I was going to continue my series on knock-offs with the example of Glassybaby, an item that has no patent or copyright or trademark, is extremely easy to copy, made of the most common materials on planet earth (silica and potash) and made in USA, is eminently knock-off-able in China, if cheap labor matters. Glassybabys have been selling since 2003. Glassybaby has made so much money in that time that they have given away nearly a million dollars to charity, and say so on their website. These have sold increasingly for 8 years (2003 - 2011). And even more provoking to knockeroffs, Glassybabys today are the same as Glassybabys eight years ago. This is fairly unique in the specialty business, making it far more attractive to knock off. Most specialty businesses are changing designs constantly. The knockoff people are "stealing" what we let go 4 years ago. What more could a company do to tantalize those knockeroffs, than provide such information freely on a product so easy to knock off?
Not only that, Glassybaby carefully explains exactly how they make their items, helpfully even providing a video to show how. What elan! What insouciance! Precisely the attitude of those who thrive in small business.
So my wee lesson was to be that it is eight years before the knockeroffs got to work. Those who believe their neat idea will be immediately stolen, it takes a very long time for knock-off artists to "steal" your idea. So far so good.
Then, just to make sure, I googled "Glassybaby patent" and yielded this. Ugggghhh... In 2011, they seek a patent on a trademark. Sigh. Because the owner desires to block "knock-offs." Ooooof...
The article has some interesting information...
The Seattle company has grown to 65 employees and more than $4 million in annual revenue. Since opening its first store in 2003, it's added two more here and one in New York City....Glassblowers are working seven days a week, churning out 200 candleholders a day to meet demand that grew 50 percent last year, the company says.
Well, let's run the numbers... 4 million in sales divided by 65 employees is about $61,500 in sales per employee. Yikes, that is about half of where it should be by my benchmark. Maybe most of those 65 are part timers, which would bring that in line.
They make 200 Glassybabys a day. I doubt that figure, unless it is an average, because there are sales cycles in any business, no business is straightline. So let's go with it as an average, and multiply 200 times 7 days a week (what?), let's say 325 days per year (there has to be some holidays and maintenance downtime!) and come up with 65,000 Glassybabys made per year.
$4 million in sales divided by 65,000 equals $62 each cost. But they retail for $45! Something is not right with these numbers, and of course reporters just repeat what they are told. Let's say they really make 40,000 per year: Now they cost $100 each. No way.
Since these retail for $44, let's figure wholesale for $22, and cost about $11 each to make. From my experience in glassware, that sounds about right. But to get to $4 million in sales, they'd be making about 360,000 of these a year. Well, the numbers just can't be right. No matter.
The company sued online-gift marketer Red Envelope and New York-based candle merchant Northern Lights Enterprises in early March, alleging they are selling "a cheaply made imitation" imported by Northern Lights from China." The Northern Lights website offers them at $6.49 apiece.
OK, so Northern Lights has found a market for its cheaply made glass production capacity. Put the two glasses together and you'll see the difference. Glassybabys are a very nice piece of glass. At this point, Glassybaby can get into that cheap business or not. (I would advise not.) But certainly someone who pays $6.49 is not a customer of Glassybaby. This is new business for Glassybaby if it wants it.
I can pretty much imagine what happened: One day Northern Lights got a letter from a lawyer, designed to intimidate, on behalf of Glassybaby demanding Northern Lights stop selling the knockoff. These letters are tossed out like confetti. The people at Northern Lights had a good laugh, and ignored the letter, or even sent back a ribald response to the lawyer.
Next the lawyer took the opportunity to file a lawsuit. Kaching! No doubt Northern Lights is playing rope-a-dope, frustrating the plaintiff's attorney every step of the way. Kaching! If really smart, Northern Lights is defending the case pro se.
Glassybaby founder Lee Rhodes says in a statement: "I have put my heart and soul into my business and I intend to protect it."
O dear. Music to a lawyer's ears. The way one protects a business is to listen to customers and provide them what they want. I very much doubt any customer ever decided not to buy Glassybabys because a knock off is available. If Glassybaby believes this to be the case, they ought to test that hypothesis. How does it serve Glassybaby customers in trying to stop Northern Lights from using the Northern Lights productive capacity to serve the Northern Lights customers? Let's ask someone super successful in competing on design about this question - ladies and gentlemen: K A R L L A G E R F E L D !!!!
