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Keyword Podcast Episode 50: Patent Horror Story and False Complaints by Black Hat Sellers

December 19, 2017

Competition on the Amazon Marketplace is fierce, so fierce that many sellers result to black hat tactics to try to edge up. However, competition in business is nothing new and bad actors have been doing some of the same techniques for decades. Things like ripping off products, stealing competitive marketing and photos. It’s happened before. That’s why we have things like patents and intellectual property rights.

There are lots of horror stories when it comes to patents and this week we’re taking a look at one that cost at least a $1 million and nearly destroyed a company. The company survived the legal battles and is now growing again thanks to the Amazon Marketplace.

“Competition has gotten so fierce on Amazon that sellers have been willing to resort to these kinds of measures to take each other out,” says former Amazonian Chris McCabe.

Chris is referring to sellers sending in false intellectual property infringement claims, false property rights claims, false patent claims and more. These black hat sellers are sending any sort of false information to Amazon to try to hurt their competition. Chris used to work at Amazon suspending accounts. Now he works as a consultant helping sellers get their accounts unsuspended.

“I was tired of sending warnings and suspending accounts all day long or in a lot of cases, denying appeals to people who had been suspended who were trying to get reinstated,” Chris says.

Fran Kuglen is an inventor, business owner, and entrepreneur with more ten patents, primarily for different accessory items. I want to introduce you to Fran Kuglen (coug-len).

“Interesting ways to do scarves and then it was gloves and then it was bridal,” says Fran, “There were hats and hair accessories.”

Each patent has cost her around $15,000, except one, which ended up costing her significantly more: around a million dollars in a massive legal battle.This legal battle that possibly could’ve been avoided if she’d had a patent earlier.

“I was chomping at the bit and when I started Hairzing, I knew it was going to be worth millions of dollars, I did,” Fran says.

HairZing is a hair product made out of two combs and elastic to pull hair out of the face without the pressure of a rubber band. Soon after launching Hairzing on QVC, an infomercial company ripped off the design.

“I don’t really find it a form of flattery when people copy my products,” Fran says.

This company not only used the same design but they also took Fran’s exact marketing language and hairstyles and used them in their commercials.

“I don’t even think I could cry because I was so sick in the pit of my stomach. I was so sick. I just stood there and I remember shaking, I remember I couldn’t hold the phone,” Fran says.

Then on top of all that the company sued Fran for slander and libel. Fran had wanted to out-market and outsell the competitor but when they sued her she was forced into a lawsuit that would last several years. It only settled once Fran had her patent for the Hairzing. The competitor paid no damages.

“I never, ever want to be in court again. I will go to court to protect myself but to bring a suit against somebody and then go through that again, I would rather out market them and outsmart them at this point,” Fran says.

Fran has re-launched Hairzing on Amazon and is expanding into the European marketplaces at the beginning of 2018.

“What I embrace about it is we’re selling all over the world now. We just got a request from a tiny little town in Mexico,” Fran says.

She’s also continuing to create other products and seeking patents. Fran’s learned a lot about acquiring patents since the early 90s when she received her first. The process for that patent required Fran to drive to Sunnyvale, California to research in the patent library.

‘You have to do a process that sees if anybody else has invented the same thing because part of the integrity of the patent process is you have to give the patent officer everything that’s even vaguely similar to yours and it’s called prior art,” Fran says.

Fran recommends anyone looking to get a patent should buy a book called “Patent It Yourself” by David Pressman. Here’s a link to find it on Amazon:

https://www.amazon.com/Patent-Yourself-12th-David-Pressman/dp/1413305164

If you do the work to get a patent yourself, the filing fees will cost you around $750 to $1,000 plus the time you put into the research and writing the patent. The patent needs to be written a specific way with specific jargon that’s required.

If you use an attorney, they can take care of the research and writing for you but it will cost you significantly more.

Getting a patent isn’t easy and it’s going to test your patience.

“Strap yourself in and hang on for the ride because it’s going to take you all over the place and you’ve got to be prepared for the ride because otherwise, you’ll feel like you’ve failed and you’ll feel like why is this so hard,” Fran says.

Having a patent will protect you and your product in the future. Remember, once Fran had the patent for the Hairzing, the lawsuit was settled. If there are issues on Amazon, Amazon also wants you to have any patent, intellectual property and trademark work done so they can help you protect your product and brand.

“I wanna help someone else that’s out there that’s gonna go through the same process that I did. I want them to avoid the same pitfalls that I made,” Fran says.  

Amazon is bit like the wild wild west in that sellers can easily report each other for violations on the marketplace.

“Anyone can submit a patent complaint, a rights infringement issue that Amazon needs to take action on, but it might not be a permanent listing restriction,” Chris says.

Now, if you have your patents, trademarks, intellectual property protections all in place, you’re in a good spot.

“Especially if you’ve got a good patent attorney who comes back and says no there’s no patent infringement here, this is a baseless complaint. They send that into the notice abuse team. That listing restriction might not last very long,” Chris says.

However, if you legitimately violate a patent or trademark. Amazon doesn’t want to be involved.

“Amazon typically says ‘We can’t mediate this legal dispute for you. We received a properly filled out form, alleging a patent violation here and we took the action that we had to which included removing your listing and who you need to contact and sending you the notification,’” Chris says.

If you have a competitor with a similar product do research and make sure you aren’t violating a patent. If your product isn’t, it’s a good idea to still have a lawyer look at the patent and your product to make sure you’re in the clear.

Again, filing false complaints is a strategy of some black hat sellers.  

“They’re just trying to take you down during a key weekend, key period, Prime Day, something like that, score all those sales while you’re busy trying to get your listing back you’re not selling and they are getting more sales because of it,” Chris says.

Thank you to Christ McCabe and Fran Kuglen for being a part of this episode. Chris can be found at ecommercechris.com and you can find Fran’s HairZing product at hairzing.com

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