Patents give companies competitive advantage. They create legal protection for products and can be used for marketing purposes. They are most frequently pursued by innovative firms, particularly in high-tech industries. For example, IBM, Samsung, and Canon were the three top patent recipients in the United States in 2016, 2015, and 2014.174 The U.S. Patent and Trademark Office issued 298,407 patents in 2015.175 This challenge deals with L’Oreal’s firing of Steven Trzaska. Trzaska was a patent lawyer in charge of a team that examined the work of the company’s researchers to decide whether it contained patentable work product. The team then submitted patent applications when appropriate. L’Oreal spends about $1 billion a year on research and development while employing 4,000 people in research labs around the world. The company is clearly committed to innovating its product offerings. Trzaska filed a lawsuit against L’Oreal, claiming he was let go for “refusing to make filings for dubious inventions just so the company could fill an annual quota.” He said L’Oreal had “ordered him to apply for at least 40 patents last year to help fill a companywide global quota of 500 applications. The company sought to post on its cosmetics packaging that the contents were ‘patent pending,’ thus increasing their allure to consumers, according to the lawsuit.”176 The company denies the charges and plans to vigorously fight them. The U.S. Patent Office is trying to enhance its evaluation process because it feels many applications cover vague ideas that are not real inventions. Trzaska said L’Oreal was interested in improving the quality of its applications, but “a review by an outside organization had found ‘the vast majority of its inventions were of low or poor quality,’” according to the lawsuit. This in turn led L’Oreal researchers to submit fewer ideas for potential application and Trzaska’s team to reject more. All told, submitted applications declined and reduced the chance of achieving the company’s global patent goals. The lawsuit claims that Trzaska was fired “for his refusal to draft and file patent applications for proposed inventions which were not patentable” and for his failure to allow his team members to file such applications.177

How would you rule if you were a judge evaluating this case? 1. I would side with the company. It’s not Trzaska’s job to be a gatekeeper. Let the U.S. Patent Office make those decisions. Trzaska’s role is to help the company acquire patents for its products, and he was jeopardizing future sales by taking an unduly hard stance about patentable work. Further, the company’s goal specified the number of applications, not the number accepted. 2. I would side with Trzaska. He took a stand on the quality of submissions for patent applications. The company should focus on the quality of ideas submitted rather than on the work of Trzaska’s team. What is Trzaska supposed to do when people submit poor ideas? 3. I’m not sure who is right or wrong, but I don’t like the idea of setting goals for innovation such as the number of patent applications submitted. 4. Invent other options.

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