When a reporter came across Karl Lagerfeld shopping for Chanel in the New York city knock-off markets, the reporter asked Lagerfeld how he felt about all of his designs being knocked off: "Flattered" said Lagerfeld.
Here is Lagerfeld again being asked about knock-offs:
This is not unusual. Most successful people competing on design have no concern whatsoever about the knock-off artists. Nonetheless, a lawsuit is filed:
The lawsuit says Glassybaby's "distinctive design... constitutes a famous trademark" and buyers will be unfairly confused by the other products, diluting the value of the company's brand.
Come on... that is just silly. I am pretty sure nobody reading this post has any idea what a Glassybaby looks like. And if they did, they would know the knockoff is not a Glassybaby. Where is the problem?
But how legally unique is that design? The company was denied a trademark for the design by the U.S. Patent and Trademark Office in January. The PTO preliminary decision says the design "appears to be generic and incapable of acquiring distinctiveness because many other sources in the marketplace use almost identical designs for candle holders, cups and vases."
Heck, I could have told Glassybaby folks that. And since I do business and not law, I could have told them how to make news, enhance the image and grow the business, instead of paying a lawyer.
Glassybaby attorney Robert Sulkin says he's not done pursuing a trademark.
I bet. Kaching!
The company also has common-law protection for its design, he says, adding that the close similarity of the Chinese version shows how distinct and valuable the Glassybaby look is — "To me, that speaks volumes."
See how convoluted matters become when legal considerations take precedence over market considerations? It does not matter what the lawyer thinks, in business it is what the customers think. Has Glassybaby done any valid and reliable test of customer reaction to knock-offs entering the market?
I'd advise Glassybaby to institute a customer listening process, to find out what else in gift and housewares category the present customer base would ALSO buy. I would switch to wholesale only, and as the leases ran out of the retail locations, not renew. My guess is sales have been slowing down and Glassybaby management has made the fatal error of trying to block others (who do not matter anyway) instead of grow their own business. That is my guess.
Here is a full time working patent attorney, Stephen Kinsella, who holds patents himself, who argues we need to rid the USA of Intellectual Property Law if we expect to remain innovative and competitive. Here is a .pdf that is a good starting place to study his thoughts.
If you have an hour, here is a lecture... and below a good primer book.
The book on the topic... (although they argue for trademarks monopoly... nobody is perfect.)
Not only that, Glassybaby carefully explains exactly how they make their items, helpfully even providing a video to show how. What elan! What insouciance! Precisely the attitude of those who thrive in small business.
So my wee lesson was to be that it is eight years before the knockeroffs got to work. Those who believe their neat idea will be immediately stolen, it takes a very long time for knock-off artists to "steal" your idea. So far so good.
Then, just to make sure, I googled "Glassybaby patent" and yielded this. Ugggghhh... In 2011, they seek a patent on a trademark. Sigh. Because the owner desires to block "knock-offs." Ooooof...
The article has some interesting information...
The Seattle company has grown to 65 employees and more than $4 million in annual revenue. Since opening its first store in 2003, it's added two more here and one in New York City....Glassblowers are working seven days a week, churning out 200 candleholders a day to meet demand that grew 50 percent last year, the company says.
Well, let's run the numbers... 4 million in sales divided by 65 employees is about $61,500 in sales per employee. Yikes, that is about half of where it should be by my benchmark. Maybe most of those 65 are part timers, which would bring that in line.
They make 200 Glassybabys a day. I doubt that figure, unless it is an average, because there are sales cycles in any business, no business is straightline. So let's go with it as an average, and multiply 200 times 7 days a week (what?), let's say 325 days per year (there has to be some holidays and maintenance downtime!) and come up with 65,000 Glassybabys made per year.
$4 million in sales divided by 65,000 equals $62 each cost. But they retail for $45! Something is not right with these numbers, and of course reporters just repeat what they are told. Let's say they really make 40,000 per year: Now they cost $100 each. No way.
Since these retail for $44, let's figure wholesale for $22, and cost about $11 each to make. From my experience in glassware, that sounds about right. But to get to $4 million in sales, they'd be making about 360,000 of these a year. Well, the numbers just can't be right. No matter.
