Business

These entrepreneurs stole their idea, they fought, and so they won

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On Valentine’s Day 2015Natasha Ruckel and her husband Fred sat in their living room. Natasha improvised on the piano and Fred listened to her play with the couple’s cat, Yoda. Fred noticed a crease in the living room carpet where his cat hid and kept walking. Natasha looked up from her piano. “That’s when we came up with the idea for the Ripple Rug,” she says.

These entrepreneurs stole their idea, they fought, and so they won
These entrepreneurs stole their idea, they fought, and so they won

The Ruckels, who had been marketing and promoting the PepsiCo, ESPN and Hasbro brands for around 25 years, were already in the process of starting their first company – an app that amateur photographers could use to monetize images. on-line. But they both agreed that the Ripple Rug was a better choice. It was a two-layer mat that a cat can slip in and out of to play with its owner.

A few days later, Fred went to the Home Depot and bought some cheap pieces of carpet, and they got to work on a prototype. When they finished, they launched a campaign of Kickstarter In May 2015, the price of the product was set at $ 39.95 to test the market. Within 30 days, they received $ 15,000 to support the crowdfunding campaign. They made the products in Georgia for $ 15 each and started fulfilling orders.

The Ruckels were considering their next step when the chance of their life came in autumn. The QVC sales channel associated with the program todayorganized an ongoing competition called “Next Big Thing” for entrepreneurs with new retail products. The participants presented their offers on TV and the winning products were commissioned to be sold on TV.

After a tedious selection process that included a multi-million dollar insurance policy, a guarantee came up at least Ripple Rug put 1,500 items up for sale and sent sample videos of jerk pitching. “We went to New York City and practiced pitching at every stop,” recalls Fred. “We came to the QVC appointment at five o’clock in the morning because we had hardly slept the night before.”

They immediately sold a few hundred units. QVC bought 1,500 more and Ripple Rug became a flagship. “It was pretty amazing,” says Fred. “We started making money almost immediately, which is virtually unknown.”

Unfortunately it got the wrong attention. Over the next 14 months, the Ruckels found that creating truly original innovations not only attracts interested customers, but also highly organized, resourceful thieves who copy products and systematically destroy their inventors.

However, in the heat of battle, the Ruckels learned important lessons: the importance of protecting assets before a product is launched; the reality that people are stealing part of a good idea, from the marketing launch to the promotional photos. They also got a dark and fascinating glimpse into how ruthless, well-funded, and sophisticated smuggling operations work, and how these idea thieves can be defeated with tenacity, vigilance, a good lawyer, and the right strategy.

Image: David Yellen

The Christmas season 2016 Fred and Natasha promised to be beautiful. Sales of their cat mat were up month-to-month for most of the year, and by October they had sold nearly half a million dollars worth of products. They expected to trade 4,000 Ripple Rugs between Thanksgiving and New Years. So confident were they that they invested $ 80,000 in producing fresh inventory.

However, when only 2,000 units were sold, Fred was confused. “I planned it well: we advertised everything on social media, contacted influencers, paid for ads, etc. I couldn’t understand what went wrong,” he said in an interview with . He had previously worked on hundreds of campaigns so Fred knew what he was doing but couldn’t explain the lack of sales. “Something strange happened.”

In February 2017, a friend told the Ruckels that their accountant had seen the commercial for their product on TV, but that it had a different name. The Ruckels told him they hadn’t aired a television commercial. Suddenly sick, Fred made his friend call the accountant. “She told me she saw a commercial for something called Purr N Play, which was like the ripple carpet,” says Fred.

The Ripple Mat may have been a startup product, but Fred had a distinct advantage. He had spent years as a forensic scientist self-employed who helped lawyers in internet cases. “The plan was to examine all the pieces and put them together to reveal the crime committed.” There was no easy way to do this, however, so the Ruckels had to dig layer by layer, starting with what lay in front of them.

First: the website. The couple found the site that sold Purr N Play for two for $ 19.99 plus shipping. With a friend’s name and a borrowed credit card (so as not to deter thieves), Ruckels placed an order. They sent him an email confirmation along with this strange note: “Sorry, this product is on hold. We will notify you when stocks are available. Your credit card will not be charged until the product is available and shipped.”. The credit card was not charged, but there was no way to cancel the order.

