Two experiences, several years apart, have shaped my thoughts on “To Patent or Not To
Patent”. In this article, I will go over our very first experience with patented products and
patent infringements.
Background
Back some time now, I was one of the founders of a tool company called Carica. Initially,
Carica designed, developed and manufactured a product line of unique telescoping tools for
industry; telescoping pick-up tools, inspection mirrors, and inspection magnifiers. The
original telescoping tools were dedicated tools, which were then followed up with tool kits
with quick-connect features that allowed the user to change from different sized rare earth
magnets to different sized mirrors to magnifiers. These telescoping tools were
manufactured and branded under our Carica brand, however, we also private labelled for
tool icons like Mac Tools, Snap-on Tools, Danaher Tool Group and UAP/NAPA’s UltraPro line.
The most important trade show for Carica, every year, was AAPEX/SEMA in Las Vegas at the
end of October/early November.
One year, we were exhibiting at AAPEX and our patent attorney came to our booth and told
us he had just seen some “knock-offs” of our patented tools. After this revelation, the
patent attorney took me over to a US tool distributor exhibiting in the same building. Sure
enough, the distributor was displaying a complete line of copycat Carica tools and copycat
retail displays under their private label. A Taiwanese manufacturer had copied every tool in
our current catalogue and private labelled for a US tool distributor. Interestingly, the
manufacturer copied some of our original production runs; copying old or original models
that had since been modified and improved. Regardless, they had infringed on 3 of our US
utility patents.
We walked away from the booth and discussed the best possible strategy based upon what
we knew at the time. The patent attorney informed me that if we believe there has been a
patent infringement, and we are now aware of the infringement, it was our fiduciary duty to
promptly inform the patent offender of the infringement and that action will be taken. As
this was only Day 1 of the 4-day trade show, our patent attorney suggested we immediately
inform the tool company.
We walked back to the booth and introduced ourselves and informed the US tool company
that the tools they are displaying were infringing on Carica patents. Initially, the company
representatives feigned ignorance. We then told them that if they didn’t immediately
discontinue displaying the copycat tools at their booth, our specific damage claims against
their company will exponentially increase. Reluctantly, the company complied.
After further investigation at the AAPEX show, we found four more tool companies
exhibiting and promoting the Carica “knock-off” tool line. Again, all these companies were
told that if they didn’t remove the tools from the booth, for every moment they kept the
tools on display, our specific damage claims would exponentially increase. Although some of
the company’s representatives were quite abrasive, they all reluctantly complied.
Every day of the Show, our patent attorney returned to all five companies that were
displaying the copycat tools to make sure they were complying with our concerns.
Some actually tried to display the tools again and they were warned that Carica will be
taking action very soon against their company and damages will increase with their defiance
and willingness to display copied tools that were clearly patent infringements.
Strategy
For smaller companies, enforcing patents is financially challenging. For us, at the time, to
hire a patent attorney in Taiwan to sue a Taiwanese company manufacturing in Taiwan that
is infringing on US patents would be time-consuming and costly with any success being a big
unknown. Fighting patents in a foreign country against an “infringer” in its own home court
is an uphill battle. Thus, our strategy was this, to sue and obtain injunctions on US
companies who distributed our “knock-off” products in the United States.
The attorney fees were as follows:
This type of legal arrangement for smaller companies is ideal because in the worst-case
scenario, the company is only out a small retainer. In the best-case scenario, the company
recovers the retainer, receives 50% of the damages and obtains permanent injunctions on
the infringing US distributors.
Once these terms were settled with our patent attorney, he immediately confronted the
five US companies with pertinent information and documents that clearly outlined that the
“copycat” tools they were selling were infringing on US patents and that they would be sued
for damages. Quite quickly, to avert legal action, the companies agreed to cease and desist,
never sell or advertise the “copycat” products again and pay agreed-upon damages. Except
one. A tool company in FL was combative and initially disputed our claims. Close to 30 days
later, the FL company agreed to our terms and ended up paying more damage fees than the
other four.
Summation
As our patent attorney told us, the infringements on our US patents were a SLAM DUNK.
The infringers had no case. Within 60 days, we were able to get injunctions; permanently
stopping the infringers from advertising or selling the “knock-offs”. And, our company
actually made some money from damages (over and above the initial retainer).
This scenario would have been completely different had we not had patents to protect our
product line. Although the “knock-offs” looked very similar to our Carica tools, they were
low quality and poorly-made. And the “knock-offs” were selling for half the price of Carica
tools. In summation, it was the patents that saved our company from a very rough road and
possible bankruptcy.
