Oracle Lighting, the market leader in high-quality and innovative LED solutions for the automotive, power sports, motorcycle and marine markets, first introduced its Vector™ Pro-Series full LED grill, a uniquely designed lighting package for Jeep Wrangler vehicles, at the SEMA (Specialty Equipment Market Association) Show in 2017. The product received an enthusiastic reception, going viral on social media when, two days into the trade show, a serious problem emerged.
Justin Hartenstein, Oracle’s founder and director of product development, monitored the product’s reception and chatter and found an alarming post on WeChat, a Chinese networking social media platform. The post combined a video of the Vector™ Grill with a message from a manufacturing company in China, saying it intended to copy the product and release a knock-off within two months.
What Went Wrong
Within three months, the company in China created and released a cheaply made knock-off version of the Vector™ Grill, selling and shipping it to distributors worldwide. Angry calls and e-mails to Oracle Lighting from disgruntled and disappointed customers swiftly followed. These customers had purchased the copycat product while believing it was manufactured and sold by Oracle and provided many complaints about the product’s shoddy construction and poor performance. “It’s a piece of junk,” was a common refrain.
The stakes were high. Not only was Oracle Lighting losing legitimate sales opportunities, its brand and reputation were being damaged in the process.
What Went Right
Oracle Lighting had followed best practices and filed a patent on their new product design before exhibiting at SEMA. This early filing helped Oracle’s case. Oracle would not have been able to file a patent application in most countries, such as China, had it waited and filed the application after displaying the product.
In addition, Oracle Lighting immediately sought legal advice. Edwin A Sisson, Attorney at Law, LLC always sends attorneys to SEMA to meet with current and future clients. Hartenstein showed the video posted by the Chinese manufacturer to Jeffrey Banyas, a patent attorney with the Sisson Law Firm, who was attending the show. Within two weeks, Banyas was at Oracle’s Headquarters constructing the strategy to protect Oracle from the impending knockoffs.
Myths and Misconceptions
There is a common myth that China will not uphold foreign patents, that the cards are stacked against U.S. and other foreign manufacturers, and that the case is lost before it is ever pursued. As a result, many businesses will file suit in the United States and try to stop product distribution, rather than going after the manufacturer in another country, or the source of the problem.
The truth is the Chinese court system will review pertinent documents and protect intellectual property, even when the plaintiff is a U.S. company. In addition, the fees associated with such a case, filed in China, are often a fraction of the cost of similar litigation filed within the United States.
Despite this, less than one percent of patent infringement cases in China—and there are hundreds of thousands each year—are filed by non-Chinese manufacturers, such as Oracle. Yet Oracle and the Sisson Law Firm identified early on that there was more value to filing a patent infringement case in China where the infringement originated as opposed to chasing individual distributors in the United States and other countries. Accordingly, Oracle asked Jeffrey Banyas to the manage the infringement case in China.
Building a Strong Reputation
Oracle made it very clear to its customers, industry, and competitors that it was enforcing its intellectual property in China. The Firm often advises its clients that, if you are enforcing intellectual property, let the world know. The benefits of this approach are threefold: it generates market awareness about problems associated with knock-offs, helps build brand loyalty and helps deter future attempts at copycat products. Basically, once a company builds a reputation for protecting its products by filing patent applications and enforcing them, counterfeiters will often find an easier target to pursue.
Before filing the case, Jeffrey Banyas worked through the law firm’s global network of associates and investigators to register Oracle’s patent in China and gather the necessary evidence required to file the case.
The Chinese manufacturer’s defense was that it had actually designed its knock-off before Oracle. However, saying that a particular manufacturer started product development after a patent was already filed and being able to prove it are two different things. The Sisson Law Firm was able to construct a timeline, presented to the court in China, establishing that as Oracle Lighting filed patent applications and released its product, the Chinese manufacturer followed within a week or two later.
In the summer of 2020, the First Instance Court in China decided the defendant was infringing upon Oracle Lighting’s patent. It issued a permanent injunction, sometimes called an exclusion order, prohibiting the Chinese manufacturer from making or selling the infringed product. In addition, the court ordered the Chinese manufacturer to pay monetary damages and court fees.
After the Chinese manufacturer filed an appeal in December of 2020, the appeals court judge took the manufacturer to task telling the Chinese firm its defense “can hardly be supported”. The defendant has now surrendered its defense and withdrawn its appeal – making the First Instance Court’s decision final.
According to the client, Oracle Lighting, in addition to the Court’s exclusion order and monetary damages award, the fake grills disappeared from the market shortly after the ruling was announced.
Have a plan in place to protect intellectual property before announcing or introducing it to the marketplace.
Attorneys at the Sisson Law Firm believe strongly in filing suit against the manufacturer rather than distributors or retailers. This addresses the source of the problem and halts production of knockoff or copycat product. This yields better results than chasing distributors in multiple countries, which can be both a frustrating and expensive exercise.
The End Game
Sisson & Banyas, Attorneys at Law, LLC provides a myriad of legal services tailored to help firms secure, protect, and monetize intellectual property assets. This protection, when done right, enhances your competitive advantage to grow your market. A business must always be thinking about protecting its intellectual property from being misused by others.
The Sisson Law Firm brings a business approach to protecting and promoting the monetization of intellectual property, while supplying its services on a flat-fee basis. Give us a call at (330) 598-1799 or contact us learn more about what we do and how we do it.