Starting a physical product company? You’re gonna need a lawyer

I think it's important to point out that the author is CEO of edisonlf.com, a law firm focused on suing IP infringers. I don't really think that cheapens any of his advice, and heck, he may have even decided to start the Edison business after dealing with so much infringement in his toy business. Still, he's not a disinterested party and he should have disclosed this more clearly in his article.

I read this article expecting to hear about potential liability concerns, not IP protection. It seems to me that I remember playing with a toy quite like theirs as a child many years ago. Basically cheap poker chips with cuts around the edge so they can connect. So it seems quite unlikely that they'd try to protect that IP, since it probably wasn't their invention in the first place.

The designs that they show being copied by others are an interesting problem. I got bored of all the pictures and didn't compare one by one, but it seems like if you were to do a clean room design of a helicopter made of these snowflake chips, it would be legitimate to copy. I would guess they are suing this other company based on the copyright protection of their instruction manuals. Seems hard.

I'm quite glad my interests for developing products involve a healthy amount of algorithms rather than just pieces of plastic and instruction manuals. Success breeds competition, and in something like this I doubt it's feasible to compete on quality, only price, which is a hard battle.

The first thing I notice is their Brain Flakes (TM) looks exactly like something I played with at school as a kid some 25-30 years ago (albeit the pieces were a little larger)

You cannot protect yourself from copycats, and if somebody says he can, he is a fraud.

I worked in, and around OEM consumer electronics since 2007.

A much bigger problem why you need a lawyer to run just any physical business in USA, is because of militant litigation from pretty much everybody:

1. Consumers, some time legit, some times BS, and BS litigations hurt the most. You either hire a lawyer to write "Do not try to operate the gas stove with your genitals," or you simply cannot survive with nonsensical body of law covering product liability.

Not saying that genuine screwups on your side can not be equally painful. A recall is usually the end of any non-MNC company in the industry.

2. Suppliers, and not in the way you usually expect. IP supplier-trolls at large. The moment somebody sells a single widget of yours in US, US judges believe they can apply American IP laws wherever you are in the world, and entitle trolls to your international revenue. It does not fly much anywhere in the world, but they have unlimited amount of tricks to lure you into US courtrooms.

3. Government bodies, again, some times legit, some times not. Tons of codes, and some well known vague, and contradictory regulations especially covering radio certification, and electrical safety.

It's not like they are hard to follow, but it is the authorities in charge which themselves don't know what their rules mean, and don't want to tell even if compelled to.

However, the biggest regulatory hurdle in US is much more about simply running the company as such. Militant IRS, labour related litigation, securities (just don't run a corporation in the US under any circumstance.)

4. Your own distributors. In what country a buyers of yours can not only owe you money, be overdue on the payment, and sue you for demanding them back? Yes, you know the answer. From my experience, it is extremely hard to exact payments from debtors in USA, and big co clients routinely exploit it every day.

I sympathize with the author, but his comparisons at the end (screenshots and pictures) show the problem:

- The competitor's product is in stock, the author's product is not.

- The competitor's price is cheaper.

- The competitor's packaging looks better and advertises more pieces (while still being cheaper).

Albeit packaging appearance is subjective, and so is this: I think the competitor has a better product name.

I don't recall how this toy was called back in the 80s but I certainly recall playing with them.

Maybe author could have gone into details of the aspects of this product that deserves protection.

I suppose trademark is one of them. I can certain try to sell something old with a new trademark.

> Utility patents cost around $6,000 including legal fees and drawings.

This is for the initial filing, and it won’t cover the cost of dealing with the rejections that almost every patent application receives. It’s also a serious underestimate—10k is more typical for the initial filing.

>file a provisional patent application yourself ($150) before revealing your product. That will give you 12 months to explore whether or not your product is viable. If it is, get an attorney before the 12 months expire.

Almost every single provisional application I’ve seen filed without a lawyer’s input has been close to worthless. This is a false economy.

Not limited to physical products. It's common sense to have a lawer if you do business. There is all kind of nasty stuff that will harm you; and you yourself might be even the first one on that list. A laywer should also be around check how you not break any law yourself.

You might unwillingly break someones IP yourself, or go against some easy to find trademark or patent. Or your businees might be based on some idea which is actually illegal in some aspect.

And if your business is running, you need someone to take care of customer-complains, copycats, piracy, problems with employees and partnered companies... There is so much that can go wrong, so many toxic people who wanna milk you for a cheap dollar. It's like the real world-version of anti-malware-software. If you don';t know exactly what you are doing, it might be healthier to have some good protection.

IIRC, snowboards are a counter-example to this article. The design was never patented, and the original company did pretty well on the principle that 'a rising tide floats all boats'.

Edit. The article makes me think of the different (extreme) failure modes of companies run by experts in different sub-departments. An accountant might run the company into the ground with bean-counting, a marketer might sell! sell! sell! what they've got without regard for quality, an engineer might forget to find customers, and apparently a lawyer might protect their idea so far as to prevent anyone else from helping popularize the idea. Everyone thinks their own tool is perfect for all the nails...