Patent”. In this article, I will go over our very first experience with patented products and
patent infringements.
Background
Back some time now, I was one of the founders of a tool company called Carica. Initially,
Carica designed, developed and manufactured a product line of unique telescoping tools for
industry; telescoping pick-up tools, inspection mirrors, and inspection magnifiers. The
original telescoping tools were dedicated tools, which were then followed up with tool kits
with quick-connect features that allowed the user to change from different sized rare earth
magnets to different sized mirrors to magnifiers. These telescoping tools were
manufactured and branded under our Carica brand, however, we also private labelled for
tool icons like Mac Tools, Snap-on Tools, Danaher Tool Group and UAP/NAPA’s UltraPro line.
The most important trade show for Carica, every year, was AAPEX/SEMA in Las Vegas at the
end of October/early November.
One year, we were exhibiting at AAPEX and our patent attorney came to our booth and told
us he had just seen some “knock-offs” of our patented tools. After this revelation, the
patent attorney took me over to a US tool distributor exhibiting in the same building. Sure
enough, the distributor was displaying a complete line of copycat Carica tools and copycat
retail displays under their private label. A Taiwanese manufacturer had copied every tool in
our current catalogue and private labelled for a US tool distributor. Interestingly, the
manufacturer copied some of our original production runs; copying old or original models
that had since been modified and improved. Regardless, they had infringed on 3 of our US
utility patents.
We walked away from the booth and discussed the best possible strategy based upon what
we knew at the time. The patent attorney informed me that if we believe there has been a
patent infringement, and we are now aware of the infringement, it was our fiduciary duty to
promptly inform the patent offender of the infringement and that action will be taken. As
this was only Day 1 of the 4-day trade show, our patent attorney suggested we immediately
inform the tool company.
We walked back to the booth and introduced ourselves and informed the US tool company
that the tools they are displaying were infringing on Carica patents. Initially, the company
representatives feigned ignorance. We then told them that if they didn’t immediately
discontinue displaying the copycat tools at their booth, our specific damage claims against
their company will exponentially increase. Reluctantly, the company complied.
After further investigation at the AAPEX show, we found four more tool companies
exhibiting and promoting the Carica “knock-off” tool line. Again, all these companies were
told that if they didn’t remove the tools from the booth, for every moment they kept the
tools on display, our specific damage claims would exponentially increase. Although some of
the company’s representatives were quite abrasive, they all reluctantly complied.
Every day of the Show, our patent attorney returned to all five companies that were
displaying the copycat tools to make sure they were complying with our concerns.
Some actually tried to display the tools again and they were warned that Carica will be
taking action very soon against their company and damages will increase with their defiance
and willingness to display copied tools that were clearly patent infringements.
Strategy
For smaller companies, enforcing patents is financially challenging. For us, at the time, to
hire a patent attorney in Taiwan to sue a Taiwanese company manufacturing in Taiwan that
is infringing on US patents would be time-consuming and costly with any success being a big
unknown. Fighting patents in a foreign country against an “infringer” in its own home court
is an uphill battle. Thus, our strategy was this, to sue and obtain injunctions on US
companies who distributed our “knock-off” products in the United States.
The attorney fees were as follows:
- a relatively small retainer
- split the damages recovered 50/50.
This type of legal arrangement for smaller companies is ideal because in the worst-case
scenario, the company is only out a small retainer. In the best-case scenario, the company
recovers the retainer, receives 50% of the damages and obtains permanent injunctions on
the infringing US distributors.
Once these terms were settled with our patent attorney, he immediately confronted the
five US companies with pertinent information and documents that clearly outlined that the
“copycat” tools they were selling were infringing on US patents and that they would be sued
for damages. Quite quickly, to avert legal action, the companies agreed to cease and desist,
never sell or advertise the “copycat” products again and pay agreed-upon damages. Except
one. A tool company in FL was combative and initially disputed our claims. Close to 30 days
later, the FL company agreed to our terms and ended up paying more damage fees than the
other four.
Summation
As our patent attorney told us, the infringements on our US patents were a SLAM DUNK.
The infringers had no case. Within 60 days, we were able to get injunctions; permanently
stopping the infringers from advertising or selling the “knock-offs”. And, our company
actually made some money from damages (over and above the initial retainer).
This scenario would have been completely different had we not had patents to protect our
product line. Although the “knock-offs” looked very similar to our Carica tools, they were
low quality and poorly-made. And the “knock-offs” were selling for half the price of Carica
tools. In summation, it was the patents that saved our company from a very rough road and
possible bankruptcy.