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June 6, 2012

What Do A Drive In Movie Theater And Intellectual Property Have In Common?

Summary:

As a CEO, COO, CFO, or Human Resources executive, make sure that your insurance professional is well-acquainted with Intellectual Property issues and with insurance policies which will provide adequate coverage.

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Remember the days of drive in movies? Those were some great memories! And, so is the story of how the drive in movie idea began.

The first version of a drive in movie was started by Richard Hollingshead, Jr., and was opened inn a 10-acre backyard in Camden, New Jersey. Richard was a sales manager in his father’s auto parts company and, as the story goes, he had a mother that weighed 431 pounds and could not comfortably go to the movie theatres of the time.

Her son set up a make-shift movie theatre by using his car, a 1928 Kodak movie projector and two sheets nailed between two trees for a screen. The idea caught on and became a popular way to enjoy a movie.

Eventually, he came up with a ramp in each parking space so that patrons could elevate the front of their cars to see the screen without being blocked by other vehicles. Richard formed a company named Park It Theaters, and charged 25 cents per person and 25 cents per automobile, with a maximum of $1.00 per entry.

On August 6, 1932, the company applied for a patent on the idea, and it was granted patent #1,909,537 on May 16, 1933. Hollingshead sold the theatre in 1935 and opened another one. Hollingshead licensed the “drive in movie” concept to Loews Drive-in Theatres, Inc., but from the very beginning, he had trouble collecting the royalty payments from Loews (and this was back in 1937). Hollingshead sued Loews Theatres for failure to pay royalties and patent infringement. After many years, actually in 1950, the patent was ruled invalid, as it was alleged that a Culver City, California theatre was really the first drive in theatre (http://en.wikipedia.org/wiki/Richard_Hollingshead).

Putting this article into perspective, as it relates to Intellectual Property (IP), most people relate Intellectual Property to high tech companies like Microsoft, or drug companies like Johnson and Johnson. We would not think that the “idea” of starting a drive in theater would be something that could be patented; or that liquid paper was patented; or the distinctive color of a Tiffany’s box is patented. Intellectual Property goes much further than just patents — it also covers copyrights, trademarks, trade dress, and trade secrets. It is an exposure that many businesses have but is rarely identified and correctly insured.

In years gone by we looked to the Commercial General Liability policy for coverage on limited categories of Intellectual Property, but as the forms have changed, the coverages have become more and more limited to the point that the coverage is close to non-existent.

The job of an insurance professional is to identify exposure and determine appropriate solutions. There are a limited number of companies that have a real understanding of Intellectual Property and insurance policies with broad-based responses. As a CEO, COO, CFO, or Human Resources executive, make sure that your insurance professional is well-acquainted with Intellectual Property issues and with insurance policies which will provide adequate coverage.

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