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Snake bite Market wars: The innovative SnakeLight has been Black & Decker's shining star. Now it faces the problems that can follow success - its novelty has worn off and there are competitors trying to steal the spotlight.

THE BALTIMORE SUN

Two years ago, SnakeLight snared a $100 million market to become Black & Decker Corp.'s most successful product ever.

Newscasts told of shortages of the flexible flashlight. Oklahoma City bombing rescue workers ordered them. Television's David Letterman joked that he gave his mother one for Christmas.

Now in its third holiday season, SnakeLight faces a problem that befalls every runaway hit. The novelty's gone.

That means that SnakeLight has not only lost its cachet, but that it faces another inevitability - copycats who want to seize its flexible flashlight franchise.

So for more than a year, Black & Decker has waged an aggressive legal battle to protect what's left of its marquee product's market.

The company filed about 15 lawsuits against the makers of so-called knockoff products such as Grip Light, Pretzl Lite, Job Pro Coil Light and the Cobra. The millions likely spent on legal fees are a small price to pay for SnakeLight's estimated $250 million in sales since its introduction in August 1994.

"If the company hadn't gone to court, it would have been devastating for Black & Decker," said Ray Niro, a Chicago-based patent attorney whose firm handled the SnakeLight litigation.

Black & Decker's legal fight has won it more than $9 million from opponents and helped keep SnakeLight free of all but three major competitors.

Two rivals represent leftover inventory of companies that agreed to stop production in settlements with Black & Decker. The third will likely go to trial against Black & Decker next year.

"You're talking about one of the best intellectual property groups in the world," said William Fryer, an intellectual property professor at the University of Baltimore School of Law. "They can identify what can be protected and they know how to protect it."

The lawsuits show how Black & Decker spent $15 million to bring a designer's brainstorm to market and how initial sales of SnakeLight tripled expectations. They also show how competitors mobilized to develop knockoffs, and how Black & Decker used patents and courts to fight back.

SnakeLight is a flashlight with a rippled tube, or core, that can be twisted into a variety of shapes. This feature allows it to be wrapped around poles and other items, thus freeing both hands for a home project. Black & Decker holds four patents for SnakeLight, covering its flexible core, the anchor at the end of its sleeve, the product's proportion and its overall design.

The idea for SnakeLight was born in 1989 when Bryan DeBlois, a designer for the company, was making home repairs and saw an electrician stuff a flashlight into his shirt so he could work with both hands.

The SnakeLight team struggled to make a core that would bend and then hold its shape. The team experimented with gooseneck lamp pieces, solid copper wire and even bendable plastic sip straws. Finally, Black & Decker hired Lockwood Products Inc., of Lake Oswego, Ore., the inventor of a "ball and socket" design that ultimately proved to be the answer.

That cost about $1 million. Black & Decker also spent $6 million on components, $4.6 million on tools and equipment and $4.5 million to pay salaries of people who worked on SnakeLight.

Launched in August 1994 at a Chicago trade show, SnakeLight was lauded as a "giftable" item - a key to gaining a foothold in the huge "do-it-yourself" market. SnakeLight easily surpassed Black & Decker's four other new household products. A new hand-held vacuum and light iron lost money and were withdrawn from the market.

In response to demand, the company quadrupled production of SnakeLights at its Asheboro, N.C., plant. A SnakeLight takes four minutes and 30 seconds to assemble. One was produced every 2.5 seconds.

"We were making as many as we could and we could not keep with the demand," Don Graber, then head of household products, testified in one case.

The company had planned to sell 200,000 SnakeLights between August and December, but ended up selling three times that.

$100 million in sales

Black & Decker doesn't release sales results of specific products. But analysts estimate that SnakeLight generated about $100 million in sales last year. That would be only 2 percent of Black & Decker's total, but a larger percentage of earnings because of the product's high margin.

With something so successful, everyone knew the knockoffs would come.

"They had the same problem with Dustbuster," said Bentley Offutt, an analyst with Offutt Securities. "Every time they have a successful product like this, they are constantly in court defending their patents."

The SnakeLight launch came without patents, which protect inventions from imitation and are secret until they are issued.

The result was a game of nerves between Black & Decker and its would-be competitors.

Black & Decker was vulnerable to anybody who could mass produce a flexible flashlight quickly. Until it had patents, the company could use only weaker arguments that other products unfairly resembled SnakeLight or had names that sounded like SnakeLight.

For their part, competitors did not know what features to avoid to make a legal product. They ran the risk that their flexible flashlights would be rendered worthless by a patent issued after production.

One competitor, GSL Group, a Hong Kong company, entered the market with Grip Light in the fall of 1995, about a year after SnakeLight's launch.

That kind of speed is not unusual, said Fryer, the law professor. "Products are being made and imported almost overnight," he said. "The technology for molding and the computerized designing of products allow people to take the specifications right off the product. It's like having the drawings."

