The nitty gritty, down and dirty of the furniture industry.
July 13, 2022
Today I dig into the mother of all furniture knock-off stories, Man Wah v. Raffel Systems. Who really wins in that situation? In my opinion, no one—and that includes retailers.
Plus, learn what HENRYs are and what inflation could mean for them, and find out if consumers will embrace the Buy Now Pay Later trend.
#WIMTY — What It Means To You
Imitation may be a sincere form of flattery, but when it comes to knockoffs, flattery often flies out the window in favor of lawsuits, no-nonsense cease and desist letters, angry retailers, and confused and unhappy consumers.
To be clear, knockoffs are nothing new, but what caught my attention is the sudden spate of new litigation underscored last week when Cartier and Amazon showed up together in U.S. court to accuse a “social media influencer” of partnering with Chinese firms to sell knock-off Cartier jewelry on Amazon’ site.
Then, I also saw Nautilus Inc. alleging that competitor Vevor Corp. is selling adjustable dumbbells that were developed by copying its patented technology and the look of its Bowflex-branded SelectTech 552 and 1090 dumbbells, according to a federal lawsuit Nautilus filed in California.
And it seems that knockoffs even recently had rapper Kanye West singing the blues. The entertainer reportedly just settled a lawsuit with Walmart after he sued the superstore for selling ‘knock-off’ Yeezy shoes.
In our own backyard, Lovesac recently settled a lawsuit filed late last year against a unit of La-Z-Boy that claimed that La-Z-Boy had infringed on its line of modular couches.
Stamford-based Lovesac alleged in its lawsuit initiated in 2021, Joybird, a company acquired by La-Z-Boy in 2018, had introduced “an infringing knock-off” of Lovesac’s modular couches, which are known as Sactionals, and that Joybird’s Notch Modular furniture “copies many of the innovative and patented elements of Sactionals and advertises the same modular, reconfigurable function.”
In a response to the complaint, Joybird denied that Lovesac “invented an entirely new category of modular furniture,” but it admitted that Lovesac filed a patent application in 2005.
Last week, Lovesac reported that both parties had reached a mutually agreeable business resolution and the lawsuit was dismissed with prejudice. The terms of the settlement were not revealed.
But without a doubt, the mother of all furniture knockoff stories of late must be the David vs Goliath throwdown between Man Wah and Raffel Systems.
In this case, David, aka Raffel Systems LLC, described as a small Wisconsin firm engaged in product development and innovation, went toe-to-toe with Chinese upholstery goliath Man Wah, accusing the Asian manufacturer of knocking off a multifunctional, lighted cupholder.
As reported in the Milwaukee Journal Sentinal, a federal jury awarded more than $106.2 million in damages to Raffel—$8.7 million in actual damages and an additional $97.5 million in punitive damages for the “malicious appropriation of Raffel’s trade dress, the overall lock and feel of the cupholder.”
I guess, with every pun intended, one could say the verdict made Raffel’s cup runneth over.
But wait….there’s more. If you click over to Raffel’s website, you will see a page about Raffel v. Man Wah.
Raffel Systems, Inc. has hired the law firm of Lanny Davis, former counsel to President Bill Clinton, to represent the company in its bid to press a federal investigation into Man Wah Holdings LLC’s business practices.
Raffel held a press conference on June 30 to discuss its plans. It announced that Davis’s firm, Davis Goldberg & Galper PLLC, will be pursuing investigations into “illegal and unfair trade practices” with the Federal Trade Commission and the International Trade Commission.
Raffel alleges that Man Wah is still selling its “counterfeit” lighted cupholder that was found to violate patent law by a federal jury in June. In addition, the firm indicated that it will pursue a review by the Consumer Products Safety Commission regarding allegations of failed electronics in the copied cupholders.
In mid-June, a federal jury awarded Raffel over $100 million in punitive damages for what they found to be Manwah’s willful trade dress infringement, misappropriation of trade dress, false patent marketing, and willful patent infringement of Raffel’s patented, lighted cupholder, according to the ruling.
Man Wah has previously said that it will appeal the ruling.