This is a quibble, but you might find it useful. The writer of this otherwise well-written article writes "i.e." where they should have written "e.g.". i.e. means "that is". e.g. means "for example". I have no idea why people keep getting this wrong.

I had a toy 100% precisely like brain flakes when I was a kid.

Feels like this is where there’s some value in a physical retailer like Toys R Us as distribution. They wouldn’t stock both Brain Flakes and Picasso Tiles. Since Brain Flakes would have come to them first and with the right IP, they’d put them on the shelf. There’s some sort of in built filter with physical stores because it’d be awkward to show the exact same product under different brands, it may even reflect poorly on the retailer or store. Whereas on Amazon, brand value completely subsides and I’d assume the main competing factors are price and search rank.

Hacker News tends to hate IP but I thought the article was very informative, really appreciate the costs breakdown. Maybe worth mentioning the legal up side company but I don't think it changes the advice.

I am thinking of starting a hardware product based company, and the thing that worries me the most is liability since the US is so litigious

If your product is so easily copied, unfortunately it will be copied. It isn't a good thing but that's the way it is! I think toys are probably the hardest industry to avoid copycats.

To be successful you need to keep innovating and try to build moats around your product, whether that is having better quality, having a software aspect which is harder to copy, or even just having the brand name.

"If you are successful, you will be copied and the copies will take your sales. You need a way to prevent this and that is "intellectual property" or "IP". This is a catch all term for an exclusive license from the government to sell something you created."

Generally, you can't grant an exclusive license to rights that you do not own. The author's definition of "intellectual property" would appear to have the government owning exclusive rights to sell anything eligible for intellectual property protection.

Sometimes, as a condition to receiving some form of financial support from the government, you might automatically assign rights to them. Obviously not all "intellectual property" is created with governmental support.

Internet authors frequently try to explain intellectual property incorrectly, but this is one of the more intersting incorrect definitions I have seen.

Patents, trademarks and copyrights do not grant a license to sell anything. They do provide rights to sue others.

An(almost)identical product was available 20+ years ago in Eastern Europe(most likely all of Europe and Asia).

Edit: Link to pic https://ro.pinterest.com/pin/559713059931829100/

Same happens with popular apps. You will almost certainly face blatant rip-offs.

It strikes me that having the time/space lag from "good idea" to "available everywhere cheaply" decrease is, overall, a good thing.

But like Napster, too much of a good thing causes it's own problems, eh? (I'm kidding, napster was great and nothing better has yet replaced it.)

As time goes on this lag will reduce and the problem becomes how can I pay my bills? But that's a problem everybody (who doesn't own a robo-omni-factory) shares with you. So UBI baby. (Universal Basic Income) Star Trek. Yay.

Unpopular opinion and anecdotal but in all the companies I've started lawyers have been the single biggest waste of money. They gave me nothing that I couldn't have found by doing a Ctrl+F in the law code.

It may help that I live in a country with pretty straight-forward laws and very little bureaucracy, which doesn't seem to be the case in the US. Even the preparatory work and case-laws are easy to digest.

> If you need a lawyer and to file a lawsuit, try to get one on contingency. Contingency means that, instead of earning money by the hour, the attorney gets a portion of the money you recover. They’ll care more and your incentives will be better aligned.

Unfortunately, this is not possible in all countries. I come from Austria where this is definitely not allowed. There are probably other european countries where this is disallowed.

> Copyrights. In the physical product world, you can file a copyright for advertising copy, your packaging art, or even your e-commerce photos. They cost $65 to file with the US Copyright Office and you do not need an attorney to do it.

Since when is this a thing? Isn't copyright automatic on any kind of creative work? Like, even the text I'm writing here should be protected by default, right?

Your design is most likely to be copied by companies outside of US jurisdiction. Good luck enforcing IP there, even with a great lawyer.

I wonder if it’s possible for creators to successfully defend products from imitators. I’ve heard it’s rife on amazon and haven’t heard any practical solution. E.g was chatting to a very popular artist a few days ago and his only solution is to keep innovating and try to outpace the copycats.

So basically the author does not like it when someone competes with them (who does?) and runs to the government to get a monopoly on the product. Spending money and effort on suing instead of continuous innovation and improvement. What a great system.

I have a physical product company in a very heavily regulated industry and I suspect strongly that my attorney has far less to do than if I made software. I'll have to ask him, maybe I'm misunderstanding and screwing up bad

They released those "Brain Flakes" in 2014 and had copycats within a year. But I remember toys that look exactly like that from much longer ago. Aren't Brain Flakes the copycats here?

I remember playing with a toy very similar to the one in the article and this was over two decades ago. Weird that he now owns the copyright.

How does one protect against selling products to Chinese companies and getting copied? (Except for the obvious "don't sell")

Probably should have also mentioned you should always get liability insurance, with any business for that matter.

Is any of this relevant to anyone outside the US? Or can they copy your product as much as they want?

That's the least of your problems. To fire up an assembly line for even the most trivial of products you are going to be looking at initial expenses in the range of $1M, if you are lucky. Even if it's China, in which case you will also have to know how to navigate the industry there.