In August 2006, we received an email from a vendor advised us that "I came across this carrier and thought it was designed just like the pet-on-the-go. the manufacturer is a company called Bxxx Nxxx LLC. They call this carrier Urban Mod Sling Bag. I don't know what you can do but i thought you might like to know of people who copy your designs." The company claimed in the webtsite that this is a "patent pending design, really". We made a friendly phone call to the owner of the company who confirmed that they imported the product from China. She told us that she has gone through the patent process with another product she has and asked us to provide the patented details of what we think they are copying so that they can "modify the design to avoid the patent issue". She is correct, isn't she? That will be very convenient; we are amiss!
It hurts the most to be copied by a potential buyer, who can sell the products immediately through their distribution network. This happened with our Pak-o-Pet carrier, which has a pending patent application.
The buyer of XXXEdge, a large pet-industry catalogue company, asked for a free sample during a trade show. It was not unusual when we received no reply. We were surprised soon after that, however, to see in their catalogue a product that looks essentially the same as ours, using grommets instead of our side mesh. One of the sizes exactly matches our medium size, which we designed with an unusually wide body for the pet's comfort. We also discovered the knock-off uses the unique and more costly construction method we developed to minimize defects in the finishing process.
We didn't even get the courtesy of a small trial order! Just as distressing, the base support they use is a wooden board wrapped by a thin lining. This is unhygienic (absorbent of urine or water) and harmful if the pet chews on it. We also do not believe the wood is propertly declared for export, with the required fumigation process to kill any insects.
Except for a paper hangtag with unregistered trademarks "Eastside Collection by Casual Canine," there is no label or trademark on the carrier.
We decided to come back stronger by reintroducing our economical Basic line. The knock-offs come in two sizes and are priced from $69 ($49 on some sites). Our Basic line offers four sizes, costs $69 to $89, and has the full range of features, including a safe structure and quality materials. Why would you want an unsafe knock-off for your pet?
We were told that the owners of X & X are Asian and are "pros" in the handbag knock-offs field for more than 10 years. What is being copied is our Love Series, a heart-shaped design first introduced for Valentine's Day in 2005. Louis Vuitton designer Marc Jacobs has reportedly said, "Knock-offs are the highest form of flattery (for the designer) but the company won't feel good about it." For small businesses like ours where the designer is the essense of the company, the threat to the business mitigates any sense of flattery!
The Love Series is a call to love others regardless of our apparent differences. It also expresses our designer's determination to move forward in facing breast cancer.
The design incorporates a narrower base for a more lively presentation and two straps that extend to the base of the heart as close together as technically possible so you can "unzip (open) your heart."
The knock-offs have successfully copied the body of the design but not its spirit. While we handcut each piece of the Love Series, the knock-off is offered by X & X at a price so low, it doesn't even cover the cost of our base materials. How? The knock-offs are made of PVC, with less structural support and visibly poor workmanship.
We live in a free society, striving for the American dream. We estimate that a full 20-foot container of Love Series knock-offs can generate ten of thousands in profit for X & X. This is perhaps their dream, but it is our nightmare. We are discouraged but will move on.
XXXXXSpeed Co., Ltd., a Hong Kong company with a factory in China, was recommended by a friend and manufactured our first product, the Original Pak-o-Pet, to our satisfaction. Unexpectedly, having collected half of the payment, they subcontracted our next production without our knowledge and agreement to another factory. It was a much bigger production, with improved features and more options. Inferior materials were used and the finished product was defective. It simply was not what we paid for, and Celltei easily could have been closed.
We rejected the shipment, only to find it in the hands of a U.S. trading firm a year and a half later. We made it clear to the trading firm that these products have our trademark and selling them is an infrigement of our copyright. To our astonishment, the firm offered to sell us the defective products at an unreasonble price. We would call it blackmail. Later, we realized the trading firm's owner had pretended to be a buyer and visited our company to collect pricing information before taking on the shipment. In order to "legitimize" the selling of the rejected products, numerous attempts were made by different related parties to purchase a smaller quantity of our current stock.
We reserve the right to sue the manufacturer and have prepared the necessary documents for such an action. However, as a foreign firm, we are required to put down a substantial deposit in order to bring a local firm to court.
We were tipped by a vendor and shocked to find a China-based company named XXX Arts & Crafts Co. Ltd. using our own product images (copied from our Web site) to solicit orders. We have never contacted this company and can't help but wonder how many other companies are applying the same tactic. We notified another U.S. pet carrier company about the listing of their product images on that site.
In the past decade, U.S. trading firms have brought to China many products, fueling the development of large-scale, low-cost manufacturing. Some of these manufacturers have secured big accounts, built a production staff of 1,000 or more, invested in machinery and now have in-house design capability. But most are operating at a 200-person staff level, doing low-cost, sub-contracted work or making volume knock-offs. The workers are paid a low base salary with incentives on quantity produced, so these factories achieve economies of scale on simple products made in large volumes. As costs and expectations continue to rise, these manufacturers are facing stiff competition from companies in the inner provinces, where very low-cost labor is still available. To survive, they have to actively seek attractive products to entice the interest of overseas buyers.
Undoubtedly, the pet industry has grown substantially in the past two years. Many people have traveled overseas to find manufacturers who claim to offer unique and original designs. The worst situation is that before their shipment arrives, those same unique and original designs are being sold in the market at a price they can't afford to match.
We were able to get XXX Arts & Crafts Co. Ltd. to take our product images off of their site before officially lodging a complaint with the Chinese Embassy. When we asked them to give us a proper quotation for making our products, they told us that they cannot produce the quality we demand.
In a small company, the designer or inventor is also the salesperson, bookkeeper, janitor and many other roles. Very few have the financial resources to bring an infringer to court. Even fewer can endure the stress of producing all the necessary documents and going through the process while continuing to run the business. Finding a good lawyer also requires luck, and if you do win the case, you will wish the infringer or the insurance company stays liable enough to at least cover your legal expenses.
We have spent tens of thousand of dollars on our patent applications and still can't cover all the designs. The legal fee is often more than double the initial estimate the lawyer provides. In addition, there is a $3,000 annual filing fee to keep each patent after it is granted. We often wonder whether our money would be better spent in securing the market or improving the product.
We met a vendor whose patented product was copied 100% by a bigger outfit incorporated in Canada but trading mostly in the U.S. She had little money to take action beyond issuing a few legal letters, which were completely ignored by the infringer. By now, she has accepted the reality and focused her energy on breaking new ground with her amazing sales skill. Another vendor we met had an entire collection of copyrighted artwork copied by an importer. He spent nearly $100,000 to stop the importer from selling and an additional $150,000 to bring the importer to mediation, which took 15 months. While he sinks deep into the equity he accumulated over the past 25 years, the importer's legal expenses are covered by its insurance company. A quarter of a million dollars later, the case is far from closed. It is not only the financial pain but also the enormous paperwork demand that is giving this vendor great distress over what he first thought of as "the right thing to do."