Nearly every client I’ve had walk through my door has been motivated—at least in part—by a fear that someone could steal their invention and sell it. However, as I’ve noted elsewhere, invention theft is extremely rare.
This rarity is largely a practical matter: An invention needs to generate about $1 million in revenue before it becomes worthwhile for a copycat to steal it. This is because a knockoff must be priced much lower than the copied product in order to steal the latter’s market share. This price point is typically around one-third to one-half of the copied product’s price. So, if a product is sold for $20, the knockoffs have to sell for about $7 to $10.
However, patent infringement does occasionally happen. But when it does, it’s not necessarily bad. Recently, the Chicago Tribune reported on a case in which small tool company successfully sued Sears and a supplier for copying a product they had previously sold through Sears.
LoggerHead Tools vs. Sears & Apex Tool Group: A Case Study in Invention Theft
As the Tribune reported, back in 2005, Illinois resident Dan Brown Sr. and his son Dan Brown Jr. founded their hand tool company, LoggerHead Tools. The company was created as a venue for selling original tools invented by Brown Sr., one of which is the Bionic Wrench.
LoggerHead’s site describes the Bionic Wrench as a “hybrid of an adjustable wrench with the ease of use of a pair of pliers.” When the handles of the product are squeezed, six metal prongs close together—in a manner similar to a camera lens iris—allowing it to tightly grip nuts and bolts in a wide range of sizes.
Brown Sr. beat the odds and successfully marketed the product to a number of large companies, including Lowes, Walmart, Menards, and Sears. In 2009, Sears placed its first order for the Bionic Wrench, totaling 15,000 units. This order, as well as a subsequent order the next year for 75,000 units, sold out completely. In 2011, Sears sold more than 300,000 Bionic Wrenches. According to the court complaint, the tool was the “best-selling and most profitable tool in its category.”
But in 2012, Sears pulled the Bionic Wrench from store shelves. In its place, the store chain began selling its own product, the Max Axess Locking Wrench, which was sold under the Craftsman brand for approximately half of the Bionic Wrench’s retail price.
In 2012, LoggerHead filed suit against Sears and its tool supplier, Apex Tool Group, alleging that they had produced a “virtual copy” of the Bionic Wrench which violated the patents protecting the tool. The case was finally decided in May of 2016, when a federal jury found that Sears and Apex had willfully infringed the patents covering the Bionic Wrench, awarding LoggerHead damages of nearly $6 million.
According to the Tribune, Brown Sr. and his company plan to request that the judge award additional damages, based on the fact that willful infringement was found, and will also seek an injunction against further sales of the Craftsman product. Unsurprisingly, Sears and Apex plan to appeal.
Enforcing a patent in court isn’t cheap, but there are ways of covering the cost.
The author of the Chicago Tribune article noted that many inventors don’t go after infringers, or accept small settlements, because of the extremely high cost of litigating a patent infringement case. While it’s true that such cases are costly, many inventors fail to realize that there are ways of mitigating this cost.
It’s possible to secure patent infringement insurance, which can cover most of the financial cost of enforcing or defending a patent in court. If your invention is currently returning a sizeable profit, then it’s wise to obtain patent infringement insurance now, as it’s much more costly if you know that infringement is already occurring.
Also, there are investment firms which provide patent litigation financing in exchange for a percentage of any legal damages. Please read the linked articles for more information on these topics.
There are two conclusions that inventors should take away from the Sears/LoggerHead legal case. First, actual patent infringement is very rare. As shown above, a product has to be extremely profitable before infringement becomes worthwhile. In the case of the Bionic Wrench, it sold about 400,000 units before Sears introduced its competing (and infringing) product.
Secondly, when patent infringement does occur, as long as you can clearly show that patent infringement has occurred, there are ways of obtaining the funding necessary to cover your legal fees.
If you believe that your patent in being infringed upon, we can help. To speak to an experienced patent attorney, or to obtain more information about the process of enforcing a patent, call us at 916-760-8265 or use our contact form to send us a message.