The Warrior

By Bob Dumas

Brett Kingstone’s war with counterfeiters nearly cost him his company. His drive for innovation saved it.

I started Super Vision International out of a garage with my friend, Roy Archer, in 1989. Over the past 17 years, we’ve grown the company from a modest start-up that sold $50,000 in fiberoptic lighting its first year into a publicly traded entity that’s doing closer to $12 million in annual sales today.

Through the 1990s, we grew with remarkable speed and kept pace with some of the other bulls on NASDAQ. Our sense of invincibility was further fueled when we were named one of America’s 500 fastest-growing technology firms by Deloitte & Touche and Florida Power/Progress Energy.

Little did we realize an unforeseen enemy was gathering at the gates.

It wasn’t the burst of the high-tech bubble that nearly got us. It was a new breed of economic terrorism emerging overseas. Counterfeiters headed by a Chinese national (Samson Wu) and his family had illegally stolen trade secrets. They were selling unlicensed Super Vision products on the black market.

It started in late 1998, when I received calls from my British and Japanese distributors, Garry Armitage and Keiji Yamada. They said that counterfeits of our products were turning up in their markets.

Garry said the counterfeiters had actually stolen our logo and trademark in some cases. Meanwhile, Keiji had been contacted by some Chinese outfit offering to sell him everything in the Super Vision line for less than half of our distributor’s price. This was actually less than our own production cost.

Apparently, the Wu family had set up a network of dummy corporations in 27 countries, including China, Panama, parts of Africa and South America. They were operating under various names and counterfeited everything from our fiberoptic pool lights to Bulova watches and Kodak one-hour photo labs.

As I sat in my office listening to Keiji, the walls started caving in. Later, in my book The Real War Against America (Specialty Publishing Co., 2005), I recalled the exact moment and sheer terror I experienced after that call. The passage reads as follows:

“I said goodbye to Keiji, offering some words of hope as I hung up. Deep inside, however, I felt frustrated and furious. I had no idea how I would fight this faceless enemy, but I was well aware of how devastating their acts would be to our business. I had faced this type of theft before in a previous company. The results proved disastrous.

“I had already known that we were experiencing a steep sales decline overseas, particularly in Asia. But until then, I had attributed this to just a decline in economic conditions. I looked across my office at the many gifts from our foreign distributors. I wondered how many of them had been approached as Keiji and Garry had. I looked out my window and watched a snow-white egret plummet through the blue Florida sky and skim the silvery surface of the pond. His talons plunged swiftly beneath the water line, and he emerged with his lunch.

“Predator and prey, I thought. Someone was now eating our lunch.”*

For the first time, the entire staff at Super Vision saw dark clouds in their future rather than sunny skies. We had been a company used to doubling its sales every year for nearly 10 years, so the financial decline from the counterfeiting was like a train wreck.

Our troubles didn’t end there. FBI wiretaps eventually revealed that the Wus had bribed our own director of research and development, Jack Caruso. They paid him $1.4 million for siphoning trade secrets to one of their American subsidiaries. Caruso was aided by two of our shipping clerks, Jose Cruz and Ron Simon, the last of whom confessed to the larceny.

We knew we had to do something or we wouldn’t last through another season. We couldn’t sit back and let criminals destroy years of our hard work. Once I finally regrouped, I swore to bring the counterfeiters to justice or hunt them to the ends of the earth.

With the help of the FBI, we later managed to track down Wu in Florida and brought a civil suit against his family. Though the U.S. attorney general refused to try the case against Caruso, we ultimately won $46 million in our lawsuit against the Wu family. But other than seizing a few million dollars of our counterfeit products in the United States, we have yet to collect a penny of the judgment.

Immediately prior to the verdict, the Wus encumbered all their warehouses in the United States with loans and liens, and wired out millions of dollars to overseas accounts. Some of the seized counterfeits were later stolen by the Wus in violation of the court order and shipped back to China. No doubt they are still counterfeiting our products overseas.

We have kept the Wus out of the U.S. markets, and are still pursuing them around the world. However, we had one lingering question: How could we protect ourselves from this type of intellectual property theft in the future? The answer was innovation … constant innovation.

The only way to survive was to reinvent our fiberoptic product lines with new technology. We made much of what they’d stolen obsolete with our new line of LED lights that is years ahead of our previous products.

We brought that new corporate vision to our dealers and distributors, and they’ve remained faithful ever since. In the past three years, we’ve seen our LED sales grow to almost 70 percent of our pool sales. This is a huge change from the nearly 100 percent product sales we had in the past from fiberoptic pool lighting.

This dramatic turn of events completely changed our company and put us back on the road to recovery in terms of lost sales. We’ve managed to rebuild our fortress on the foundation of innovation.

Brett Kingstone

Chairman

Super Vision International Inc.

Orlando, Fla.

Lessons Learned

• The only way for America to compete with theft and cheap labor is through constant innovation.
• In every great crisis lies the seed of opportunity.
• Never give up.
• Your customers, distributors and representatives will support you as long as you possess optimism and a vision.

 

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