A former patent lawyer for L’Oreal USA claims in a federal whistleblower lawsuit in Newark that he was fired after complaining about company quotas for patent applications.
L’Oreal, the French maker of cosmetics and hair products, set quotas of 40 patent applications in 2014 for its U.S. research division in Clark, and the company’s global quota that year was 500 patent applications, according to the suit by Steven Trzaska, the company’s former head of patents and business development.
But those quotas resulted in the filing of applications that were not patentable because they were not novel, were redundant or were not capable of functioning in an industrial application, the suit claims. Trzaska was fired in December 2014, after complaining to management that the company’s low-quality patent applications put him at risk of violating proscriptions in the Rules of Professional Conduct and the rules of the U.S. Patent and Trademark Office against bringing frivolous proceedings and making false statements to a tribunal, according to the suit.
The company frequently makes “patent pending” claims on product packages in an attempt to lead consumers to believe the item in question is innovative and efficacious, the suit alleges. The quotas also are intended to improve the company’s reputation and to lead shareholders and financial analysts to think it is innovative, the suit claims.
Filed in the U.S. District Court for the District of New Jersey on diversity grounds because Trzaska lives in Pennsylvania, the suit claims his retaliatory discharge violates New Jersey’s Conscientious Employee Protection Act. L’Oreal USA and the parent company, L’Oreal S.A. of France, are the defendants.
In 2014, Trzaska and others in his group were told that their employment was on the line if they did not meet the quota of 40 patent applications filed, the suit claims. That same year, the company sought to improve the quality of its patent applications after an outside consultant reported that the vast majority of L’Oreal’s patents were of poor quality, according to the suit.
In October 2014, the suit claims, Trzaska told Jean Francois Pahin, global CFO of the research and innovation arm of L’Oreal in France, that he and the company’s other patent attorneys were not willing to file patent applications they believed were not patentable, solely for the purpose of meeting the quota of 40 patent filings.
Two weeks later, according to the suit, Trzaska was called into a meeting with the company’s head of human resources for research, Diane Lewis, who offered him 15 weeks of severance if he would leave the company. He did not accept, but on Nov. 25, 2014, he received a call from Thomas Sarakatsannis, general counsel of L’Oreal USA, who offered him 40 weeks of severance if he would leave, the suit alleges. Trzaska again declined, according to the suit, but on Dec. 8, he was told he was being terminated immediately.
Trzaska was told at the time of his dismissal that his position was no longer needed, but the same position was advertised soon thereafter, the suit alleges. The stated reason for dismissal was a pretext for the actual reason for his discharge, which was his refusal to sign patent applications for inventions that he did not believe to be patentable, and his refusal to supervise such conduct by patent attorneys and patent agents under his supervision, the suit claims.
A patent attorney or patent agent is legally and professionally responsible when reviewing a patent application “to make a good-faith determination whether the subject matter in an invention disclosure is potentially patentable,” according to the suit.
L’Oreal’s exposure in the case is “heavy” because Trzaska, 52, earned roughly $400,000 per year and could have reasonably looked forward to another 15 years of work, said Gerard Jackson, the Cherry Hill attorney representing Trzaska. Furthermore, jobs for lawyers in Trzaska’s speciality are scarce and his age makes it harder for him to get hired, Jackson said.
Matthew DiGirolamo, L’Oreal USA’s chief communications officer, said in a statement that L’Oreal USA “does not comment on ongoing litigation, but the company strongly denies these allegations and intends to vigorously defend itself in this lawsuit. L’Oreal has become the worldwide leader in beauty through our steadfast commitment to research and innovation. We stand proudly behind the quality of the more than 35,000 patents that we have been granted globally.”