development have to be released to the public. Thus if there was no patent, those results would not have to be shared with the public. It would be difficult for other companies to copy something that they know practically nothing about. By the time another company figures out how to copy the product, the original creator would most likely be on top of the industry, meaning that earning money would not be an issue.

Conclusion

With the patent system in place, creating a better helmet now is a challenge. The innovator would have to work around all of the claims and restrictions on all other helmets. That innovator could then share the same fate as that of Schutt Sports. Without the patent, the focus would shift from companies worrying about infringement and having to work around the patents to creating better products. Their money could go towards research and development instead of lawsuits.

It is understandable how people see that patents foster innovation because the patent prevents copying. But, companies tend to hide behind patent law and can try to make the patent general. Then that company seeks to destroy their competition by claiming patent infringements on products, which in turn hurts that industry. The selection available to the people would diminish. Without the patent, the focus would be more on superior equipment instead of protecting the product. And the money spent on developing is much less than the overall cost of losing a large lawsuit. Overall, the patent can hurt the economy, no matter what the industry is.

With all of the possible lawsuits within the sports world, it is amazing that advancements are made. Every item used in the sport can fall under patent protection. Patents may actually benefit only one of the sport equipment manufacturing companies. The patents could help them seize what would be a near monopoly over the industry. Riddell Inc v. Schutt Sports is an example of one company working its way to complete control over an industry, which in that particular case related to helmets. These cases can literally hurt the players as well. The number of concussions increased substantially from last year in the NFL. Between the case of Riddell Inc v Schutt Sports and possibly the new helmet used this year, it is clear that patents are to blame. Because of all the concussions and injuries, the players and the game of American football itself receive a tarnished name. It becomes a brutal sport where the players’ intentions are to hurt each other. Without the patent it is possible that a better helmet would already be in use and these injuries would not occur. Patent law issues went beyond football; just about any sport has its own issues with patents.

Although patents are in place to benefit the company, they don’t benefit the economy. Specific studies such as PatentSim have shown that patents don’t foster innovation as well as they were perceived to. While the research does not specifically relate to sports, the ideas of the findings can be applied to all industries. Companies could focus more on the quality of the product rather than worry about facing a lawsuit. New technologies could be produced at a much higher rate. But, as long as the current patent system is in place, industries, like the sports industry for example, will suffer. It turns out that patents hurt the sport industry, not help it.

References

Feld, B. (2010, January 30). Do Patents Slow Down Innovation? Retrieved September 26, 2010, from FeldThoughts: http://www.feld.com/wp/archives/2010/01/do-patents-slow-down-innovation.html

Ide, T. M., Infusino, R. J., Kraemer, N., Withnall, C. R., & Bayne, T. D. (2005). Patent No. 6934971. United States of America. ImpactLab. (2009, July 28). New Study Shows Patent Systems Hinder Innovation. Retrieved September 26, 2010, from Impact Lab: http://www.impactlab.net/2009/07/28/new-study-shows-patent-systems-hinder-innovation/

NCAA. (2010). Concussion: A Fact Sheet for Student Athletes. Retrieved October 21, 2010, from NCAA: http://web1.ncaa.org/web_files/health_safety/ConFactSheetsa.pdf

Phillips. (2010). Patents and Innovation. Retrieved October 31, 2010, from Phillips Web Site: https://www.ip.philips.com/articles/backgrounders/patents_innovations20060605.html

Sachdev, A. (2010, September 14). Football gear maker files for bankruptcy after losing patent-infringement suit. Chicago Tribune.

Schermick, C. (2010, Ocotber 22). NFL Concussions: Should League Make Equipment Less Safe To Protect Players? Retrieved Ocotber 27, 2010, from Bleacher Report: http://bleacherreport.com/articles/498392-should-the-nfl-make-equipment-less-safe-in-order-to-protect-players

Tabb, L. (2010). UBM TechWeb. Retrieved September 26, 2010, from http://www.wallstreetandtech.com/electronic-trading/showArticle.jhtml;jsessionid=SX2VUD53ZICHNQE1GHPCKH4ATMY32JVN?articleID=159904507&_requestid=349322

Tomlinson, B., & Torrance, A. (2009). Patents and the Regress of Useful Arts . Columbia Science and Technology Law Review, Vol. 10, 2009 , 1-2.

USPTO. (2005, January). What is a Patent? Retrieved September 29, 2010, from USPTO Website: http://www.uspto.gov/web/offices/pac/doc/general/index.html#top

Weiner, S. (2009). Callaway Golf Co. v. Acushnet Co. Harvard Journal of Law and Technology.

Wild, K. A. (2009). Recent Developments in Sports Law. Marquette Sports Law Review, 14-15 .