January 17, 2012

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Gary L. Crocker

Gary L. Crocker doesn’t gripe about his days as a broke, Harvard Business Sch...Read More

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In the Mix

How Blendtec Fought to Protect its Design

Tom Haraldsen

January 17, 2012

The concept was invented on a Memorial Day weekend, but it took more than nine years before the blender truly enjoyed its “independence day.” It’s the story of a battle over patent infringement involving inventor Tom Dickson’s company, Orem-based K-Tec, and decades-old Vitamix Corporation of Ohio. The battle centered on a simple five-sided blender jar that Dickson created literally during that holiday weekend, and it became a court case resulting in a multi-million dollar settlement. Dickson remembers it well, all of the events leading along that arduous journey from laboratory to courtroom. Along the way, he learned many lessons about trust, greed and deception. He also learned ways to avoid such pitfalls in the future. A Leap Forward Dickson wasn’t thinking about patents and lawsuits on that day back in 2001 when he invented, in blender terms, a better mousetrap. “I wasn’t a stranger to courtrooms,” Dickson says today. “This was the 20th year that I’ve been involved in a federal court. People have copied our products and designs before, and a lot of the time in the past, we just haven’t patented everything we create—it’s a waste of time and money.” That’s a posture he’s been rethinking a bit since this story unfolded. Here’s how it began. Tom Dickson first caught the inventing bug in 1975, when he revolutionized home wheat milling by taking it from stone grinding to stainless steel milling heads technology. He later invented a function for mixers that allowed them to knead dough, and then developed a blender using a square pitcher, rather than the conventional round pitcher. His concepts caught on, and he soon became known as the guru of blending. That led to perhaps his most publicly known role as the star of his “Will It Blend?” series of videos on YouTube. They’ve been viewed by literally millions of people worldwide, and he’s been a guest on nighttime talk shows and morning news programs. His Blendtec brand of blenders quickly became bestsellers, a fact not lost on competitor Vitamix, which began to see its market share drop dramatically. But even with all that know-how, Dickson still had to contend with the greatest challenge all blenders had faced throughout the 20th century—cavitation. “It’s the biggest problem our industry has faced,” he says. “A cavity was always forming around the blade of the blenders when too much substance was being blended. When that happened, the blending stopped. I knew there had to be a way to change that.” On May 25, 2001, the Friday of Memorial Day weekend, when his employees were off on holiday and his lab closed, he began tinkering with his glass jar. “I literally cut it up, kept reassembling it in different configurations, and by the 28th, I had created a new product.” That new product was a five-sided glass jar, something no one else in the industry had thought of or tried. It was revolutionary, and, in Dickson’s own words, “something created by total accident, not something from someone skilled in the art.” That statement would prove pivotal years later in a Utah courtroom when he had to defend his invention. By time his staff returned to work on May 29, the testing of the new design was underway. The design was perfected and a mold ordered from Taiwan on July 13. Seven weeks later, Dickson took two prototypes of the new jar to the North American Food Equipment Manufacturers Show in Orlando, showcasing it for three days before flying back to Utah. His product was a huge success. Almost immediately, customers wanted the new blenders, including many ice cream shops such as Baskin-Robbins. One reason—blending time. Using the conventional blenders of the day, a milkshake took about 90 seconds to blend. With the new five-sided technology, that blending time was cut to six seconds. Brewing Trouble Enter Vitamix and two company employees, including its chief engineer. At a Baskin-Robbins store on the west coast, the employees studied and took photos of a Blendtec machine, later returning to headquarters and quickly applying for a U.S. patent for the design. K-tec had a patent pending of its own for the product, but in the meantime, Vitamix began selling its own version of the five-sided jar—one that matched almost exactly the K-tec design. “It’s illegal to use patents you don’t own to misrepresent your product for purposes of selling it,” Dickson says. And so the battle began, the mixer, as it were, between K-tec and Vitamix. Over the next seven years, both companies sold their products. Dickson says the Blendtec product has been sold in 86 countries and is used in Starbucks locations in 66 countries. Vitamix has its machines in U.S. Starbucks locations, but Dickson says Vitamix used a bait and switch by trading its jars for those patterned after the Blendtec jars. He heard through the grapevine that Vitamix’s No. 1 corporate goal was to “get the Starbucks account away from Blendtec.” Handing the issue of patent infringement over to Salt Lake-based law firm Holland and Hart, the case went before a federal district court jury this past summer. On June 17, the jury ruled that Vitamix willfully infringed on Blendtec’s patents on its five-sided jar and awarded K-tec more than $11 million in damages. And that’s just the beginning. While Vitamix has been enjoined from further sales of its jars (it has asked for permission to sell its blade assemblies used in the infringed jars), and awaits its appeal of the court ruling, U.S. District Court Judge Tena Campbell is still weighing other options, leaving it to a jury to set final damages. Those new fees could take the settlement into the $30–40 million range. Dickson says his company has spent more than $3 million for legal services, and Vitamix has probably had similar expenses. Dickson knows the final legal wrangling will take time, but for now, his company has an $11 million bond that will be released once appeals are denied. More importantly, he has ownership of a product and design that was always rightfully his. So what did he learn from his experience? A cautionary tale for any inventor or entrepreneur. “When [you have] a really good idea—a breakthrough—then you patent it,” he says. “Get a good law firm, one that’s well-known, reasonable and honest. They can take you through any trial if needed. And remember that even an average litigation will probably run $3–4 million.” And if you don’t have that kind of cash? “Just go as fast as you can into the marketplace, knowing someone is going to try to knock you off.” Sidebar The Inventor’s Playbook Ken Black is a patent attorney with Salt Lake-based law firm Stoel Rives. He says companies can take one of two strategies regarding patents: an offensive one or a defensive one. “If you have a lot to protect, you have to think offensively,” he says. “You have a brilliant idea and you want to rush to the marketplace and be first. You probably want to get a provisional patent application on file, sort of like a placeholder, and then follow it up with a design or utility patent.” Conversely, many companies end up taking a defensive stand, and with good reason, to make sure they aren’t guilty of patent infringement. “As the cliché goes, ‘an ounce of prevention is worth a pound of cure,’” says Black. An initial landscape search or product clearance search should be conducted, usually involving legal counsel skilled in such searches. “Here’s my idea, here’s my product. Help me to see if what I do would infringe on someone else’s patent,” he suggests. “[Searches] are not inexpensive, but they are definitely worthwhile—to see what other intellectual properties are out there that might be exactly like or closely similar to what you are looking to do or make. Trademarks can and should be checked as well.” Black says sometimes a simple alteration of a design in a way that doesn’t affect the product’s functionality may be enough to avoid infringement. Perhaps most importantly, such searches can give a company or manufacturer comfort in knowing that “even if you are sued at some point, you’ll have very solid arguments that you did not willfully infringe. When someone is found guilty of willful infringement, their financial consequences may be tripled, and they likely will have to pay the legal fees of the company filing suit.”
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