Shane Chen Starts Rage
In 2011, Shane Chen started a rage. His self-balancing Solowheel electric unicycle provided both great fun and exercise for millions of users. That fulfilled the goal Chen, CEO of Inventist, Inc., holds for all of the dozens of lifestyle products he’s invented. While sales in the United States have been strong, the big explosion has happened in China, beginning with the Solowheel’s appearance on a Chinese TV show called Happy Camp. Amazingly, Chen has seen nothing from the millions of units sold there.
“We saw a few knockoffs at first, which is very common for products with U.S. patents that make it to China,” Chen told I&T Today. “A year later, we saw 100 to 150 copies. Now, they are copying the copies and selling them worldwide.”
This is of paramount concern for Chen, one of the most prolific but least-known inventors in the sports, outdoors, and lifestyle marketplace. Besides Solowheel, he has invented the Hovertrax, a jointed, electric skateboard; and the Aquaskipper, a waterborne device that looks and works roughly like a bike.
While China continues to tout their growing protection of intellectual property, Chen advises businesses to heed the cautionary words of folks like James Zimmerman, chairman of the American Chamber of Commerce in China, whose organization reported that only 21 percent of its members believed China was offering even lukewarm enforcement. Sharing Zimmerman’s skepticism is Gary Shapiro, President and CEO of the Consumer Electronics Association.
Patent Troll Problem
“It’s definitely gotten worse. Far worse. Here and abroad,” said Shapiro, one of the world’s most knowledgeable and ardent proponents of patent protection. “The percentage of lawsuits has gone up dramatically. We thought we had something when the House of Representatives passed the Innovation Act, 325-91, in late 2013 – but Sen. Reid, then the Senate Majority Leader, pulled the legislation. Now it’s open season for patent trolls, and open season for the trial lawyers who are looking for work.
“Patent suits have gone up 1,500 percent since 2005. And these suits only occur when an extortion attempt by a patent troll fails. The problem is that 80 percent of troll victims are small and medium-sized businesses [such as Inventist]. When you start up a company and have interested investors, you pour your resources into product development and marketing. But when you get hit by a patent troll, no other investors will likely come your way. It’s a loss for both the business and the investor — as well as the economy.”
For those small businesses that can afford an expensive patent troll lawyer, Shapiro notes the lawyer must think like a patent troll. When that happens, chances of IP protection increase. “Trolls don’t want to go through litigation, so they go after the low-hanging fruit, the businesses that can’t afford a lawyer,” he said. That’s not all. Once a suit is initiated, the company must state which specific patent is being infringed, and how — a cumbersome process for a single patent holder, let alone larger companies that might be trying to protect hundreds of patents from various trolls.
Business Harm
“At some point, Congress will have to act,” Shapiro said. “This hurts big companies as well as start-ups. Let’s say a troll copies 110 patents. The jury rules in favor of the company on 109 of them, and throws one to the patent troll, thinking they’re doing the company a favor. They’re not. What if that’s the patent that can change a market, or a product category? That is no way to act.”
There might be light on the horizon. A new bill, HR 9, recently moved through the House Judiciary Committee on a 24-8 vote, and will be considered by the full House in the fall. The Senate is prepping its own version, S1137, but supportive lawmakers on both sides of the aisle – a strong majority – are taking heat from trial lawyers and members of the pharmaceutical industry about some provisions.
To that, Shapiro simply says, “For every week Congress doesn’t pass a good bill, the economy loses $1.5 billion – and this is a bad time in our economic progression for anything to weigh on the economy. We have to succeed in the next couple of years.” The Consumer Electronics Association’s Gary Shapiro (L) is one of the world’s foremost crusaders against patent trolling.
By Lee Bell