Advanced technology has made copycats a pervasive problem.

"The rights have to be obtained early and the rights have to be strong," he said.

According to court records, Larry Sloven, GSL chairman, attended the trade show where SnakeLight was introduced. He said the Target Stores discount chain later requested a SnakeLight knockoff.

"We develop quite a lot of products for Target," he testified in trial in late May and early June against Black & Decker.

Sloven's lawyers wrote him: "You are probably free of patent infringement at least for a year. I suspect that you can make a ton of money on this. Go for it," according to court records.

GSL used actual flexible cores from SnakeLights in his prototypes for customers. Customers such as Kmart used "SnakeLight knockoff" in correspondence.

Concurrent suit and patent

GSL delivered 160,000 Chinese-manufactured Grip Lights to Kmart and Ace Hardware in Hong Kong in the summer of 1995. On Sept. 12, 1995, when the Grip Lights were on a ship bound for the United States, Black & Decker received its first SnakeLight patent, which covered SnakeLight's flexible core.

The same day, Black & Decker sued GSL for infringing the patent. The company filed the GSL suit and its other major suits in U.S. District Court in Alexandria, Va., a popular choice for patent lawyers because of speed that makes it known as the "rocket docket."

GSL sent its products to warehouses and hired a firm to replace the cores with new ones that didn't infringe on Black & Decker's patent. The redesigned Grip Lite gave GSL $4.6 million in sales.

In that case, Black & Decker argued that the product was so much like SnakeLight that the company's return center was getting broken Grip Lights. GSL argued that Grip Light was a lawful alternative. Priced between $17 and $20, compared with the $29.95 SnakeLight, it represented the cheaper "value segment" of the market, GSL argued.

The judge ruled that the shipment of 160,000 Grip Lights infringed on Black & Decker's flexible core patent. The jury ordered GSL to pay Black & Decker $2.17 million, $13.60 per flashlight, or 70 percent of the retail price, said Niro, the Black & Decker lawyer.

After Black & Decker filed a second suit on two additional patents, GSL agreed to pay Black & Decker $1 million and to get out of the flexible flashlight business, Niro said.

Niro compared SnakeLight rivals to permutations of a virus. "Every time we deterred someone from doing this, it seemed like somebody else surfaced," he said.

But some Black & Decker opponents have a litany of complaints.

Threats stop sales

Terence Ross, an attorney for Catalina Lighting Inc., which is being sued by Black & Decker, said threatening letters from Black & Decker lawyers to retailers killed sales of its Hugger Lamp, even though a trial date has yet to be set.

"As a result of that campaign outside the courtroom, our sales have fallen off dramatically, from about 75,000 a month to 3,000 a month," he said. "I consider it to be on the margins of professional conduct, particularly for the letter to come from the outside law firm."

Niro said the letters to retailers were necessary because of the need to collect evidence.

Joseph Zito, a lawyer who represented two rivals, said if Black & Decker wanted to protect its intellectual property, it would have answered rivals' requests for information about what SnakeLight features would be covered by patents.

He said Black & Decker wanted to protect not its product's innovations, but an entire market. For Black & Decker, "patents are a valuable investment as an offensive tool in an overall marketing strategy," he said.

"Commercially, they've succeeded. They should be happy and proud of that. But they've used the court system improperly to their advantage."

Niro disagrees. "Patents aren't economic weapons," he said. "They're a constitutional right. If people can copy a new and successful idea, you have lost the incentive to invent and create."

B&D;'s legal battle over SnakeLight

* Coleman Co. Inc.'s Job Pro Coil Light: A federal jury in August found that Coleman Co. Inc. infringed on two Black & Decker patents and ordered Coleman to pay $3.7 million in damages. Black & Decker sued Coleman again on Oct. 25 over a new patent covering SnakeLight's overall design. In a settlement, Coleman agreed to stop selling its flexible flashlight and pay the Towson-based company $2.5 million.

* GSL Engineering Ltd.'s Grip Light: A federal judge ruled in June that a shipment of 160,000 Grip Lights infringed on Black & Decker's patent for the design of the flexible core. The jury in the case ordered GSL to pay Black & Decker $2.17 million. After Black & Decker filed a subsequent suit on two additional patents, GSL agreed in September to pay Black & Decker $1 million and to get out of the flexible flashlight business.

* Universal Security Instruments Inc.'s Pretzl Lite: Universal Security, an Owings Mills company, agreed in July to stop making Pretzl Lite and to pay Black & Decker $300,000 as part of a settlement. The agreement came a week after a federal judge ruled that Pretzl Lite's original design infringed on Black & Decker's "flexible core" patent.

* Catalina Lighting Inc.'s Hugger Lamp: Black & Decker has sued Catalina in three cases that allege violations of three Black & Decker patents. The cases have not yet been scheduled for trial.

Pub Date: 12/15/96

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