Walmart and the Pool Guy

by Doug Walsh.

The pool industry is teeming with stories about pool service technicians who in the course of their day-to-day activities come up with better, more cost-effective ways to do the job.

Some of them have developed ideas into products to help others do the job more easily or to offer homeowners a new, useful product.

One of these ideas came from Richard Rosene, who over the course of more than 20 years serviced more than 500 pools in the San Fernando Valley and Inland Empire areas of Southern California.

The homeowners he was dealing with wanted a safe, less intrusive alternative to pool covers that at the same time could help heat the pool. His idea came in the form of floating rings that could cover the pool surface.

In consultation with his father-in-law, David Bartoli, who happens to be an engineer, Richard and his wife Lora developed Solar Sun Rings, inflatable rings that float on the pool’s surface and act like a magnifying glass to intensify the sun’s rays.

The three introduced the product at the Aqua Show in Las Vegas in 2004, and they immediately had a hit on their hands. Sales grew at a rate of 230 percent per year, forcing the fledgling company to grow their business out of a garage-type operation in Murrieta, Calif.

Lora, who ran the business end of her husband’s pool service company and who serves as CEO of Solar Sun Rings, sought help in the terms of a Small Business Administration loan that secured a warehouse and office space for the growing solar ring business.

In fact, within four years sales were booming not only in the United States but in Australia, South Africa, South and Central America, Europe, Mexico and Canada as well. By 2008, Solar Sun Rings’ sales totaled more than 530,000 units and employed 10 people. The company was selling its product in more than 1,200 retail outlets, many of them mom-and-pop operations just like its own.

Of course, that’s when the problems began.

In 2009, a Florida company that makes aboveground pools and had an “in” with the retail giant Wal-Mart wanted to partner with Solar Sun Rings to offer a pool and the rings in one package.

Wal-Mart rejected the idea but approached the Rosenes with an offer to sell the rings in its stores. Not wanting to hurt the rest of their retail partners through the discount pricing strategies employed by Wal-Mart, the Rosenes declined the offer.

But Wal-Mart really wanted to sell the product. And what Wal-Mart wants…well, let’s just say there a good reason that the retailer rings up nearly $419 billion in retail sales a year.

The following year, Solar Sun Rings learned that Wal-Mart had a similar product — Solar Pads — in some of its store locations. This just happened to follow an incident at the 2009 International Pool, Spa & Patio Expo in which company personnel had to chase a person from the Solar Sun Rings’ booth who was taking close-up pictures of their product.

“They were aware the Solar Sun Ring was protected by multiple patents,” Lora Rosene said.

She said that Wal-Mart had its Chinese manufacturer make a halfhearted attempt to get a license to manufacture from Solar Sun Rings, offering a pittance for a royalty knowing full well it would be turned down.

Solar Sun Rings was then told by Wal-Mart’s Chinese manufacturer that a different product would be substituted on Wal-Mart’s shelves for 2010.

Two months later Wal-Mart put their knockoff of the Solar Sun Ring on their shelves under a different SKU. But according to Lora, even the disclaimer on the “Solar Pad” product calls it a “solar ring.”

She said that the only major difference in the two products was the method used to tether the rings together. Solar Sun Rings uses magnets, while the Solar Pad uses a plastic strap with a male and female end on it.

The Rosenes filed a lawsuit for patent infringement, claiming that the Wal-Mart sales have cost the company in the neighborhood of $3 million and counting.

“Unfortunately for a small business,” Lora Rosene said, “the gestation of an elephant is faster than a lawsuit.”

She indicated that it was 8-1 lawyers in Wal-Mart’s favor, but they remain hopeful, buoyed by the fact that their lawyer has successfully sued the giant retailer before. In addition, they have what she termed “hard evidence” in the form of emails regarding Wal-Mart’s and its supplier’s desire to sell the Solar Sun Rings’ product.

Quite naturally, Wal-Mart has an opposing view of the situation.

A company spokesperson was quoted in an industry publication that Wal-Mart “respects the intellectual property rights of others.” The spokesperson further said that the judge dismissed four out of five patent issues and the company is confident in its position on the remaining one that the patent has not been infringed.

On Oct. 31, a federal district judge rejected a motion by Wal-Mart attorneys for summary judgment on the remaining patent, stating that the retail giant had failed to prove its assertion that purchasers would not confuse the Solar Pad for the Solar Sun Rings. Another motion for summary judgment, claiming invalidity of the Solar Sun Rings patent, also was denied.

The parties were scheduled back in court in early December. Look for an update in future issues once the case is settled.

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This entry was published on November 15, 2012 at 8:54 am and is filed under base line stories, Uncategorized. Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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