RE: Gunna get screwed? Yep...gunna get screwed!

[WolfeMacleod]

Ahile ago, I posted about a possibility of getting screwed by someone...

Well, I received his business proposal. Yep, I think this guy want to screw me in a fairly unpleasant way.

Here's the gist of it. A three-phase proposal.

Starting with:
Cease taking all orders, refer people directly to him, remove any material from my website and my marking from the product, and sell him completed product for resale.

Then:
Cease manufacturing entire product model, and sell him only partial product for assembly completion by him.

Then:
Cease model production entirely, giving him complete control, including manufaturing techniques, specification, supply chains, and all.


Sounds like a raw f*cking deal to me.



My wife is currently in in his area on business and want to go drop a flaming bag of poo on his doorstep.

I'd tell him where to stick it, but I don't think it's big enough to fit what I had in mind...

[Joeaksa]

Time to get a lawyer involved and bend the boy over!

[slodave]

Sounds like you may need to hire a lawyer. Good luck.

Dave

[WolfeMacleod]

Originally posted by Joeaksa
Time to get a lawyer involved and bend the boy over!

NO KIDDING?!?! [end sarcasm]

So...
Can I get a show of hands from the lawyers here?

I know one already, but don't know if he handles this sort of thing. I'll try to speak with him tomorrow though...

[Milu]

I don't understand why you have to go along with him. From what I remember of the original post you both needed each other.

There's no point in getting mad. The other side is just promoting their best interests. Perhaps in a heavy handed way, but no more than that. You must do the same.

Your options on the information posted would appear to be:

1) Abandon this line altogether.

2) Find an alternate distributor (Perhaps not satisfactory because of this one's selection skills)

3) Work out a deal that is acceptable to both sides.

If you go to a lawyer, note that the issue goes beyond legal, you need someone that can act as an intermediary and supplement your negotiating skills as well as looking after your interests. Not just someone that will bill you for rubberstaming a deal

keep us posted.

[WolfeMacleod]

Originally posted by Milu
I don't understand why you have to go along with him. From what I remember of the original post you both needed each other.
...... The other side is just promoting their best interests. Perhaps in a heavy handed way, but no more than that. You must do the same.

....etc...keep us posted.

Oh, I will absolutely refuse this deal and abandon the line altogether if that's what it comes down to, since I would be abandoning the line completely anyways, once he takes control over it.

Basically, the only thing he's offering as "compensation' is a little bit of cross-promotion.

Not worth all the time, blood and sweat I've poured into producing these things over the last year.

[competentone]

Originally posted by WolfeMacleod
Oh, I will absolutely refuse this deal and abandon the line altogether if that's what it comes down to, since I would be abandoning the line completely anyways, once he takes control over it.

Basically, the only thing he's offering as "compensation' is a little bit of cross-promotion.

Not worth all the time, blood and sweat I've poured into producing these things over the last year.

Once you "abandon" the line, I'd really be interested in hearing more details about this product and business relationship.

From your earlier description, I'm guessing the person you're doing business with has some "celebrity status" and his relationship to your product is what gives it "value" to the market the product is being sold in.

From your general description, I don't see your situation as one where you're getting "screwed." It just sounds like "market forces" at work.

If people want "celebrity endorsed" products in your market, and are unwilling to buy the product without this "celebrity stamp of approval" and the "celebrity" uses the market forces to squeeze your margins, that's no reason to "get angry" with the celebrity. You either negotiate a deal you can live with, or just drop the relationship if the "celebrity party" wants a deal not worth it to you (which sounds like it's the case here).

Of course, don't "burn your bridges" and post all the bloody details here if there is potential that, once you drop the line, the "celebrity" suddenly realizes you were bringing more to the business relationship than he was thinking. Once you abandon the relationship, he may realize that he can not replace you as easily as he may be thinking he can right now.

[scottmandue]

I'm no NBA but definitely don't lose you cool... you will need your calm to make the right decisions. Business is business and even if this guy is trying to screw you over unfortunately for too many people these days that's how business is done.

You seem like a nice guy who puts a lot of time and care into your product, you'll never fail with the attitude.

[WolfeMacleod]

Originally posted by competentone
Once you "abandon" the line, I'd really be interested in hearing more details about this product and business relationship.

From your earlier description, I'm guessing the person you're doing business with has some "celebrity status" and his relationship to your product is what gives it "value" to the market the product is being sold in.

