When a company copied their invention, Natasha and Fred Ruckel began investigating — and got an inside look into how products are ripped off.
On Valentine’s Day in 2015, Natasha Ruckel and her husband, Fred, were sitting in their living room in Gilboa, N.Y. Natasha was improvising on the piano, and Fred was listening while messing around with the couple’s cat, Yoda. Fred noticed a ripple in the living room rug, forming a half circle on one side. Again and again he tossed toys into the ripple and a delighted Yoda darted in and out. Natasha looked up from her playing. “That’s when we came up with the idea for the Ripple Rug,” she says.
The Ruckels, who had spent around 25 years earning their living in marketing and advertising for brands from PepsiCo to ESPN to Hasbro, were already in the midst of creating their first venture: an app that provided a way for amateur photographers to monetize online images. But they both agreed that the Ripple Rug was a better bet.
A couple of days later, Fred went to Home Depot and bought some cheap pieces of carpet, and they got to work on a prototype. When they had that, they launched a Kickstartercampaign in May 2015, pricing the American-made product at $39.95, to test the market. Within 30 days, they received $15,000 in backing. They had the products made in Georgia for $15 each, and filled the orders.
The Ruckels were weighing their next step when, that fall, the opportunity of a lifetime hit. QVC, in conjunction with the Today show, hosted an ongoing competition called the “Next Big Thing” for entrepreneurs with new retail products. Participants presented their offerings on the TV program, and the winning products received an order from QVC.
Following an arduous vetting process — including proof of a multimillion-dollar insurance policy, a guarantee of having 1,500 items available for sale and sample videos of the Ruckels in pitch mode — Ripple Rug made the cut. “We drove into New York City, and at every exit, we practiced the pitch,” Fred remembers. “We were there by 5 a.m. and hardly slept the night before.”
They sold a few hundred units immediately. QVC bought 1,500 more and Ripple Rug became a top seller. “It was pretty damned amazing,” says Fred. “We were profitable out of the gate, which is virtually unheard of. It felt like a great moment.”
It was, and it wasn’t. Over the next 14 months, the Ruckels learned that coming up with a truly original innovation attracts not only devoted customers but also the kind of highly organized, deep-pocketed bootleggers who rip off products and systematically grind their inventors into the ground — both financially and emotionally. “It creates so much discord that you are willing to give up the dream of entrepreneurship and go back to your day job,” says Fred.
In the thick of battle, however, the Ruckels learned critical lessons: the importance of copyrighting assets before launching; the reality that people will steal everything from your marketing pitch to your product to your advertising photos; the need to continually patrol for ripoffs and take action. They also got a darkly fascinating glimpse of how ruthless, well-funded, deeply sophisticated bootlegging operations work — and how, with tenacity, vigilance, a good lawyer and the right strategy, they can be beaten.
To read how they won, here is the rest of the article:
Earlier today, iPEL, Inc., launched its new website and a brand-new model of patent monetization, which offers free and paid licensing options to operating companies. iPEL has also defined a set of business practices that a Non-Practicing Entity can follow in order to call itself an Ethical NPETM.
iPEL was formed with $100 Million in initial capital, in May of 2017, by Brian Yates, a well-known patent monetizer, and Rasheed McWilliams, a respected patent trial attorney. For the last year, iPEL has been actively building its worldwide patent portfolio, which currently includes more than 1,000 distinct patent families.
iPEL announced its Initial License Offering, available only through the end of 2018, which provides all companies an opportunity to secure a license to iPEL’s entire worldwide patent portfolio, through one of two licensing programs: (1) free licenses for small businesses and startups, and (2) paid licenses for larger businesses.
Both categories of licenses should be a welcomed change for operating companies, who historically learned of patents owned by one of Mr. Yates’ companies by being sued. Indeed, the dozens of NPEs that Mr. Yates has owned were often amongst the most active patent plaintiffs in the US and were responsible for more than 1,000 patent infringement lawsuits, against a majority of the companies on the Fortune 1000.
With iPEL, it seems clear Mr. Yates is intent on pursuing a very different monetization model. “It’s pretty funny,” said Mr. Yates. “Several people thought I retired or left the patent monetization business, because during the last year, I have not created dozens of new NPEs or filed hundreds of new patent lawsuits. But, I just turned 43 years old, and I have no desire to retire anytime soon. I love what I do and am incredibly proud of what we are doing with iPEL. And, even though it has been fun keeping the details of iPEL a secret, it’s going to be a lot more fun watching iPEL impact the entire innovation ecosystem.”
Although Mr. Yates and Mr. McWilliams would not share the full scope of what iPEL has planned, it is clear that they want to change the NPE narrative. Providing a defined list of best practices and clearly defined pre-litigation licensing options are definitely new talking points for NPEs.
