Crocs Patent--The Stuff Legends Are Made Of

From Mommy Millionaire, Kim Lavine:

Just what exactly is a patent worth? How Crocs shoes anticipated competition and created a strategy to head it off, is the stuff that legends are made of! I explain how in response to a question today from one of my readers Michelle, who asks: 

“Many companies like Crocs Shoes come up with an idea and put it on the market like you did, well what about the Crocs knockoffs? My question is how can a company that does the Crocs knockoffs get away with it? Do they have to pay the founding company? I would be one of those people who would be afraid of being sued. I could go on and on comparing items that we use everyday and that can be a long list.” 

I remember when I was just starting out, perhaps the scariest moments for me involved putting my ideas out there in the marketplace, worrying about somebody knocking them off. Since then I’ve learned that the idea is only 5% of a product’s success—and this may include the patent! The other 95% is sales and marketing. You can find a whole section in my book MOMMY MILLIONAIRE on patents, and I would suggest everyone read it to find out the absolute basics for going forward, including when to pay and attorney, and when not to.

When it comes to patents, some of the best advice I’ve ever been given was that “Martha Stewart doesn’t own the patent on sheets and towels,” which is evidence that trademarks and brands, in my experience, can be more valuable than patents. In theory, a patent is only as valuable as your capacity to defend it in the marketplace, which usually means a lot of money spent paying lawyers. Unfortunately, you don’t usually have the revenues to support paying an attorney to defend your patent when you’re starting out, so it’s always been my advice to take your idea to the marketplace as hard and as fast as possible, so you can generate the revenues necessary to defend your patent. The United States Patent and Trademark Office anticipated this problem, allowing inventors to sue patent infringers for triple damages, which goes a long way to keep people from wanting to steal your idea, if they have to pay three times the money they make off of it to you in damages.

http://www.USPTO.gov. Despite this, patents typically defend a narrow technical parameter, which a lot of competitors usually manage to find a way to get around. 

Crocs journey began in 2002 in a Canadian plastics company, when a Crocs founder discovered a version of the funny-looking shoes being used in day spas. In 2003, the founders of Crocs, after seeing initial success selling their unique and admittedly ugly shoes at boat shows—and after being rejected by venture capitalists in their attempts to raise start-up capital to take their idea big time—raised $5.2 million dollars from friends to fund their company! The first thing they did with that money was to buy up its suppliers and manufacturers of the unique resin that Croc shoes are made of, called Croslite. This same supplier also owned the design patent on the resin. Crocs began selling first to small shoe stores, then went into national distribution at Nordstrom and Dillards. To meet the need, Crocs founders employed contract manufacturers in China, Italy and Romania. In 2006, Crocs expanded overseas from Singapore to Austria. 

The people who founded Crocs had serious business backgrounds, including a President at a national branding company, an exec at a national sandwich chain, a hardware sales executive and a President of an electronics manufacturer. With a motto of “Think Huge,” and after selling only 1,000’s of pairs in 2002, they pooled extraordinary management talents to write a business plan that raised them $5 million for launch from friends and business associates alone. In Feb of 2006, Crocs raised an additional $239 million in the largest footwear IPO (Initial Public Offering) ever, valuing their market share at $1.09 billion. Yes, there are competitors nipping on their heals now, no doubt with some slightly different resin formulation for their shoes on which their patent is based, but they are the innovators with all of the market share and they have the resources to keep their competitors at a permanent disadvantage. 

There are a couple of lessons here:

Why aren’t women’s companies getting this kind of money to fund start ups?

Why do only a tiny percentage of women-owned companies generate revenues of a million dollars or more annually?

Why, though there is $20 Billion in Angel Capital every year for start-up businesses, does only 4% of it go to women-owned businesses, when 40% of all businesses in the US are owned by women? 

Is it just a lack of confidence that keeps us from formulating five million dollar business plans? Is it because there is still a attitude of male chauvinism in the business world that won’t see beyond our sexuality? Or is it that we haven’t given ourselves the permission to dream this big, and the tools to go after it? As a very inspiring woman I met this week told me, Molly McDonald of The Pink Fund, http://www.thepinkfund.org which provides financial aid to those suffering with breast cancer: “We don’t need brass balls, we need brass boobs.”

Comments

[Kim Lavine]

Hi Nance,

I'm glad you like this article. However, I would ask that take it off this website. In the future, before you post my writings to the Ladies Who Launch website, please ask my permission first. I will require that you properly credit me with writing it by including a reference to where it came from, the www.mommymillionaire.com Message Board and Blogletter--listing that source including directions on how to subscribe, and include my bio: Kim is the President and Founder of Green Daisy, Inc—a lifestyle brand focused on balancing life with love ™--and the best selling author of Mommy Millionaire. Kim has appeared on The Today Show, Rachel Ray, NBC & ABC news, CNN, CNBC's "The Big Idea" with Donny Deutsch, NPR, Oprah & Friends Radio Network, LifetimeTV.com, and has been featured in USA Today, Country Living, Guideposts, Women's World, and American Baby to name a few. Kim is on a mission to encourage women to follow their dreams, inspiring them with hope, honesty and faith. Since you're a lawyer, I know you understand. Thanks, Nance.