Then, using Photoshop, they went through the online and televised commercial, frame-by-frame, and made an amazing discovery: The Ruckels saw a logo of their Ripple Rug while taking several shots of the cat toy!

“We assumed the thieves had made a copy of our rug and sold a ton,” said Fred, “so they couldn’t store it. But it wasn’t a discount. They were literally promoting our product!” The mystery had deepened.

The Ruckels then discovered the source code on the Purr N Play website which led them to the developer of the website. They scoured other websites of this company and found that many of the websites were simple websites like Purr N Play that were designed for the sale of pirated copies. Fred called the web company and told them that the product had been stolen and was his. “I told them the website needed to be removed,” says Fred. The site creator agreed to comply, but it wasn’t the company that brought the Ripple rug down. The web developers only did contract work.

The next step was to find out who did the commercial. The ad showed three cats playing with the carpet and two middle-aged women giving testimony, all in one house. That was an indication. “We searched online for people whose business locations match those used in the videos,” says Fred. “We also looked for ads from people looking for locations that match those used in the ads – entire living rooms that cats would be welcome in.”

Natasha looked for casting announcements for kittens and 40-year-old women who could give product references like a professional trading company would have published to make the announcement. Bingo: Natasha spotted a casting call on December 14th requesting kittens on Facebook for the Purr N Play commercial. This detail led her to the website of a cat breeding center that had provided the cats used in the videos. Fred contacted the owner of the adoption center and explained what had happened. “First he told me he was mad. Then he confirmed the production and where it was filmed. Then he suddenly nodded and a lawyer came up to us.”

Shortly after, Fred began looking for people who had contacted him in the past few months to come up with discount offers on the Ripple carpet. One was an operation called The bargain show, an affordable online version of QVC. As Ripple Rug sales fell, a representative from the Bargain Show repeatedly asked about the possibility of a collaboration. “We believe the ripple carpet could be a great option for our online shopping network,” he wrote. “Nothing beats cute animals on video!”

The timed coordination Fred found it curious and approached the representative. When the man called again, the caller ID was “Victim Communications,” according to a photo taken by Fred. The Ruckels raided communications victims who made infomercials and found the sets to be on The bargain show matched those used for Purr N Play. Victim’s attorney, Bernie Rhodes, argued so The bargain show he just posted victim infomercials, but otherwise had “nothing to do with victim communications”.

Fred has connected with a manager at victim. “Without further ado, I told him our product had been stolen,” he says. “The man’s voice was perfectly calm, but he replied that he needed to speak to some people and that he would contact us later. But he never did.”

At this point, in late February, Ripple Rug sales were in free fall. Fred and Natasha considered what to do with their inventory. They discussed applying for a home equity loan. They had covered an entire wall of their home with sticky notes trying to connect the dots in this smuggling operation.

And then a godsend. After several calls to the web design company, they managed to connect with their CEO. “He gave me the name of the man who hired him,” says Fred. Fred was told it was a man named Ronald Steblea, who ran a Connecticut company called Rutledge Bapst. Much later, the Ruckels would discover a previous company for which Steblea, as president, had already received a $ 7.5 million judgment for misleading business practices. One attorney described Rutledge Bapst as “a company whose general business model is to market contraband products using the images and goodwill of bona fide products like Ripple Rug”.

In late March 2017, Fred and Natasha Ruckel filed a lawsuit. And as the year progressed, the Ruckels used the legal discovery process to lift the stone under which Steblea operated and gained a rare glimpse into how a fake business like theirs worked.

Most entrepreneurs, Fred says, “believe that their products failed because the idea wasn’t good,” not because someone stole them, made them cheaper, advertised them in the market, and sold them at a lower price than the originals. “Fraud companies are often rich enough to spend $ 200,000 marketing an unused product. Imagine you have that kind of money when the entrepreneur who made the invention is on a budget.”

Ruckels’ attorney Paula Brillson Phillips, managing partner of the Digital Law Group who has worked on more than 50 of these cases, summarizes the bets more easily. “Independent inventors,” she says, “are lambs to slaughter.”