The company sued online-gift marketer Red Envelope and New York-based candle merchant Northern Lights Enterprises in early March, alleging they are selling "a cheaply made imitation" imported by Northern Lights from China." The Northern Lights website offers them at $6.49 apiece.
OK, so Northern Lights has found a market for its cheaply made glass production capacity. Put the two glasses together and you'll see the difference. Glassybabys are a very nice piece of glass. At this point, Glassybaby can get into that cheap business or not. (I would advise not.) But certainly someone who pays $6.49 is not a customer of Glassybaby. This is new business for Glassybaby if it wants it.
I can pretty much imagine what happened: One day Northern Lights got a letter from a lawyer, designed to intimidate, on behalf of Glassybaby demanding Northern Lights stop selling the knockoff. These letters are tossed out like confetti. The people at Northern Lights had a good laugh, and ignored the letter, or even sent back a ribald response to the lawyer.
Next the lawyer took the opportunity to file a lawsuit. Kaching! No doubt Northern Lights is playing rope-a-dope, frustrating the plaintiff's attorney every step of the way. Kaching! If really smart, Northern Lights is defending the case pro se.
Glassybaby founder Lee Rhodes says in a statement: "I have put my heart and soul into my business and I intend to protect it."
O dear. Music to a lawyer's ears. The way one protects a business is to listen to customers and provide them what they want. I very much doubt any customer ever decided not to buy Glassybabys because a knock off is available. If Glassybaby believes this to be the case, they ought to test that hypothesis. How does it serve Glassybaby customers in trying to stop Northern Lights from using the Northern Lights productive capacity to serve the Northern Lights customers? Let's ask someone super successful in competing on design about this question - ladies and gentlemen: K A R L L A G E R F E L D !!!!
When a reporter came across Karl Lagerfeld shopping for Chanel in the New York city knock-off markets, the reporter asked Lagerfeld how he felt about all of his designs being knocked off: "Flattered" said Lagerfeld.
 |
| Lagerfeld Shopping In Knock Off District New York via http://www.infdaily.com/ |
This is not unusual. Most successful people competing on design have no concern whatsoever about the knock-off artists. Nonetheless, a lawsuit is filed:
The lawsuit says Glassybaby's "distinctive design... constitutes a famous trademark" and buyers will be unfairly confused by the other products, diluting the value of the company's brand.
Come on... that is just silly. I am pretty sure nobody reading this post has any idea what a Glassybaby looks like. And if they did, they would know the knockoff is not a Glassybaby. Where is the problem?
But how legally unique is that design? The company was denied a trademark for the design by the U.S. Patent and Trademark Office in January. The PTO preliminary decision says the design "appears to be generic and incapable of acquiring distinctiveness because many other sources in the marketplace use almost identical designs for candle holders, cups and vases."
Heck, I could have told Glassybaby folks that. And since I do business and not law, I could have told them how to make news, enhance the image and grow the business, instead of paying a lawyer.
Glassybaby attorney Robert Sulkin says he's not done pursuing a trademark.
I bet. Kaching!
The company also has common-law protection for its design, he says, adding that the close similarity of the Chinese version shows how distinct and valuable the Glassybaby look is — "To me, that speaks volumes."
See how convoluted matters become when legal considerations take precedence over market considerations? It does not matter what the lawyer thinks, in business it is what the customers think. Has Glassybaby done any valid and reliable test of customer reaction to knock-offs entering the market?
I'd advise Glassybaby to institute a customer listening process, to find out what else in gift and housewares category the present customer base would ALSO buy. I would switch to wholesale only, and as the leases ran out of the retail locations, not renew. My guess is sales have been slowing down and Glassybaby management has made the fatal error of trying to block others (who do not matter anyway) instead of grow their own business. That is my guess.
Here is a full time working patent attorney, Stephen Kinsella, who holds patents himself, who argues we need to rid the USA of Intellectual Property Law if we expect to remain innovative and competitive. Here is a .pdf that is a good starting place to study his thoughts.
If you have an hour, here is a lecture... and below a good primer book.
The book on the topic... (although they argue for trademarks monopoly... nobody is perfect.)
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