Decision could make it difficult to hold executives liable for inducing infringement

The Federal Circuit ruling misunderstands the corporate law doctrine of piercing the veil, some experts contend

In early 2009, Roger Hall’s prospects were excellent. He had invented a travel towel that could be easily folded and zipped into a compact form. He had applied for a design patent on his invention, and three months before the patent issued, he had a meeting with a nationwide retail chain interested in selling the towel.

But in that meeting, things took a turn for the worse. The retailer—Bed, Bath & Beyond (BB&B)—resisted Hall’s asking price. Moreover, according to Hall’s court papers, Farley Nachemin, a vice president of BB&B, said his company could have similar towels produced in Pakistan at a lower cost. Hall warned against that because he had a patent pending on the product.

Limited Liability

The confusion began soon after Congress created the Federal Circuit. The court’s seminal 1986 decision in Orthokinetics, Inc. v. Safety Travel Chairs, Inc. incorrectly interpreted the patent statute and state corporate law, and the court has held fast to those errors in subsequent rulings, according to Prof. Lynda Oswald, who teaches business law at University of Michigan School of Business. 


Steven Seidenberg

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