......uses the market forces to squeeze your margins, that's no reason to "get angry" with the celebrity.

Nope, no celebrity status with this guy. He was a frequent customer who I made something custom for that other people got wind of and started requenting the same thing. He chose a particular component, and I had paid him over $5000 to date to continue to choose components for this model.
At first, I thought he just wanted to get a slice of the pie by demanding that I wholesale everything to him for resale. It turns out, he wants the WHOLE pie - all manufacturing specs, techniques, supplies, and the lot of it in the end. In the beginning, he wants me to remove my maker's label from the products entirely, while I am still producing them for his resale.

[craigster59]

Why can't he sell a version of the same pickup, just "badged" differently? As long as yours is pricepointed, you should both be able to turn a profit.

Whatever you do, don't let your attitude get the best of you. I'm sure the "pickup world" is very small and you will eventually cross paths/deal with each other again somewhere down the road.

[cashflyer]

I don't know your business, but I think I know who you're talking about. If I'm incorrect, what I'm about to type will not make any sense.

Any good electronics guy could do the component selection if you know the selection criteria... I mean, it's not that hard to plot a performance curve.

You may or may not have to change the name. Depends on how hard each of you want to fight to keep it, depends on who establishes first use in the industry, and depends on if it would create consumer confusion.

I will bet that this will lead to some mudslinging from both sides - but a lot from the side that gets cut out. And I bet there will be the inevitable "mines the original" - "mines better" arguments if he decides to make his own or find a new subcontractor.

[lendaddy]

Playing a little devils advocate here, I'm sure he feels it was all his idea.

Put yourself in his shoes and he no doubt thinks like this:

"Here I have a great idea and I pay Wolfe to manufacture it, next thing I know he's selling it like it was his idea under his name for huge profits and I'm just making chicken scratch for manual labor on it".

I'm certain I don't know the details(so please correct me), but it's always helpful to approach it from your competitions perspective. Did he agree to let you own it like that or was it just "the way it went down"?

[WolfeMacleod]

Originally posted by cashflyer


Any good electronics guy could do the component selection if you know the selection criteria... .

Itr's actually magnetics in this case.

Originally posted by lendaddy
Playing a little devils advocate here, I'm sure he feels it was all his idea.

Put yourself in his shoes and he no doubt thinks like this:

"Here I have a great idea and I pay Wolfe to manufacture it, next thing I know he's selling it like it was his idea under his name for huge profits and I'm just making chicken scratch for manual labor on it".

I'm certain I don't know the details(so please correct me), but it's always helpful to approach it from your competitions perspective. Did he agree to let you own it like that or was it just "the way it went down"?

The original product I made him was based on something that I had previously made for someone else. He heard it, went "Whoa! I gotta have something just like that!" and requested something similar to test his hand-picked parts in. Neither of us expected them to take off like they did when he sent them to another guy who refused to give them back and started posting about them on guit-forums.

And first, he was selecting the component "out of the goodness of his heart"
and then it was "$10 each part" - totalling...sorry, my memory was wrong earlier -- $4660 since JANUARY.
and now it "Gimmie gimmie, I want everything"

[HardDrive]

Wolfe, for god sake, you need an intellecutal property attorney. Seattle is chock full of them.

Your manufacturing methods are YOURS. You should have not let this go this far. Its worth paying the retainer on an attorney just to advise you how to proceed.

[stomachmonkey]

Originally posted by HardDrive
Wolfe, for god sake, you need an intellecutal property attorney. Seattle is chock full of them.

Your manufacturing methods are YOURS. You should have not let this go this far. Its worth paying the retainer on an attorney just to advise you how to proceed.

Yeah. I don't know what you are waiting for.

Are you thinking that the cost of legal representation is not worth it compared with historical/projected sales?

For all you know this guy has leveraged the products popularity into a deal with a larger manufacturer who can put marketing $'s behind it and blow it up big.

[WolfeMacleod]

Originally posted by HardDrive
Wolfe, for god sake, you need an intellecutal property attorney. Seattle is chock full of them.

Your manufacturing methods are YOURS. You should have not let this go this far. Its worth paying the retainer on an attorney just to advise you how to proceed.

I'll be talking to someone when I get out of the spammer-court thing today.

[competentone]

Originally posted by HardDrive
Wolfe, for god sake, you need an intellecutal property attorney. Seattle is chock full of them.

Your manufacturing methods are YOURS. You should have not let this go this far. Its worth paying the retainer on an attorney just to advise you how to proceed.

