Case #3: W&P vs Home Essentials: Patent Infringement

W&P’s Mason Jar Cocktail Shaker (left) and Home Essential’s “Original Mason Cocktail Shaker.” Courtesy of: Eric Prum

Background Information: Eric Prum and Joshua Williams “invented a Ball Mason jar fitted with a custom lid that converts into a cocktail shaker” that hit shelves in West Elm stores in November 2012.  In a year, the product, priced at $29.95, made $1 million dollars in sales – very profitable for a start-up company.

Competition:  Customers have been recently complaining about the product, not knowing that it’s actually a knowoff product.  Home essentials has produced and marketed the “Original Mason 16-ounce Cocktail Shaker”, which sells at Bed, Bath & Beyond for $19.99.  The product is very similar to Prum and Williams’ Mason Shaker, but theirs used the original Ball Mason Jar.

Patent Infringement: In order to protect their new creation, Prum and William patented the cocktail in March 2012 – before it was officially on shelves for customers to purchase.  Unfortunately, patents take 29 months on average to be approved.  During the time that the product is on shelves and the patent is being approved, it does not have much protection. Larger companies take advantage of this because even if they are sued for infringement, they can reap the benefits of selling a similar product and pay the lawsuit later.

On Dec. 14, 2013, W&P’s attorney notified Home Essentials that it was potentially infringing on its product. 

Unfortunately, Home Essentials made the case that their product is not eligible for a patent and so there’s no harm in selling something similar to it especially if it will be a cheaper alternative for customers.  Home Essentials has been well-known for copyright and trademark infringement lawsuits, having four in the last 10 years.

Further Issues: Many start-up companies can’t afford the cost of lawsuits, which can be as much as $1 million dollars. In this case, the lawsuit could equal the amount of total sales the company has made. For small companies, a lawsuit can result in a settlement or maybe even an acquisition by that larger company.

Ethical Violation: Start-up companies face enough issues in terms of determining a cost-efficient production process, positioning that product in the market, and gaining new customers.  Often times small business start up with the owners’ personal contributions and so they have already taken on huge risks by investing so much time into creating the business not knowing if it will succeed in the long run.  The last thing that a start-up needs is a larger company to steal its customers.  In this case, Home Essentials seemed to provide a knockoff that was less quality and so customers who associated that product with W&P have an altered perception.

It is unfortunate that the patent has yet to be approved and although W&P claimed that their revenue hasn’t been affected, there is a high possibility that customers will choose the less expensive alternative. Since Home Essentials sells the product in Bed, Bath & Beyond, W&P has lost a potential marketing outlet, which could have made them even more money since the store is known for selling high quality household products at an affordable price. It is definitely an ethical violation for larger companies to take advantage of vulnerable start-ups who may not have the funds for a patent and are still in the process of building their brands.

Moving Forward:

  • Wait until patent is approved before taking any further action.
  • Continue to build the brand.
  • Make sure customers are aware of knockoffs.

Source: Million-Dollar Startup Threatened by Copycat

Case #2: FUZZ

fuzz

 

What is FUZZ??

It is a people-powered radio, where users can create personalized tracklists using their own music files and sharing them. It was founded by Jeff Yasuda in September 2012.

>http://bloom.bg/Sgzbjl#ooid=lod2l5NTrQdZ7mh1FBzY6l1j2aW3D9eb

How does it work??

It is almost like a mix between Pandora, Facebook, and Instagram except it’s just for music.  Registration is quick and free; all users have to do is enter an email address, a username, and password.  You will then be directed to the home page, where you have the option of choosing the type of station you want to listen to whether it’s trending, popular, recently added, or “mad props”- usually mashups. If users have a specific artist or playlist in mind, they can directly search for them. Users have access to the entire website without actually creating their own stations, but they are recommended to in order to enhance their experience on the site.

How do users make their own station(s)??

Fuzz wants users to have a variety of songs to listen to and so they recommend that every user who decides to make a tracklist put at least 10 songs by 10 different artists.  If a user only puts up let’s say 6 songs by the same artist, the tracklist will not be considered “published” and so the public will not have access to their tracklist.  The site will prompt users of this on the tracklist section of their page.  Uploading music is easy and can be done in bulk to save time.  Once users have made a tracklist that is diverse enough, they become “DJs” instead of just regular users.

fuzz 1

fuzz 2

How do users share their music??

Instead of just having a playlist, users create an actual page, including a description, a background picture, tracklist, comments section, and play history. Anyone who has registered can access the tracklist if it has been published. When listening to a station, users have the option to click either “repost”, “buy from Amazon” or “buy from iTunes”.

fuzz 4

 

What sets this apart from competitors??

FUZZ’s major competitors are Pandora and Spotify, but what sets them apart is the social aspect of the site.  Instead of robots creating random playlists, real people are interacting and creating playlists using their own music and so there’s much more diversity. Users can also provide feedback to the site and usually will be responded by FUZZ administrators.  Users are also able to share stations on Facebook, Pinterest, Twitter, and via email.

How do they make money??

Although FUZZ provides free services, they are partnered with many third party sites, including Facebook. When users first register, they have the option of signing up through Facebook. They also rely on users’ network connection and music files that were previously downloaded or purchased, and so their only purpose is to make the space for connections.

What are the advantages of “Freemium” for FUZZ??

Users have a more personalized internet radio experience free of charge without having to deal with advertisements.  Allowing users to listen to a variety of music may encourage them to purchase more digital music, and since there are links directing them to Amazon and iTunes, it serves their convenience.