As the fitness industry prepares for the Smith-Leahy America Invests Act (AIA) to go into effect in 2013, changing the U.S. patent system from a first-to-invent to a first-to-file system, just how big of a problem is patent infringement in the industry?
Lawyers who specialize in fitness law say that exercise equipment is one of the most litigious fields for patent infringements. However, commercial equipment manufacturers disagree.
“I don’t see a lot of patent lawsuits in our industry,” says Kevin Corbalis, executive vice president of marketing and product development at Star Trac, Irvine, CA.
Ray Giannelli, senior vice president of research and development at Cybex International, Medway, MA, says, “We investigate others’ IP (intellectual property) before we embark on a new product. If the idea is already out there, we probably don’t want it because we want to do what hasn’t been done before. It enhances our creativity to think outside of the box and not to copy what others have done.”
Dean Sbragia, CEO of Med-Fit Systems, Fallbrook, CA-based manufacturer of Nautilus equipment, agrees, adding: “Ours is a sales-driven company, and we like to get our customers’ input on product design. We leave it up to engineers to figure out how to do that without infringing on others’ patents. Marginally, [patent protection] stifles a certain part of the creative process because there’s a lot of existing patented technology out there that we need to dance around. On the other hand, it also focuses our creativity by necessity, as we don’t want to infringe or get into legal hassle.”
Like Cybex and Med-Fit, Star Trac engages in a patent-clearing process before embarking on new product development.
Corbalis says: “To protect products in development, we have patent attorneys do searches to see if there are any patents for what we’re developing. If there are, we like to see if we can license them. If not, we’ll change our approach.”
Still, several fitness equipment patent cases have popped up in the last few years. In September, SmartFit Solutions filed a patent infringement lawsuit against 26 equipment makers, including some of the largest manufacturers in the industry. SmartFit claims the manufacturers are using its patented system of methods and processors with protocol-generating algorithms. A court date is pending. Also in September, Precor, Woodinville, WA, filed suit against Yowza Fitness, Naples, FL, for infringing on its patent for elliptical cross-training equipment. In 2010, Cybex filed cease-and-desist letters against four companies after it says it uncovered violations of its intellectual property during a trade show. All four companies complied with the demand, Cybex says.
These cases are just some of the cases in the courts, although no one has an exact number on how many cases relate specifically to commercial fitness equipment.
Martin Belisario, a patent attorney at Panitch, Schwarze, Belisario and Nadel in Philadelphia, says patent protection can become problematic when U.S.-based manufacturers do business globally.
“This is particularly an issue in China,” he says. “Although that country has gotten better in recent years, it still is not perfect when it comes to patent protection.”
Sbragia, whose company, Med-Fit, is in the process of moving its manufacturing from China and Taiwan back to the United States, says: “It’s hard to have patent protection in certain countries that don’t have similar legal systems. American companies that manufacture in countries like Mainland China, which is still a communist country, don’t have any legal jurisdiction. So a judgment against a Chinese company is virtually impossible to enforce.”
The risk inherent in manufacturing overseas, he says, is that “you’re handing over your IP, tooling and designs to a nation that doesn’t share our legal system.”
Other IP problems could, theoretically, occur if a U.S.-based company uses a third-party, overseas manufacturer that also makes other fitness manufacturers’ products in the same facility. Competitors visiting the plant could see each others’ products, which potentially could lead to problems with IP infringement.
That said, Star Trac, which manufacturers in China, says it does not have this problem.
“Our new owner, Michael Bruno, owns the [Chinese] plant, so we have a history with that facility,” Corbalis says. “They do make products for other fitness companies, although none are competitors of ours. The plant is a sister company to ours, and we have our own space within that facility. We have no IP concerns with them at all.”
Belisario says U.S.-based companies can protect their patents as long as they have nexus here.
“If a questionable product is made in, say, China and shipped to the United States, and there’s a U.S. patent on it, U.S. patent laws can be used to stop the sale or distribution. Similarly, if the product is made in the U.S. and shipped overseas,” he says. “The problem is when a product is made overseas and shipped to an overseas customer. There has to be a nexus in the U.S. in some way.”
U.S.-based global companies that want to protect their patents must file patent applications in all countries in which they do business, Belisario says.