Image: David Yellen

When most consumers think of fakes, You can probably imagine big brands like Nike, Rolex or luxury handbags pouring into the street corners of the world from places like China, contributing to an estimated global turnover of $ 500 billion a year.

There’s a reason for that, says Joseph Gioconda, an attorney for the New York-based Gioconda Law Group, which specializes in trademark protection. “The forger is trying to do the least amount of work for the most money, without respecting the law or morality,” he says. Big brands have an integrated market. They come closest to a guaranteed sale that a counterfeiter can get.

But under certain circumstances, small brands can offer the same guaranteed reward, for example when they appear like the Ripple Carpet on TV shows or climb through the ranks bestseller from Amazon. In these cases, Gioconda says, the threat is often more local: people who destroy small American products could be based in the United States themselves and set up sophisticated operations to help them move forward quickly. They often have their own intellectual property attorneys who make minor adjustments to an existing product that lead the counterfeiter to take care of the inventor’s patents. If the inventor doesn’t own a patent, he’s moving faster than intellectual property law and getting the product to market before an entrepreneur can protect his idea.

Based on the records the Ruckels received during the lawsuit, the Ripple Rug appears to have landed on Rutledge Bapst’s radar. Internal emails show that Rutledge Bapst employees treated theft for granted as if they were a product-based company testing a new concept. “Please read the appendix for a new item we are testing called Purr N Play,” written on January 20, 2017. “I’ll check it out and get things going!” Replies another.

Based on an analysis of hundreds of pages of this documentation, this appears to have evolved when Rutledge and Bapst allegedly tried to forge the Ripple carpet:

  • When the Ripple carpet caught the attention of Rutledge Bapst, it passed all tests: attractive product, independent inventor, patent pending.
  • They hired the aforementioned web design firm to create a simple website for what’s called the Purr N Play that mimicked the language, color scheme, and photography of the Ripple Rug website, even using an image of Yoda, the Ruckel’s own cat .
  • An email was then sent to just under a million people to assess the toy’s market potential. The results have been good. Customers were waiting at Purr N Play.

What follows is the subject of dispute. As the documents show, in early 2016 Rutledge Bapst contacted Sacrifice Communications to propose a collaboration on Purr N Play. Scott Sacrifice, head of the company, emailed a subordinate: “This is a product that Ron sent me. He owns the product and asked us if we’d like to work with him. We’ll do the work in vain and he buys the evidence. If it works, we will split the profits. “(Rhodes, victim’s attorney, told that the two companies make regular contributions, but that victim never suspected that it was Product was a hack and that their involvement did not go beyond the announcement (although he confirms: “It is possible they had an alternative collective agreement”).

On August 26, 2016, victims sent Rutledge Bapst a contract to create a commercial for Purr N Play. “Thank you, Ron,” the victim employee wrote and emailed the agreement to Steblea. “I look forward to continuing to work with you and your team to do fun things.” Victim went to work on the advertisement. A script was distributed containing a claim about how the Purr N Play was made from “veterinary material”.

“It looks good,” a Rutledge and Bapst employee wrote to Scott Opfer in January 2017. “Just a question about the ‘vet quality’ of the material – does it really exist? Or is it a term you came up with?” From a claims standpoint, I just want to make sure we’re not giving false information. “

“I pulled this out of my sleeve,” victim replied. “We can take it off.”

A draft of the announcement was made and a Rutledge Bapst employee emailed it to another for comments. The last employee was delighted. “Hi Ron sent it to me last night. I find it amazing. The part where the three kitten heads come out is adorable and made me laugh. I love it!”

Then he added, “I just hope if the commercial works, we can make it.”

Read that sentence again.

At first Fred was concerned because he thought Purr N Play had sold so many products. In reality, however, Rutledge Bapst had nothing to manufacture. It turned out that even before Rutledge Bapst prepared to advertise the product, the company was struggling to manufacture it.

Rutledge Bapst had rightly bought the original Ripple Rug and sent it straight to a representative in China who was working to organize production. This is common, says Brillson Phillips. “Most of the counterfeit manufacturing takes place in China,” she says. “Usually there is someone there to coordinate manufacturing and someone in the US to run the business.” In this case, however, several Chinese factories were unable to adequately replicate the product.

