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C. Gopinath

PAPER cups containing hot liquids can be quite hot. A few years ago, an elderly woman filed a case against McDonalds (the fast food chain) in the US for compensatory and punitive damages. She had purchased coffee at the drive-through window of the restaurant, put the cup between her legs to remove the cover, and spilled it.

She suffered from severe burns. When the case went to court, the jury gave a verdict of $2.9 million (Rs 14 crore) in her favour, which was finally reduced to less than half by the judge.

Late night comedy shows have not stopped using this incident as an example of the ridiculous levels to which tort litigation has fallen in the US.

The question they raise is one of who should be held responsible in situations like this.

Yet, the case made restaurants doubly careful of the temperature at which they serve their drinks and how they hand over containers with hot liquids to their customers.

Either they give you a lukewarm cup of the liquid or provide a concave sleeve made of two-ply corrugated board about seven cm high that fits snugly around the cup in the centre. This second layer makes a hot cup easier to hold.

I began noticing these sleeves used by different vendors but they all give the same patent number US # 5,205,473.

This patent is held by David Coffin, who applied for it in March 1992 and was granted it in April 1993.

Among other things, the patent office says that what is claimed is "A recyclable, insulating beverage container holder, comprising a corrugated tubular member, comprising cellulosic material and at least a first opening therein for receiving and retaining a beverage container, said corrugated tubular member comprising fluting means for containing insulating air; said fluting means comprising fluting adhesively attached to a liner with a recyclable adhesive." For our purposes, we shall call it a piece of cardboard that goes around a paper cup. Coffin must be smiling all the way to the bank as companies worldwide pay him for permission to use a piece of cardboard around their paper cups.

Does this patent make sense to you? It does not to me. In the absence of a sleeve, we would have picked up a paper napkin to hold the cup and protect us from the heat. Or we would have asked for another cup in which to place the first.

Or the restaurant may have fashioned the said sleeve out of waste that its paper supplier had. Now, all such restaurants have to pay a fee to the patent holder for using his invention.

I tried hard and failed to think of what significance a corrugated sleeve has that its use around the world needs to be protected.

And protection is the name of the game. Take another case. A French family business named Polypap makes a product called the "Bouquett `O" which is a flat, thin, semi-circular shaped plastic sheet which can be folded into a cone to hold flowers.

Now, in the US, a firm called Southpac Trust holds a patent for what is described as `floral holding material' as any device that can hold flowers upright for display without use of a flower pot. So Southpac and its licensees filed a suit against Polypap on grounds of patent infringement and lost in the US District Court in Southern Illinois (the lower court). Not giving up, they filed an appeal in the US Federal Circuit Court of Appeals.

Watching the proceeding from the visitors' gallery last month, I tried hard to suppress my amusement at highly-paid lawyers going into intricate details of how flowers are held for display and wasting the time of three highly-paid judges, asking that the lower court decision be overthrown.

Clearly, Southpac would like to receive a fee from Polypap for every piece of plastic that they sell in the US.

Apart from providing rewards to creative genius, patents serve as a barrier to competition. When one player secures a patent for a product, he prevents rivals from creating a similar product and thereby increases the value of his differentiated product. But there are other ways by which this prevents competition and is socially iniquitous.

There are areas where it makes sense and areas where it does not. Filing for a patent is a costly process and defending it calls for even deeper pockets. The Charrin brothers who run the tiny family firm Polypap, employing 18 people and with sales of about $1.4 million (Rs. 7 crores) (by their own admission), are now retaining attorneys in the US to fight a case about how flowers are displayed. I suspect they would be digging deep into the family jewels to pay for their survival in the face of this onslaught.

India is now a part of the global patent regime. (Ever wondered why it is called a regime? Like Saddam Hussein's regime that we want to overthrow?)

From January 2005, we will be a part of the `harmonised' Intellectual Property Protection system. We are told that the system consists of several instruments to protect intellectual property, and offer rewards to those who possess tangible and intangible assets, from unauthorized exploitation by others. Several pharmaceutical producers are not happy with this, and have finally resigned to the new system.

I suspect the tea shop that paints a cheery mouse or duck on its name sign will now have to be very careful if Disney's lawyers are anywhere around.

In all this debate and discussion, there is one fundamental question that is not being asked: Should we make a distinction in the kinds of products and services that are worthy, from a society's point of view, of patent?

I grant you that we need to issue a patent for the discovery of a new cure for AIDS. The company or research lab may have spent millions over several years coming up with the cure and would want to recover those costs and make a tidy profit at the end of it.

And society is better-off in giving that incentive to the inventor. We may even want them to begin working on a cure for the common cold.

But if one idiosyncratic society wants to hand out patents for corrugated paper sleeves, should it be enforced all around the world?

End note: I initially titled this column "Much ado about nothing". But, then, better sense prevailed. For I might be opening myself and the publishers of this paper to law suits filed by the successors of Shakespeare's estate for having used the title of his play without prior permission or payment of royalty.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinath@Suffolk.edu)

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