OurPetsSmartScoopLegal

Applica / Salton, Inc, a $1.2 billion maker of appliances owned by a $20 billion hedge fund, has sued relatively tiny OurPet’s Company. OurPet’s Co. has been making pet products since 1995 and currently makes and markets the SmartScoop Self-Scooping Litter Box.

Applica / Salton alleges that SmartScoop infringed on one or more of its patents covering their automated self-cleaning litter box, which OurPet’s believes is unmerited.

The OurPet’s Company

OurPet’s was founded in 1995 by Dr. Steve Tsengas with a single product and a single goal: To improve the health, safety, comfort and enjoyment of pets. For the past 13 years, OurPet’s has developed and patented scores of products that focus on solutions to pet and owner issues. The company has enjoyed critical and marketplace success, but at 23 employees, is still a relatively small company, especially in the $43 billion pet market. Despite encountering hundreds of challenges along the way, OurPet’s is now faced with the challenge of its life - it is being sued by a competitor that has the resources of a $20 billion company.

The Litter Box Problem

Cats are wonderful pets - they are cuddly, cute, relaxing, and fun to watch while they play. 93% of cat owners believe the best benefit to having a cat in the home is they provide companionship, love and company. Unfortunately, 32% of cat owners believe cat waste and odor are a major problem.

After thoroughly and carefully researching cat owner beliefs about waste and odor control products, OurPet’s embarked on an entrepreneurial mission to develop a solution for the problem. Starting with a desire to create a litter and odor solution for these wonderful feline friends (and their owners), a blank piece of paper, and three years of hard work, sacrifice and an investment of over $1 million, OurPet’s developed the SmartScoop line of cat litter maintenance products.

The Litter Box Lawsuit

Based on retailer and customer reaction since being introduced, it appears that SmartScoop has the potential to significantly improve the lives of cats and their owners. Unfortunately, OurPet’s and two other companies that introduced automatic cat litter boxes to the market have been sued by a major competitor for alleged patent infringement. Applica / Salton is also challenging Chicago-based Lucky Litter LLC and Arlington, Texas-based Doskocil Manufacturing Co. Applica / Salton first filed suit in Federal Court/Texas Eastern District in October 2007 and in the International Trade Commission in Washington D.C. in November 2007. The lawsuit alleges that OurPet’s infringed on one or more of Applica’s patents covering their automated self-cleaning litter box, which OurPet’s believes is without merit.

The Litigants

OurPet’s Co. (2007 revenue of $10.5 million) was sued by Applica Inc. (2005 revenue of $556 million), a wholly-owned subsidiary of Salton, Inc. (2006 revenue of $636 million). Harbinger Capital Partners owns 92% of the outstanding common stock of Salton, and as of March 1, 2008, the Harbinger Capital Partners investment team was managing in excess of $20 billion. That means that OurPet’s is engaged in a legal struggle with a company 2,000 times its size.

OurPet’s Vigorously Denies Alleged Patent Infringement

OurPet’s does not feel that SmartScoop infringes the Applica / Salton patents. OurPet’s utilized a patent attorney in every step of the design process and has obtained an independent opinion letter from an intellectual property law firm who supports the company’s position. OurPet’s hopes this matter will be resolved soon, but is prepared to defend SmartScoop and pending patents diligently.

The Legal System

According to a study by M. Webbink in the Duke Law Review, under the current patent legal system a patent infringement lawsuit can easily cost $1.5 million in legal fees to defend it in the International Trade Commission (ITC). This gives a tremendous advantage to large companies like Applica / Salton as opposed to smaller companies with limited financial resources like OurPet’s. Congress is aware of this and is pressing legislation to help smaller companies like OurPet’s by making the patent litigation process, especially for smaller companies, simpler, more efficient, faster and less expensive. House Resolution 1908 (HR 1908) passed the House in September 2007 and is currently on the senate calendar.

In the meantime, OurPet’s continues shipping SmartScoop products to its appreciative customers and simultaneously defending its SmartScoop proprietary products and its right to make available the best, most price competitive litter solution on the market.

This site exists to provide additional information to interested parties.

Interview requests and press inquiries should be directed to info@SmartScoop.com

Through March 31, 2008, OurPet’s has amassed legal expenses of $741,503 defending itself against a $1.2 billion corporation (Applica / Salton) and a $20 billion hedge fund (Harbinger Capital Partners.)

To put this in perspective, the legal costs OurPet’s has incurred is 7% of its 2007 revenue. In comparison, the same cost is only .06% of Applica / Salton’s 2006 revenue and .0037% of Harbinger’s 2007 managed capital value.

The fight against a patent infringement lawsuit is taking a bite from the OurPet’s Co.

The maker of pet products on Monday reported a first-quarter net loss of $391,472 despite a 12.5% increase in revenue, to $2.9 million, from the like period a year ago. The company said net income would have been $167,650 excluding litigation expenses in the quarter that totaled $559,122.

Read the entire article HERE

OurPet’s is asking for your help to help resolve this legal issue as quickly, efficiently and as inexpensively as possible.

1) You can help by forwarding this website to as many friends and family as possible. The more people that are made aware of how cumbersome the legal system can be for small companies, the better. Have them forward the story as well.

2) Forward the story to any media outlets or other people you think would be interested.

3) Send any letters expressing your opinion to:

Terry L. Polistina, Chief Executive Officer and President, Salton, Inc.,
3633 Flamingo Road, Miramar, Florida 33027

John M. Silvestri, President and General Manager, Pet Products Division
Salton, Inc., 3633 Flamingo Road, Miramar, Florida 33027

Lisa R. Carstarphen, Vice President, General Counsel and Corporate Secretary, Salton, Inc., 3633 Flamingo Road, Miramar, Florida 33027

4) Contact your senator and / or representative and express your opinion. Click HERE to locate your members of Congress.

For more information about the lawsuit, click here:

Crain’s Cleveland Business article

A company’s corporate domicile is the location where its governing functions are performed. The laws of that particular state or country are what govern the operation of the business, no matter where the company sells its product. OurPet’s Company’s corporate domicile is the State of Colorado. Harbinger Capital Partners is registered in the Cayman Islands.

What does this mean?

CorporatePolicy.org

Social Science Research Network

Who is Max Baucus?

Harbinger Capital Partners owns 92% of the outstanding common stock of Salton, and as of March 1, 2008, the Harbinger Capital Partners investment team was managing in excess of $20 billion.

This SITE will give you more details about what they do.

Some press releases about Harbinger:

Harbinger Capital Scores Big With Bear Stearns Short

Oglebay Norton Adopts Poison Pill

Who Are Those Guys?

Applica Consumer Products, the maker of the Litter Maid litter box, is a wholly-owned subsidiary of Salton, Inc. Harbinger Capital Partners owns 92% of the outstanding common stock of Salton.

Click HERE to read about the ownership of Applica / Salton.

Other brands owned by Salton include Black & Decker, Spacemaker appliances, Clear2O, George Foreman Grill, Breadman bread makers, Farberware kitchen products, Melitta coffee makers, Stiffel lamps, Toastmaster and Juiceman juicers.

This PROFILE will give you a brief history of Applica.