If imitation is the sincerest form of flattery, then InstaTrim owner Greg Amundson wants his business to be less admired.
For more than a decade, sales of sealants he made in Minnesota grew to more than $3 million last year.
But this year, sales are down 35%.
Amundson and his lawyers attribute the sudden drop to patent-infringing counterfeiters, mostly Chinese, who have launched about 30 similar products on Amazon.com over the past few months. 80% of InstaTrim’s sales have been relying on e-commerce platforms.
“It’s amazing how quickly counterfeiters are eating away at our sales with similar knockoffs,” Amundsen said last week. “If you search for ‘flex-trim’ and ‘caulk’ on Amazon, we usually appear on the first page, above the fold of InstaTrim products.
“Now you see all the knockoffs that are completely taking over the front page, pushing us down. Fair play is fair. But not the way they do it.”
Amundson, a former homebuilder who exited during the 2008 property crash, spent years turning Scandia-based InstaTrim from idea to cash flow growth company.
Amazon has long been criticized as a place where counterfeiters can easily copy everything from soap, baby formula, clothing, accessories and toys to car and plane parts.
The business magazine Fast Company reports that researchers estimate that counterfeit goods worth nearly $1 trillion are flooding the global economy. Many look identical to those made by the original brand, but they are often produced from cheaper materials.
According to Robert Handfield, a supply chain expert who studies Amazon and a professor at North Carolina State University, there is a well-known and veritable “underground economy” of counterfeit goods on the e-commerce platforms used by small businesses around the world.
According to Handfield, online counterfeiting has largely replaced retail stores selling counterfeit goods. According to Handfield’s analysis of U.S. Customs and Border Protection reports, about 80 percent of counterfeit goods enter the United States from China and Hong Kong.
“People who work in legitimate factories may start their own businesses to make fakes,” Handfield told Fast Company. “They’ll copy it, sometimes with cheaper materials, and sell it on the same channels.”
Amundsen and his lawyers aren’t nitpicking Amazon. In fact, they’re using Amazon’s simplified complaint and takedown system, which was introduced this year in response to complaints from manufacturers that have grown as the number of counterfeit products has grown.
Amundson claims several of his patents have been repeatedly violated.
InstaTrim senior patent attorneys Loren Hansen and Amundson research the alleged offenders through trademark filings and Amazon identification numbers. Some dubious manufacturers use product names similar to InstaTrim.
“The traditional option of enforcing patents through federal courts and the International Trade Commission … is time-consuming and very expensive,” he said.
“You spend a lot of your income on lawyers,” Hansen said. “Amazon’s new process since April is very good. They will cancel [counterfeit] If they don’t respond, the seller. “
Companies with trademarked items such as InstaTrim can participate in Amazon’s “Apex” program, according to law firm Baker Botts. Failure to participate when challenged will result in the alleged infringer’s product being removed from Amazon immediately. A neutral patent attorney considers each case and makes a determination of alleged infringement within 16 weeks.
The first source of alleged patent infringement targeted by InstaTrim has until next week to provide an initial response to InstaTrim’s patent infringement claim.
Art3D, a serious competitor that sources its goods in China, has said it will stop ordering the product after it is still available for sale on Amazon, according to an email sent to InstaTrim this month.
“Amazon has no one to talk to, but we estimate there are 32 sellers, and they all have different names,” Amundsen said. “Some of them called their product InstaTrim. So we’ve issued a cease and desist order to them. One guy took it down pretty quickly. They admitted they got everything from China. There’s a lot of layers there and it all happens within the last three or four months.”