The best weapon in Ruckels’ lawsuit was a series of email exchanges between a Rutledge Bapst employee and a representative in China. The Asian partner said they had difficulty replicating the label “on the original product”, to which a Rutledge Bapst employee replied, “No problem, we don’t need the label.” The Chinese representative said in another email that two of the “Ripple Rug raw materials are quite expensive”; The employee of the robbery company replied that he should try “a cheaper material”. The representative sent estimated cost per unit; Rutledge Bapst urged to keep the price below $ 4, even if that means making the carpet smaller.

Eventually, the Chinese contact alerted Rutledge and Bapst that the cat they were testing the mock prototype with suffered from the top layer, which appeared to be too smooth to curl properly.

These delays appear to have saved Fred and Natasha’s businesses. The Purr N Play ad campaign may have got off to a good start: Rutledge Bapst spent more than $ 8,000 to run the ad during reruns of the Hallmark Murders Mysteries program and other programs that would appeal to seniors, however before the Chinese manufacturer Die Ruckels had made the US government aware of the problem. The couple expected copycat deliveries to be stopped when they tried to enter the country.

If the products had made it to the US, they might even have made it onto the market, says Gioconda, the trademark protection attorney. This is because the “As Seen On TV” sections are often something of the Wild West of retail. The phrase sounds like it implies some authority, but it is actually general. No entity owns the phrase and it can be applied to almost anything. Often times, a questionable marketing company buys shelf space from retailers across the country, marks it as “Seen on TV”, and then fills the shelves with pirated copies.

The Ruckels sued before the Purr N Play was made. On February 23, 2017, a lawyer for Rutledge Bapst responded that they had “ceased all efforts to manufacture, market and advertise their Purr N Play product and any use of their direct response television advertising product.” On March 1, victim also agreed to stop marketing. The lawsuit went on, but the Purr N Play, a non-existent product that wreaked havoc, was on the verge of death.

But the Ruckels didn’t just want these companies to stop; They wanted compensation for lost Ripple Rug sales. The case was debated for months. Finally, in August 2017, almost five months after the lawsuit began, the two parties agreed to discuss a settlement. The Ruckels and Ron Steblea sat in a judge’s room in federal court in Bridgeport, Connecticut. At a conference room-style table, the couple and their lawyers clashed tense with their opponent and their legal representatives. Fred remembers how Steblea sat with a smile.

He asked Steblea why she was smiling, to which the thief coldly replied that the theft “It wasn’t personal.”

“It’s never with thieves,” replied Fred.

Image: David Yellen

In the end, the Ruckels won. On January 31 of this year, Steblea resigned and agreed to pay them compensation. On February 20, both parties signed the agreement. The Ruckels claim they received a substantial payment but are unable to tell how much under confidentiality regulations. Lawsuits are pending against some of the other parties involved in the forgery. Steblea did not respond to multiple requests for comment from business owners.

Gioconda, who looked into Ruckels’ lawsuit at the entrepreneur’s request, said the couple got three things right that all other entrepreneurs should do in the event a product idea is stolen: They called for very early protection from intellectual property rights, including trademarks and preliminary design and patent applications; they hired good and aggressive lawyers; And by telling their story in a medium like this, they are spreading the word that counterfeiters can be attacked and beaten. “Thieves choose their targets based on ROI. They don’t want to be sued or harassed,” says Gioconda. It’s just easier to find people who are quick to give up.

How much the Ruckels hacking attempt cost is difficult to estimate, but the Ripple carpet is still alive today. “We’re bringing new colors out and things are really good,” says Fred. “We are one of Amazon’s bestsellers.”

The Ruckels decided to use some of the money from the lawsuit to set up an organization to help other product inventors who are victims of poachers. They named it the Randy Cooper Foundation, after an entrepreneur whose health was partially ruined by the stress caused by the theft of his design. “Idea thieves work in the dark corners of the Internet,” says Fred. “And there I am and look at her.”

Sure, someone has to. In May, three months after the Ruckels settled their lawsuit, Fred discovered something unsettling on Amazon: a product called Vpets Cat Activity Play Mat, which looked exactly like the Ripple rug. “They copied our information word for word, the descriptive text even says ‘Ripple Rug'”, Fred wrote in an email.

But he has already won a victory in this arena. There is room for one more.

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