Company Learns that Stealing Inventions Costs More Than Buying Them

Recently, a federal court handed down a $25 million judgment (plus interest for as long as it goes unpaid) against Home Depot. An independent inventor developed a system that makes table saws much safer (though it’s apparently not the same device I blogged about a while ago), by making it very difficult, if not impossible, for a user to get their fingers anywhere near the blade, while still allowing them to easily manipulate the wood that’s being cut. Home Depot installed this device on all of the saws that their employees use to cut lumber. The device proved amazingly effective, and because the vast majority of on-the-job injuries at Home Depot were apparently caused by saws prior to the installation of these devices, their injury rates plummeted, and they saved millions of dollars in worker’s compensation claims.

So far, so good, right? Well, according to the court, not so much. It turns out that Home Depot outright stole the invention. They were in negotiations to license the device from the inventor, and found that it would have cost them about $4 million to install it on all of their saws. Apparently thinking that this price was outrageous, they had their own engineers copy the design from a few sample units they’d been given for testing, and installed those.

One executive, apparently when advised of the likely legal consequences of this course of action, said something like “F*** [inventor] Michael Powell. Let him sue us!” according to court records.

And sue he did. At the end of the trial, he had a $25 million judgment to wave in Home Depot’s faces, and a federal judge going on record calling the company “callous and arrogant.”

Now, people throughout history have said things they came to regret later on. George W. Bush probably wishes he hadn’t told the insurgents in Iraq to “Bring it on.” John Kerry most certainly regrets being “for it before I was against it.” And Harry Houdini probably wishes he could take back his claim that he could withstand a direct punch to the gut from any man alive. Well, he would if said punch hadn’t killed him, anyway.

Now, if these news stories are recounting the facts accurately, we have a pretty clear-cut case of patent infringement.

I really have to wonder what the people in charge of Home Depot were thinking if they thought that this was a good idea. I’m sure they initially did save quite a bit of money by reverse-engineering this device, and manufacturing it themselves, rather than buying it from the inventor.

I also don’t doubt that they thought they could win in any lawsuit. After all, they’re a multi-billion dollar company, and the inventor is just some guy working out of his garage. What harm could he possibly do?

Well, despite some evidence to the contrary, the law usually doesn’t care how much money you have. If you’re legally in the wrong, and the other side has the evidence to prove it, no amount of money, and no army of Ivy League-educated lawyers can change that fact.

While breaking the law may be cheaper in the short run, it almost always ends up costing you more.

This is something of a corollary to the principle that suing a person or company sometimes ends up costing you more (either in money or public goodwill) than the legal wrong for which you decided to sue in the first place.

Even Home Depot’s best possible outcome from this, that they won any lawsuit that Powell could throw at them, would have generated a huge amount of negative publicity. People love to see a good David vs. Goliath story play out, after all. This would almost certainly have cost them a good deal of money.

And it’s not like Home Depot would have even lost money in the long run if they’d gone the legal route and paid for this invention: it saved them millions per year in workers comp claims, and would have paid for itself in no time.

If Home Depot continues to use these devices (which, despite all this, they should – it clearly makes their employees’ jobs much safer), whatever they end up paying in damages, interest, and legal fees (theirs and the plaintiff’s) might eventually be paid for in workers’ comp savings, it’s certainly going to take a lot longer.

Once again, we’ve learned that nobody is above the law, and, despite all the evidence of greed and corruption we’ve seen throughout history, our moms and teachers were probably right when they told us that cheaters rarely win, and that honesty really does pay off.

By: Rusty Shackleford