Even the most vigilant anti-NPEs, however, will have a hard time criticizing iPEL’s offer to grant small businesses and startups a completely free, no strings license to its entire patent portfolio.
iPEL’s free license is available to any company whose gross annual revenues do not exceed $5 Million USD (or the equivalent in any other national currency) and is for a one-year term. Although the license is renewable, it is not available to affiliates or subsidiaries of larger entities that do not meet the revenue restrictions.
“We know that small businesses and startups are the most likely to engage in paradigm-shifting innovation” said Mr. Yates, CEO of iPEL. “Those companies are not afraid to take risk, to ask big questions, or to dream. Unfortunately, in almost all instances, those same companies cannot afford to buy all of the patent licenses they need in order to implement their new technologies. iPEL wants to help these companies succeed, by giving them a large portfolio of patented technologies, upon which they can freely build.”
“There is no reason patent licensing cannot and should not be a celebrated exchange of innovation and technology between those with rights and those who need to leverage those rights in order to produce and distribute products,” said Mr. McWilliams, President of iPEL. “Patent and technology licensing has been a part of the fabric of American culture since the earliest days of our history as a nation.”
“Regrettably, patent licensing has become a maligned practice over the last decade in the United States,” said Mr. Yates. “This has allowed the many benefits of patent licensing to lay unrealized, and for innovation to stagnate. My hope is that by giving free, non-exclusive rights to iPEL’s valuable patent portfolio, startups and small businesses will create more jobs and create exciting new technologies.”
Of course, there is a self-serving piece to what iPEL is doing as well. If startups and small businesses do successfully build on the patents in iPEL’s portfolio, then they will at some point becoming paying licensees. “Sure, it just makes good business sense really,” said Mr. McWilliams. “These small companies don’t have the ability to pay for patent licenses, and a patent infringement lawsuit could cripple them before they even get started. We’d love for them to build on our valuable technologies without worry, and once they can afford it, purchase an ongoing license. It is a win-win for everyone.”
At the end of the day, iPEL hopes this new, startup-friendly model becomes an industry standard. “Despite the false narrative that has been spread by many willful infringers, NPEs are a vital part of innovation and the global economy. And, at iPEL, we are holding ourselves to the highest professional standards, by giving all companies an opportunity to secure licenses on reasonable, pre-litigation terms. And, small businesses and startups should never be afraid of an NPE jeopardizing their company. For those reasons, we challenge the rest of the industry to follow our lead,” Mr. Yates said. “It is time for NPEs to stop allowing infringers to define us as a bunch of heartless monsters. Everyone should abide by the Ethical NPETM practices and support small businesses and startups. It’s simply the right thing to do.”
More information about iPEL’s Ethical NPETM criteria, its worldwide patent portfolio, and its free and paid licensing programs, is available at www.ipel.com.
The Cade Museum for Creativity & Invention is excited to announce that the 2018 Cade Prize is now accepting applications from inventors and entrepreneurs in the state of Florida. For the first time, the Cade Prize will award the top four finalists! The application fee is waived until June 22nd at midnight. Beginning June 23rd, the application fee will be $55.
For more information, please visit www.cademuseum.org or email Ashley Bryant at firstname.lastname@example.org.
Read the Fine Print before you sign.
It all sounds so good, and easy. You have spent hours and perhaps years creating your product. You have spent money making prototypes and patents. We know those are not cheap and can take years to get. You see an ad on TV and it sounds great! They can do it all! You meet with someone and they love your idea as much as you do, or so they say.
Here is the kicker. They are in it for the money. I am not saying they aren’t entitled to be paid for their work. The problem is, they rarely do work. Inventors do not ask enough questions or talk to enough people about the company they are choosing. It is based on pure emotion. They sign a contract to pay and they don’t know what they are getting in return.
Inventors are easy pickings for a lot of companies. They tell the inventor what they want to hear and the inventor jumps at the chance. Their credit card is out so fast, they forgot to read the fine print.
Here is another inventor who fell into the trap:
Don’t be the next one to get burned. If you have questions, or need help, email us at email@example.com
Josh Malone, the inventor of Bunch O Balloons, won a $12.3 million judgement against Telebrands’ recently. Josh’s patents were challenged at the Patent Trial and Appeal Board (PTAB) and were found to be invalid. However, the Eastern District of Texas found that the patents were valid and also found Telebrands’ and others had willfully infringed the patents owned by Tinnus Enterprises and Zuru that cover the toy, Bunch O Balloons. Zulu and Tinnus are now looking forward to enhanced damages since the jury found willful infringement by Telebrands’.
Another patent used to protect the invention of Malone was challenged by Telebrands’, but the PTAB did not grant the petition for hearing since the same issues and the same prior art had been reviewed by the examiner in the application for patent. This may show that the tide is starting to turn in favor of the inventor in further reviews of patents in this on-going battle.