Former patent holder sued

Former patent holder sued

January 29th, 2013 by Todd South in News

The man who changed the way perfume is marketed worldwide says a Chattanooga company still owes him nearly $3 million after his business pocketed about $10 million on his invention.

Derek Bishopp has posted this and other allegations about Arcade Inc. on multiple websites such as Google+ and Facebook. He has emailed his thoughts to current and former company employees. He also has written bad things about the Chattanooga law firm that represents Arcade -- Baker Donelson.

Arcade's lawyers say Bishopp is lying and have sued, claiming defamation. On Monday they asked Hamilton Circuit Court Judge Marie Williams to stop him from continuing those statements.

The 85-year-old Bishopp, who lives in Sarasota, Fla., told the judge he can't be guilty of defamation because what he has said is true.

Bishopp, who is representing himself in court, posted online messages and emails that called Baker Donelson "dishonest" and "corrupt." He also accused Arcade of falsifying documents, Arcade attorney T.O. Helton said in court.

Williams heard from both sides but hasn't yet ruled on the request.

Bishopp invented a now ubiquitous pull-apart paper strip nearly everyone sees, and smells, when opening many consumer magazines.

It's the strip that holds perfume or cologne that companies across the globe use to get their scents into potential customers' noses.

In 1993, he agreed to let Arcade use his patents as long as it paid $12.5 million in royalties to the company he founded, The Beautiful Bouquet Co. Once Arcade paid that amount, it would own the patents.

Business went well.

At one point, Bishopp said, he was making $12,000 a month.

He expected Arcade to finish paying the full amount in about 10 years when he signed the contract, he said after Monday's hearing.

But it took nearly 18 years. During that time, in 1997, he signed another contract with Arcade.

This is where he and Helton disagree.

After those papers were signed, Arcade said it only owed Bishopp $11.8 million. The company finished paying that amount in 2011, according to Helton.

But Bishopp claims, both in court documents and online, that the company actually short-changed him and his shareholders for a total of $2.7 million. He alleges that as part of the contract, his compensation was to be tied to the Consumer Price Index so the money paid wouldn't be diluted by inflation.

The CPI is the average prices of selected goods such as transportation, food and health care determined by the U.S. Bureau of Labor Statistics. It is used by economists to calculate price changes and evaluate cost of living.

Bishopp claims that Arcade instead counted the change in CPI as part of its royalty payments to his company. He compared the method to a homeowner counting interest payments on a mortgage against the principal amount of the loan.

He estimates that his company was paid less than $10 million under the methods Arcade used.

The Beautiful Bouquet Co. dissolved after Arcade's last payments arrived. Bishopp had previously agreed with other shareholders that he would receive the final payments, which he estimated at $2.7 million, to use for his retirement.

But the money didn't come.

He filed a lawsuit in 2003 alleging much of what he has said online. But he dropped the lawsuit. On Monday he said he didn't continue it because lawyers wanted $200,000 up front and another $200,000 for likely appeals to pursue the case.

Bishopp now receives about $1,000 a month in income.

Helton said in court that none of Bishopp's attempts to get more money have been successful because the contracts are valid and the amounts are what Bishopp agreed to when he signed them.

"We paid him a huge amount of money over a number of years. We think the transaction is concluded," Helton said in a phone interview after the hearing. "But he just won't let it go."

Bishopp said he isn't fighting that anymore. He signed away the money.

But when he saw a chance to post online company reviews on Arcade, he decided to tell his story.

The site asked for reviews, so he offered, he said.

"It doesn't say if you say something bad, we'll sue you," Bishopp told the judge.

Contact staff writer Todd South at tsouth@timesfree or 423-757-6347. Follow him on Twitter @tsouthCTFP