Craig Zucker, the Buckyballs CEO who fought back irreverently when the Consumer Product Safety Commission went after his product, has settled the case .

The CPSC says the settlement’s "intended to protect children and teenagers." Zucker says he hopes the CPSC has learned a lesson. Both sides want us to think they’ve won. But Zucker lost, and so did the rest of us.

The CPSC was pursuing Zucker personally, perhaps because he publicly fought back , perhaps because he closed his company and it wasn’t available as a target anymore. Zucker claimed the agency had no business going after him individually—it was his company that had sold Buckyballs—but the settlement requires him to pay for a recall. And it requires him to give up any claims he had against the CPSC.

It’s tempting to say the CPSC lost too. The amount of money the settlement requires Zucker to pay is remarkably low: $75,000 for publicity, and up to $300,000 for paying and processing consumer refunds. It’s not even enough money to refund one in a hundred Buckyballs purchases. Zucker said the litigation cost more than the settlement.

But the CPSC is not a private plaintiff looking to strike it rich by suing a business. The agency has gotten away with destroying Zucker’s business, and it has proved that it can force an individual businessman to pay for selling products the CPSC later decides it doesn’t want on the market. If the agency wants to expand its power, or if it wants to drive products on which someone might possibly injure himself off the market, this is a win for the CPSC.

As for the rest of us, we lost in several respects. We lost the ability to buy Buckyballs, toys that many people liked—and we may have lost products we don’t even know exist because this case may scare other people out of bringing them to market. We lost because the fact that Zucker ended up personally on the hook may deter other businessmen from fighting back against product recalls. And we lost because, yet again, a federal agency has demonstrated that it doesn’t need to prove that the facts and the law are on its side: it can drive people out of business, force them to settle, and even declare products illegal, all without ever making its case in court.

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