Collectable Coin Graders Can’t Toss Inventor’s Suit

(CN) - A coin collector who invented an "eye appeal" grading method can sue companies that he says broke their deal not to use his ideas as their own, a federal judge ruled.

Duane Blake, attorney and coin collector, calls his method to grade the "eye appeal" of coins the "axial ultimate refractory angle of the coin" (AURA). A coin's grade reflects its condition and authenticity, and helps to determine its value.

Blake pitched his method to several coin-grading companies, including Professional Coin Grading Service, Collectors Universe and Numismatic Guaranty Corporation of America. He says he proposed that coin labels include a plus sign for an above-average AURA rating.

He also proposed taking a digital photo of the coin during the grading process, so collectors could track any alterations made to the coin's condition.

While the associations declined to work with him, Blake says that Professional Grading and Numismatic jointly launched a plus designation within their own grading system, despite their non-disclosure agreement with Blake.

Though U.S. District Judge William Young rejected Blake's claim to own the plus designation, he said Blake can advance claims that the coin associations stole his marketing ideas.

"Blake's complaint does not allege facts sufficient to make it plausible that he owned proprietary rights in the plus (+) designation," the decision states. "Blake cannot claim ownership of the plus (+) symbol to indicate a higher quality within the same coin grade because it is a symbol in the public domain and commonly used in the coin grading industry."

Nevertheless, "Blake proposed the plus (+) symbol as a marketing tool to promote his eye appeal grade during conversations with Numismatic," Young added. "This same symbol is the one that the Defendants allegedly introduced together, despite being competitors. The fact that Numismatic's use of the plus (+) symbol overlaps with its star («) symbol to credit the eye appeal of a coin also tends to substantiate Blake's allegations."

Young continued: "Therefore, Blake sufficiently alleges that the proposed marketing plan was not in the public domain and that Numismatic disclosed the information, despite the existence of an oral agreement with Blake to keep it confidential."

The judge dismissed Blake's claims for conversion and conspiracy, but found that Numismatic may have breached an oral contract with Blake, especially given the fact that Numismatic Marking Director Scott Schechter gave numerous excuses for not signing the agreement, despite receiving four separate copies.

"The reasonable implication of Schechter's conduct is that he did not intend to be bound by the written contract," Young wrote. "Blake thus sufficiently alleges at this stage that Schechter's promise to return the signed Agreement was a pretext, a mere subterfuge to 'receive the fruits' of the Agreement (that is to say, Blake's marketing plan). Moreover, Schechter took unfair advantage of Blake's ideas by striking a deal with Professional Grading based on Blake's marketing plan, while Blake did not receive any compensation for the use of his ideas." (Parentheses in original.)

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