The U.S. International Trade Commission says that U.S. firms lost at least $48 billion in a single year thanks to Chinese companies stealing their intellectual property designs. U.S. smartphone case manufacturer, OtterBox, has had enough and doesn't want to take it anymore.
OtterBox has built a $50 million business designing hard case covers for smartphones, e-readers and tablets and now it wants to stop the entire Chinese knock-off industry from stealing and selling its designs. The Fort Collins, Colo.-based company filed a complaint with the U.S. International Trade Commission last week that names a slew of Chinese manufacturers as the culprits. It also called on the carpet more than a few U.S. outlets that sell cases imported from China including companies in Georgia, New York, Tennessee, and one in its own small home town, TheCaseSpace of Fort Collins.
OtterBox is particularly wanting to stop the overseas cheap knock offs of its popular Defender Series and Commuter Series cases. The Defender series, for instance, features hard, colorful shells of silicon and plastic and costs about $50 for the smartphone cases ($90 for iPad case). In contrast, TheCaseSpace sells a similar-looking shell for the iPhone called The Vault Case priced at about $40.
Pink imposter? The OtterBox Defender (left) vs. the Vault (right).
To OtterBox, cases like the Vault should be declared contraband and stopped at the border like a bag of cocaine.
"OtterBox has requested the ITC to issue orders to generally exclude all infringing products from entry into the United States as well as prohibit advertising, distribution and sale of these products within the United States. Orders will be administered by U.S. Customs and Border Protection at all United States ports of entry," the company said.
We aren't hopeful that OtterBox will get its wish, as it seems the USITC is fond of five-year investigations -- and business fortunes in the high-tech industry are won and loss and few times over in that time span. But the commission is starting to look more seriously at China. Its report, published about two weeks ago, was compiled from a survey of 5,000 U.S. firms conducted in 2009. In addition to putting a $48 billion price tag on the annual cost of losing business to China, it found that firms spent another $4.8 billion in 2009 to try and combat Chinese IP infringement. And these are conservative estimates because the 5,000 surveys were sent only to companies in industries heavily targeted by Chinese IP theft.
Perhaps the harshest statistic from the USITC report is that, if China's knock-off culprits were stopped, 923,000 U.S. jobs would be created by the 5,000 companies surveyed alone.
Using statistical modeling, the commission then determined that if China were to implement intellectual property right protections on par with the U.S.'s, billions of dollars would be earned and millions of jobs would be created. The report concluded that such a change would result in, "(1) a $21.4 billion increase in U.S. exports of goods and services, (2) a $87.8 billion increase in sales to U.S. majority-owned affiliates in China, (3) a potential 2.1 million increase in net U.S. employment under conditions of prolonged and high unemployment."