Most of us do not think about who owns the intellectual property of the products and materials we use in our daily lives. But the truth is patent infringement and the manufacture and distribution of knockoff products is a crime against the inventor, the manufacturer, licensed distributors, and installation companies as well as the end users. In addition, you could potentially be endangering the public and property by not using proper materials and/or procedures designed for the patented product. This unethical and illegal practice could result in a failure that creates safety issues for the public.
Knockoff products are not limited to Rolex watches or movies on DVD; many products used by both personal and business consumers can be copied and sold to unsuspecting consumers. These items can include chemicals, mechanical devices, or even products needed for compliance or certification.
Who is ultimately responsible for patent infringement violations? The answer might not be as simple or as clear as it seems. With complicated supply chains and the use of expanded distribution networks, many times we are buying products through companies that are far removed from the manufacturer. We may also come across a particular system at a customers’ site and think we can do better than what the manufacturer recommends or that we can reduce costs by making our own improvised service plan for a particular product. One question you should ask yourself is this: Will my business liability insurance cover me if a product I design, sell, or install fails at my customers’ business? Also, by altering the Original Equipment Manufacturers (OEM) system, you take on the liability of failure if the product does not perform as it was intended, one of the many potential negative consequences of altering OEM equipment or making your own. Manufacturers carry specialized product liability insurance that not only protects them, but also protects you and your customer in the event of a failure. Product liability insurance is voided or nonexistent for knockoff or altered products.
Another area in which product infringement can become an issue is with safety. Products not manufactured with the proper materials can fail, which may cause slip-and-fall and/or fire hazards in a business environment. Products built as copies or with substandard practices can also cause other systems to fail, creating residual liabilities that may be covered by an OEM product but not a knockoff or altered product. Also, products that are not serviced correctly or have improper replacement parts can cause residual long-term liabilities that include property loss, safety, or other legal compliance issues.
The liability trail begins with the consumer end user when dealing with a knockoff product that fails. When a malfunction occurs, the consumer is likely left with a failed product and a damaged facility in addition to the possibility of injuries. When the consumer learns that a system has failed, he or she, in turn, blames the installer or the manufacturer. When this occurs with an OEM product, the product liability insurance covers failure of their product. All credible service companies carry liability insurance that covers any failure caused by work they perform. The issue becomes increasingly complex if the insurance carrier determines that it was not the product or that it was a lack of proper maintenance of the product that caused the failure. At this point, all bets could be off for the service company and the end user.