The cupholder in question was invented by an employee of Raffel in 2005 and patented in 2010, according to Paul Stangl, executive chairman of Innovative Motion Technologies, who was on the call.
Stangl said that Raffel alleged in its lawsuit that Man Wah attempted to pay a low-level Raffel employee $60,000 to say that he had invented the cupholder. Stangl also said that Man Wah filed retaliatory lawsuits in China “as a distraction” as soon as Raffel was set to win various legal actions in the U.S. around the infringement case.
In this litigation, a case of this magnitude that has generated mountains of press, the plaintiff and the lawyers seem to be the winners.
So, who loses? Lots of people. In the near term, Man Wah, even though it says it will appeal. Raffel, even though it won a judgment, says it lost, maintaining the knockoffs hurt its reputation.
But there are other losers here as well.
For openers, any retailer selling a knockoff product is at risk. In conversations with attorneys in this field, I was advised that even a retailer who unknowingly buys a knockoff product can also be cited in a lawsuit that is seeking damages.
And with so many retailers’ inventories currently already under water due to supply chain issues, having to deal with issues that can arise from knock-off goods is probably the last thing they need.
In the event a retailer is on the receiving end of a cease-and-desist letter, that merchant lands between the rock and the hard place because once he is in possession of that letter if he sells that product, which he has already paid for, he faces additional penalties as an intentional infringer.
And, of course, there is the consumer. The last thing our industry needs, especially now, is to lose her trust and respect.
And maybe due to all the buzz, and much of it negative, our industry loses.
Times are tough right now. There’s nothing wrong with playing to win. But play clean, people.
In Case You Missed It
Ashley Furniture Executive Resigns
Ashley Furniture Inds. announced that long-time executive Rick Coppola will be resigning from his position as president of sales for the U.S. and Canada and will be replaced by executive Kerry Lebensburger.
He will be promoted to North American chief sales officer for the company’s primary channel of business in the U.S. and Canada.
Lebensburger joined the company in 1993, as vice president, case goods and two years later helped Ashley expand into the stationary and motion furniture categories. In this role he developed the $1 billion-plus bestselling Darcy upholstery collection.
155-Year Old Fabric Company Enters Outdoor Industry
Milliken & Company has launched Milliken Outdoor Fabrics, the organization’s entrance into the outdoor performance fabrics market.
The new line, premiering at Casual Market Chicago in July, marks the first time the 155-year-old manufacturer has supplied the outdoor furniture fabric market.
The first collection from the outdoor line, on display in Chicago, is New Vistas, a line of performance fabrics designed to move effortlessly from indoors to outdoors. Including 10 patterns across 72 skus, New Vistas is a collection of 100 percent solution-dyed acrylic fabrics that feature a non-PFAS finish to make it stain and water-resistant.
These fabrics are in-stock and ready to ship from South Carolina. The new line includes a five-year limited warranty. A follow-up collection, Outer Realm, is anticipated to launch in late 2022.
3D Imaging Provider Reports 500% Growth
As the evolving marketplace is pushing manufacturers to find ways to improve speed to market and create engaging content for customers, Live Furnish has been well positioned to help them. The company reported above 500% growth over the past two years.
Launched in 2018 to the home furnishings industry, Live Furnish is an easy-to-use 3D content platform that allows companies to create high quality 3D photo-realistic products, indoor and outdoor scenes, videos, and virtual showrooms. Its clients include producers and retailers such as Richloom, Nectar, Harbor Classics and The Great American Home Store.
In four years, Live Furnish has helped more than 150 leading retailers and manufacturers across multiple categories, from upholstery to case goods, mattresses to lighting, and home accents to flooring. The company estimates cost savings for their clients of up to 70% in creating 3D photorealistic images over studio photography; about 80% savings in studio production time; and conversion rate of nearly 50%.
“In a recent case study, a furniture manufacturing client reduced physical samples by 42% after starting with Live Furnish. Physical prototypes were reduced by 21%. The sales cycle was shortened allowing them to get to market 22% faster than before,” said Singh.
The Live Furnish team will be available at the Las Vegas Market for live demonstrations of the platform. For more information, visit. www.livefurnish.com.
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