[rich]

Check out this Canadian company, Holey Soles, with a woman CEO and President, that was been around since 2002 and is growing at a tremenous rate. Holey Soles is an innovative lifestyle company. Competition is healthy in the marketplace, but it is funny how threatened the mumber one player in this industry seems to be. It seems some companies business strategies are about litigation (bullying) rather than letting the consumer have choice.

[Roscom]

Hi
i am looking for investor .
http://Roscom.co.il
http://flickr.com/photos/roscom/
http://www.myspace.com/roscom1tm
http://www.xanga.com/Roscom

[Katie]

Thanks for sharing! That is a very good way to get the patent. Makes sense.

As for women not getting these funds: I'm of the camp that it is a confidence issue and allowing yourself to dream big. That's why it's good to get by with a little help from your friends - who encourage you.

[ol]

Just what exactly is a patent worth? How Crocs shoes anticipated competition and created a strategy to head it off, is the stuff that legends are made of! I explain how in response to a question today from one of my readers Michelle, who asks:

“Many companies like Crocs Shoes come up with an idea and put it on the market like you did, well what about the Crocs knockoffs? My question is how can a company that does the Crocs knockoffs get away with it? Do they have to pay the founding company? I would be one of those people who would be afraid of being sued. I could go on and on comparing items that we use everyday and that can be a long list.”

I remember when I was just starting out, perhaps the scariest moments for me involved putting my ideas out there in the marketplace, worrying about somebody knocking them off. Since then I’ve learned that the idea is only 5% of a product’s success—and this may include the patent! The other 95% is sales and marketing. You can find a whole section in my book MOMMY MILLIONAIRE on patents, and I would suggest everyone read it to find out the absolute basics for going forward, including when to pay and attorney, and when not to.

When it comes to patents, some of the best advice I’ve ever been given was that “Martha Stewart doesn’t own the patent on sheets and towels,” which is evidence that trademarks and brands, in my experience, can be more valuable than patents. In theory, a patent is only as valuable as your capacity to defend it in the marketplace, which usually means a lot of money spent paying lawyers. Unfortunately, you don’t usually have the revenues to support paying an attorney to defend your patent when you’re starting out, so it’s always been my advice to take your idea to the marketplace as hard and as fast as possible, so you can generate the revenues necessary to defend your patent. The United States Patent and Trademark Office anticipated this problem, allowing inventors to sue patent infringers for triple damages, which goes a long way to keep people from wanting to steal your idea, if they have to pay three times the money they make off of it to you in damages.

http://www.USPTO.gov. Despite this, patents typically defend a narrow technical parameter, which a lot of competitors usually manage to find a way to get around.

Crocs journey began in 2002 in a Canadian plastics company, when a Crocs founder discovered a version of the funny-looking shoes being used in day spas. In 2003, the founders of Crocs, after seeing initial success selling their unique and admittedly ugly shoes at boat shows—and after being rejected by venture capitalists in their attempts to raise start-up capital to take their idea big time—raised $5.2 million dollars from friends to fund their company! The first thing they did with that money was to buy up its suppliers and manufacturers of the unique resin that Croc shoes are made of, called Croslite. This same supplier also owned the design patent on the resin. Crocs began selling first to small shoe stores, then went into national distribution at Nordstrom and Dillards. To meet the need, Crocs founders employed contract manufacturers in China, Italy and Romania. In 2006, Crocs expanded overseas from Singapore to Austria.

The people who founded Crocs had serious business backgrounds, including a President at a national branding company, an exec at a national sandwich chain, a hardware sales executive and a President of an electronics manufacturer. With a motto of “Think Huge,” and after selling only 1,000’s of pairs in 2002, they pooled extraordinary management talents to write a business plan that raised them $5 million for launch from friends and business associates alone. In Feb of 2006, Crocs raised an additional $239 million in the largest footwear IPO (Initial Public Offering) ever, valuing their market share at $1.09 billion. Yes, there are competitors nipping on their heals now, no doubt with some slightly different resin formulation for their shoes on which their patent is based, but they are the innovators with all of the market share and they have the resources to keep their competitors at a permanent disadvantage.

There are a couple of lessons here:

Why aren’t women’s companies getting this kind of money to fund start ups?

Why do only a tiny percentage of women-owned companies generate revenues of a million dollars or more annually?

Why, though there is $20 Billion in Angel Capital every year for start-up businesses, does only 4% of it go to women-owned businesses, when 40% of all businesses in the US are owned by women?

Is it just a lack of confidence that keeps us from formulating five million dollar business plans? Is it because there is still a attitude of male chauvinism in the business world that won’t see beyond our sexuality? Or is it that we haven’t given ourselves the permission to dream this big, and the tools to go after it? As a very inspiring woman I met this week told me, Molly McDonald of The Pink Fund, http://www.thepinkfund.org which provides financial aid to those suffering with breast cancer: “We don’t need brass balls, we need brass boobs.”

[Orson]

It's so surprising....