With the additional information, that is exactly what I'm thinking.

If he has any sort of patent or trademark protection on the item, he may have certain rights to prevent you from manufacturing/selling the item. If not, you should probably (depending on any previous terms/contracts you've had with him) be able to manufacture it on your own and tell him to "take a flying leap" -- but you'll need the attorney to review this and help you determine who owns what.

[lendaddy]

Originally posted by WolfeMacleod
I'll be talking to someone when I get out of the spammer-court thing today.

Good deal,let us know how that goes....both things

[stomachmonkey]

Originally posted by competentone
With the additional information, that is exactly what I'm thinking.

If he has any sort of patent or trademark protection on the item, he may have certain rights to prevent you from manufacturing/selling the item. If not, you should probably (depending on any previous terms/contracts you've had with him) be able to manufacture it on your own and tell him to "take a flying leap" -- but you'll need the attorney to review this and help you determine who owns what.

Patent may be tough. I assume we are talking about a guitar pick up built using "standard" practices but with a higher degree of precision using at least one component with a measurable characteristic that let's it achieve a specific signal or gives it a uniqly identifiable acoustic signature.

I could see a Trademark being issued for something like that.

Let's hope your friend has not already done so.

I suggest you do, immediately. Start with a poor mans patent (write it up, stick in an envelope, mail to yourself certified, do not open envelope) today and get a lawyer going on a real filing.

[Jim727]

Originally posted by WolfeMacleod
Ahile ago, I posted about a possibility of getting screwed by someone...

Well, I received his business proposal. Yep, I think this guy want to screw me in a fairly unpleasant way.

Here's the gist of it. A three-phase proposal.

Starting with:
Cease taking all orders, refer people directly to him, remove any material from my website and my marking from the product, and sell him completed product for resale.

Then:
Cease manufacturing entire product model, and sell him only partial product for assembly completion by him.

Then:
Cease model production entirely, giving him complete control, including manufaturing techniques, specification, supply chains, and all.


Sounds like a raw f*cking deal to me.



My wife is currently in in his area on business and want to go drop a flaming bag of poo on his doorstep.

I'd tell him where to stick it, but I don't think it's big enough to fit what I had in mind...

Agree - it seems clear he wants to put it to you. There has been good advice so far. I'll toss in a couple of additional thoughts, for whatever they are worth.

Step One: get past any flaming bag fantasies and remember Sun Tzu's axiom that "It is the unemotional, reserved, calm, detached warrior who wins, not the hothead seeking vengeance...." You need a lawyer, but you also need a strategic plan; he is on the offense, so you want to turn that around. Begin by having your lawyer ensure your technologies - including processes - are properly protected, but recognize that if he chooses to make a competing product in China, they won't care about any patents or processes; your legal battle will end up here after he is in production.

Step Two: analyze your strengths and weaknesses. Clearly your strengths include core technology and manufacturing processes, or he wouldn't be trying to extract them from you. Your weakness is unknown, but it sounds like there is better product identification for the model he helped modify.

Step Three: analyze his strengths and weaknesses. Strength seems to be that his version of your product appears to be more desirable - whether that is a factual improvement or only one of labeling, don't know. He clearly wants to have you 'gone' and transfer your core technologies to himself, therefore he seems to be over-reaching to make a grab for complete control.

Step Four: match your strengths to his weaknesses wherever possible.

Hopefully, "his" version of the product is not your only model. You are in a much stronger position if you still produce your original. In any event, I would consider ensuring product differentiation. At a minimum there should be the "Wolfe Original" and the "Wolfe Model B" - plus I would put some thought into creating a third variant , the "Wolfe Model C" that does not include any of his ideas. Redesign your web page to promote the "Model C" improvement. Back page the original somewhat but give it the aura of the revered ancestor of the line. Further back page his model. Do the same with any packaging you might have.

Now that he is put in a defensive position, consider raising his wholesale cost from you slightly. The price increase should coincide with receiving a letter from the attorney that will demand that any product he moves must prominently mention that it is the "Wolfe Model B" and packaging/promotion must meet certain standards - yada, yada.

Require that all sales must be through you - orders taken and product shipped to the customer. Any web site he has to promote your product must only link to your site for sales. You should be paying him a royalty on his product ideas beyond your core technologies. Don't let him control the customer base under any circumstances. If he wants to be exclusive in representing [your]"Wolfe Model B"[/i] he gets less than if you have freedom to promote it through other channels.