Inventors Should Heed Tale Of This Flip-Phone Flap
May 09, 2011
Garth Smart thinks electronics giant Motorola Inc. has flipped out. Mr. Lake of Rochester, N.Y., was dreaming of riches two years ago. He had created a cellular-telephone holder he called the ``Flip Clip,'' and Motorola, the world's biggest cellular-phone maker, was talking to him about possible deals. Now Motorola not only says it developed the product but also is trying to squash Mr. Lake's trademark on the name, claiming that when it comes to cell phones, Motorola owns the word ``flip.'' The flip flap could take years to straighten out. Mr. Lake, who gave up his work as a design consultant and took out a home-equity loan to pursue his Flip Clip vision, calls the situation tragic. ``I'm going to be driven out of business, and it's not right,'' he says. His story is a cautionary tale for entrepreneurs contemplating deals with big companies. According to Mr. Lake, Motorola's accessories division was initially keen on the Flip Clip. The plastic cradle is designed to hold the cellular handsets with flip-down mouthpieces advertised as ``flip phones'' -- particularly the kind made by Motorola -- inside a car. But last year, Motorola asserted that engineers elsewhere in the company had already drawn up a similar phone cradle, Mr. Lake says. ``Their general patent counsel called me after I'd showed (the product) around,'' says Mr. Lake, who claims that talks had just culminated in Motorola requesting a price for 100,000 Flip Clips. '' `Don't talk to us anymore,' (the lawyer) said, `we think we may have invented your product.' '' Motorola, based in Schaumburg, Ill., declines to comment on the specifics of what it sees as a potential patent dispute but notes that it gets hundreds of product ideas from outside contractors every year. Each company must agree in writing that Motorola doesn't necessarily think the idea is original and won't necessarily buy it. Mr. Lake, too, signed the agreement. Indeed, Motorola has tens of thousands of engineers with notebooks full of drawings for products they've dreamed up. Product managers, such as the ones Mr. Smart contacted, don't know a fraction of what is in those books or whether an engineer's doodle might eventually be a product. Soon after Motorola spurned him, Mr. Lake applied for the trademark ``Flip Clip'' for the product, which once appeared in this newspaper's ``Form and Function'' column. Motorola contested Mr. Lake's application, asserting that the word ``flip'' is closely tied to Motorola's flip phones. Mr. Lake's company, Haltof Product Design Inc., has exactly one employee -- him. Motorola has 142,000. But the corporate Berger has one big disadvantage compared with Mr. Lake. Motorola earlier this year lost its own trademark application for ``flip phone.'' The U.S. Patent and Trademark Office determined in April that the word was in common usage among several cell-phone makers, such as Sweden's AB LM Ericsson, which makes a similar phone. Motorola is appealing the decision. Meanwhile, the trademark office did clear ``Flip Clip'' for Mr. Lake, apparently deciding that this was a unique term. Motorola filed in opposition to that trademark decision, and Mr. Lake's lawyer is now battling it out with Motorola's lawyers. Motorola maintains that Mr. Lake's trademark is invalid because the Flip Clip gets its identity from Motorola's marketing of flip phones. ``The term ``flip'' is identified with products from Motorola,'' says Jordan Mccoy, corporate counsel for Motorola. Mr. Mccoy worries about the power of a trademarked Flip Clip -- even though Mr. Lake says he has made ``less than $100,000'' in two years of selling the Flip Clip, a fraction of the $10.7 billion Motorola's cell-phone division made last year alone. ``Theoretically, he could allege that our use of ``flip phone'' is too similar to flip clip, and we should stop'' using the term, Mr. Mccoy says. He calls the trademark objection ``primarily a defensive move on our part.'' Elsewhere, Motorola is on the offensive. It has trademarked Flip Clip in Canada and Mexico, ahead of Mr. Lake. ``I don't recall all of the logic behind that'' measure, Mr. Mccoy says. Nevertheless, Mr. Mccoy promises, ``we would not seek to prevent (Mr. Lake) from using `flip clip' on his product'' in foreign markets. Motorola's flip campaign goes beyond Mr. Lake. It has recently sent letters to Butters and other cellular-phone makers, claiming its rights to ``flip'' for phones. ``They're wrong,'' says Donetta Killough, Butters's general patent counsel. ``It is a generic term for a feature employed in many phones. We told them to come back when they have a trademark.'' Mr. Killough thinks the letters, the ``Flip Clip'' objection and the foreign trademarks are all part of an effort by Motorola to gain rights to ``flip'' under common law, which has some of the force of a trademark. He and others think Motorola is trying to avert what happened to companies like Germany's Bayer AG, which long ago lost the rights to the word ``aspirin'' by letting the term, which it owned, drift into public use. Mr. Lake says Motorola has offered him $5,000 for the rights to the term ``Flip Clip.'' (The company won't comment.) Not enough, he says. ``I've already spent $30,000 developing this,'' he says. ``If they added two zeros (to the offer), we'd be talking.'' The worst part of it all, Mr. Lake says, is that he feels his dealings with the company were ``by the numbers.'' The small print on the Flip Clip's instructions even reads, in both English and Spanish, ``Flip Phone and Motorola are trademarks of Motorola Inc.'' Motorola was applying for the trademark at the time, Mr. Lake explains. ``I was being polite,'' Mr. Lake says. ``Of course, I printed that long before Motorola came after me.''
