Monday, March 18, 2013

The trouble with Tr****: A cautionary tale





The approaching spring holidays are accompanied by great stories. In that spirit, this posting departs from the usual format and offers a parable:



Once upon a time in a city called Gotham, there were terrible problems with traffic control. The problems were so severe that buses could not run on schedule, ambulances had difficulty getting the sick to hospitals in a timely manner and fire trucks often arrived at the site of a blaze after the building was only a pile of smoldering rubble.  The root of most of these problems was parking. People in Gotham parked wherever they wanted, for as long as they wanted to. They parked on sidewalks, in left turn lanes, even in intersections.



The city fathers met to discuss the grave problems caused by parking and proposed a legislative solution. They added a paragraph in the city charter grant the municipality the “right to exclude” parking from designated areas and established a schedule of fines for those that parked in violation of the new regulations.



The Mayor held a press conference and signed the new paragraph in the city charter into law in front of dozens of reporters.  All agreed that the city fathers had acted wisely. Nobody questioned the municipality’s “right to exclude”. Everybody understood it was in the public interest.



Signs were put up to indicate “no parking areas”.  There was an immediate improvement in traffic flow in Gotham, but only in the short term.  Within a year, things were as they were before the municipality’s “right to exclude” was written into the city charter.



The city fathers met again to discuss the grave problems caused by parking. They invited the chief of police to explain why the new regulations were not being enforced.  The chief explained that his officers were already overworked and simply did not have time to issue citations. He added that in many cases where citations were issued, they went unpaid. He theorized that all of this had created an atmosphere where citizens felt it was safe to ignore the municipality’s “right to exclude” because the likelihood of being punished was low.  The city fathers thanked the chief and discussed how to handle the problem of enforcement.  A junior member of the council asked permission to speak. His elders agreed and he stood before group to suggest killing two birds with one stone. He pointed out that Gotham was always starved for cash and proposed that they “monetize” the municipality’s “right to exclude” by auctioning a five year license to the highest bidder. The entity submitting the highest bid would receive the municipality’s “right to exclude” and have access to all legal means to enforce that right. This would generate revenue for Gotham and address the traffic problem at the same time.  The elder members of council asked “Why will the highest bidder succeed when the municipality has failed?”  The junior member of the council answered “There are two reasons: the first is that the bidder will be prepared to spend money to make money; the second is that the bidder will have human resources to devote to the effort.”



The auction was held. Acme Inc. submitted the highest bid forty million dollars  for a five year license, paid in a lump sum, in advance.  All agreed that the city needed the money. Nobody talked about the municipality’s right to transfer their “right to exclude”. The public interest was not mentioned.



Gotham licensed Acme Inc. to operate “Non Police Enforcement Patrols” to make sure the municipality’s “right to exclude” was properly respected. The license granted Acme the right to identify and prosecute violators with multiple citations as well as to issue new citations. The chief of police provided a list of existing violators with multiple citations.



Acme Inc. got busy. They filed a motion in the district court to impound the vehicles belonging to violators with multiple citations until the fines were paid. The judge signed a temporary impound order. Acme Inc. also deployed five hundred people to patrol the streets of Gotham and issue new citations. These employees were issued orange vests with the acronym N.P.E.P. on the back.  It wasn’t long before people began to refer to them as “Trols”.  Acme also deployed a fleet of fifty tow trucks to implement the temporary impound order signed by the district court judge.



Each day, thousands of residents of Gotham received parking citations and hundreds had their cars towed.  This contributed to great progress in restoring an orderly flow of traffic, but that was not in the news. Instead, headlines reported “Trols harass citizens” and “Acme Inc. imposes tax on mobility”.  It wasn’t long until a citizens’ action committee was organized to fight the “tax on mobility”.



An attorney working on a contingent fee basis represented the citizens’ action committee and filed a petition in the regional appellate court contesting the legality of the municipality’s agreement with Gotham. The complainants filed a brief explaining:   ‘These NPEPs do not make or sell anything themselves. They seek merely to exploit the rights of others without returning anything to society’.



The Judge, who was up for re-election the following year sat on the fence between good sense and good politics.  He upheld the legality of the agreement between Gotham and Acme. He also cancelled the temporary impound order signed by the district court judge and ordered Acme to return all impounded vehicles to their owners with due haste saying “there is no irreparable damage in these unpaid citations which cannot be addressed with future monetary payment”.



Acme responded by firing their five hundred patrol personnel and putting their tow trucks up for sale. In Gotham, buses ceased to run on schedule, ambulances again had difficulty getting the sick to hospitals in a timely manner and fire trucks are again accustomed to arriving at the site of a blaze after the building is only a pile of smoldering rubble.  



Those of you that are involved with patent matters will see obvious parallels between NPEPs and NPEs (or Trolls and Trols if you must).  Hopefully this story will prove useful in explaining to those less familiar with patent matters the inherent dangers of many popular trends.Tell your children.