Spark
An inventor-entrepreneur confronts product pirates
By Eva Winger
Editor’s note: Spark is a regular feature for 2009 that chronicles the product-development journeys of three women inventor-entrepreneurs. This story appeared in our June 2009 issue.
In three years, Julie Austin has sold more than 300,000 Swiggies, wrist water bottles that keep your hands free while exercising.
Since we launched our year-long series Spark in January, regular readers have experienced some of Austin’s ups and downs – including when she had to air freight a load of Swiggies in time for the Dublin marathon. Miscommunication with her Chinese-based factory forced the rush shipment and killed her profit margin.
Despite such set-backs, Austin is making a living off Swiggies, which is a sure sign of success.
Yet success can breed its own problem: infringement.
“Boiled down, infringement is stealing,” Austin says. “For an inventor committing years of hard work and money to grow a business, and to have this happen, is a nightmare.”
Curious one day to see how Web search engines rank products, Austin searched Google using the terms “wrist water bottle.” She found a knock-off of her patented product floating on the screen of a Chinese factory’s Web site.
“Not only did they have a picture of my product,” says Austin, “but they shamelessly stole my exact pictures and copy from the Swiggies’ Web site.”
Months before, Austin had exhibited at a gift trade show in Hong Kong to find international distributors. She says she was careful to show samples only to bona fide representatives.
She suspects an attendee stole a sample. Soon an unauthorized manufacturer was selling Swiggie copycats online.
She had her attorney, Melissa Dagodag of Los Angeles, send the factory a cease-and-desist letter. Yet Swiggies’ imitations kept appearing on other factory and promotional-product Web sites.
“Usually these promotional-product companies are not to blame because they are unaware that they are buying infringed products,” says Austin.
She sent a list of alleged infringers to Google, Yahoo and other search engines. That, too, proved unsuccessful.
Austin discovered the best strategy was to contact sourcing-directory Web sites such as Alibaba.com or TradeKey.com, which match inventors with reliable overseas factories.
On both these sites, Austin found forms to fill out and file a complaint against an infringing company.
“It’s a good idea to get to know a couple administrators at these sourcing sites,” she says, “so they know who you are and what your mission is.”
Austin succeeded in removing infringers from Alibaba, Oursbiz, Tootoo, b2bfreezone and other Web sites.
“I learned that even if a patent is only applicable in the U.S.,” she says, “infringers are violating the law if they sell the copies on the Internet” and can be removed.
Austin recommends visiting www.ip-watch.org, which offers news and analysis on international intellectual property policy and infringement.
She’s also created www.infringerblacklist.com, dedicated to fighting infringement.
Austin also recommends researching a factory’s capabilities and asking for references to determine its reliability. For history on particular individuals, Austin suggests using people-search site www.PIPL.com.
She admits she failed to conduct background research on one culprit with whom she had signed a contract. She later learned this person has been scamming inventors for years and is in contempt of court for patent and trademark violations.
“If only I had taken this simple step,” she says, “I would have found out that this guy had a pattern of starting and dissolving companies, and bilking inventors out of money.”
E-mail Eva Winger at [email protected]
Outside Advice
Stephen Albainy-Jenei is a patent attorney with Frost Brown Todd and editor-in-chief of Patent Baristas, an intellectual property news and commentary site on patent and IP issues in the biosciences. He offers the following insights on Austin’s infringement experience.
If your product is patented, file a complaint with the U.S. International Trade Commission or ITC. While the ITC does not award monetary damages for infringement, it can issue an exclusion order to block importation of infringing goods into the United States.
The process is known as a Section 337 action and it’s the fastest way to obtain injunctive-style relief to quickly block the product from the domestic market. An ITC’s exclusion order goes to the U.S. Customs and Border Protection, which bars imports of infringing goods at the border.
The ITC conducts Section 337 investigations (named for the section of the law) into allegations of unfair trade practices. While there are many types of potential unfair trade practices, about 90 percent of Section 337 investigations concern patent infringement.
A patent-based Section 337 investigation is an adversarial proceeding where both parties serve discovery and participate in the hearing. All defenses that are available to a district court patent defendant can be asserted by an ITC respondent.
On the upside, one study has shown that Section 337 complainants have a win rate of 58 percent – higher than district court plaintiffs. It’s also relatively fast. The parties typically take part in an evidentiary hearing in about eight months and a final judgment is entered in 15 months or less.
