Thursday, April 28, 2011

Battle over flooring patents takes a new turn

Those of you who have read any of my previous blog posts know that I am appalled at how much money the flooring industry spends on legal issues, many of which with common sense and rational communication could be avoided. In a new twist, Berry and Unilin have taken a new path of cooperation, not confrontation, which can only mean more money will be available for product development and that's good for the industry.


The "Click" Wars

In the last decade the legal spotlight was firmly focused on “click” locking systems used in laminate flooring. Two of the leading protagonists were Unilin (think Quick-Step) and
Valinge Innovation of Sweden, representing their exclusive licensee (at the time) Berry Floors (think Alloc). At the time, both Berry and Unilin were  owned and based in the same region of Belgium.

Early actions between Unilin and Valinge included lawsuits, counter claims, injunctions and even the dismantling of booths at the Domotex flooring fair in Germany. It's no exaggeration to suggest that the aggregate cost of litigation involving these and other laminate companies ran into the hundreds of million dollars; a very nice situation for the legal eagles.

In 2007, after several years of legal arguments, a key cross-licensing agreement was signed  by Unilin and Valinge paving the way for both companies to collect royalties on locking systems involving each others products. (Unilin, Valinge agree on patents,  April 2007)

Following this agreement the US Industrial Trade Commission upheld Unilin’s mechanical locking patents and issued an exclusion order forbidding the importation of glueless laminate flooring not licensed by Unilin or Valinge. This effectively forced Chinese laminate manufacturers to enter into licensing agreements with Unilin and this brought much needed law and order to the laminate segment.

A New Era of Cooperation

One of the latest innovations in the laminate manufacturing process is laser cutting technology developed by Berry which eliminates the white lines often present on darker colors of laminate flooring. After several refinements, the technology is now ready to be licensed out to third parties.

Competitors of Berry have no doubt been closely following the development of this technology and working hard to create a process of their own. However, this time instead of  legal battle, Unilin (through its intellectual property unit Flooring Industries) has joined forces with Berry to jointly market the Berry patented laser cutting technology. (Unilin and Berry cooperate on LaserCut patent).

This is a win-win situation for both companies. Unilin can offer product featuring the new technology to its product customers and also sell licenses to use the patented technology to licensees of its Uniclic® locking system. In return, Berry can sell product and licenses to its own customers and it benefits from Unilin’s many years of experience protecting patents and collecting royalties, as well as being able to have its patented technology marketed to Unilin’s licensees.

So isn’t this better than making lawyers rich by suing and counter suing each other? It surely means more funds are available to develop the market.

As Winston Churchill put it “Jaw, jaw not war, war.”

A comment about the ITC "dumping" investigation ....

Speaking of confrontation, the conflict between the Coalition for American Hardwood Parity (CAHP) and the Alliance for Free Choice and Jobs in Flooring (AFCJF) is beginning to escalate.
Participating US manufacturers are now introducing the concept of “targeted dumping” into the argument. This process could introduce new methods for calculating dumping margins.

Jonathan Train, president of the AFCJF, confirmed my fears when he stated recently that there is a tremendous amount of money being spent by our industry on this matter. "Money is being sucked out of our industry for no good reason,” he said. In today’s economy this is not good news - unless of course you are in the legal profession.

Let me have your thoughts, and as always thanks for reading this.

David


David Wootton is President of The Wootton Group, an independent flooring consultancy, and a member of the Floor Covering Institute. He is past CEO of both Columbia Flooring and Harris-Tarkett.

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