Score one for small business owners Greg and Betsy Amundson against the copycats on Amazon.
Sales of their Minnesota-made InstaTrim, a no-mess caulk alternative, were crushed on Amazon last year by Chinese imitators, threatening their future. Using Amazon's new arbitration-like remediation process, the Amundsons in January knocked out nearly 20 sellers with products that seemingly infringed on InstaTrim patents. Those sellers declined to spend $4,000 to defend their trim-like wares.
For InstaTrim, victory is sweet. But it doesn't guarantee survival.
"The biggest lesson was never give up," said Greg Amundson, founder of the 12-year-old company. "If you keep fighting, and don't run out of money, chances are you will win. Amazon provided a platform for us to seek fairness and justice at an inexpensive price.''
Amundson, 62, almost ran out of cash. InstaTrim sales fell 77% last year from $3.5 million in 2021. The fall mostly came from Amazon, but also because of a general pullback in home remodeling and improvement last year.
He considered bankruptcy until the Amazon arbitration win in January.
He added, "Our Amazon sales will not rebound to previous levels without a lot of work and time. We had to change our marketing strategy as well.''
Amazon is a titanic online bazaar, not a legal regulator — and long criticized for not cracking down more on counterfeiters who knock off products from soaps, baby formula, clothing and toys to industrial products.
Researchers have estimated that up to $1 trillion worth of fake goods flood the global economy annually. Many look identical to the original products but often are produced with cheaper materials and may not perform as well.
Amundson in 2022 counted 40-plus patent-infringing flexible-trim products. He spent $75,000 last year in legal fees.
Amazon also has recognized the problem and worked for several years to address it. Under the relatively new Amazon Patent Evaluation Process, or APEX, complainants like InstaTrim put down $4,000 and state their case in writing to a neutral arbitrator. The defendant must also put up $4,000 and respond, or be banished from Amazon's online sales floor.
InstaTrim lost its first case late in 2022. It did not sufficiently defend its patents.
Amundson hired another attorney, William McKenna, who has more experience in the Amazon process. Amundson learned in January that InstaTrim won its second case.
"The problem a lot of sellers face … is that even if they get patent protection, [the case] can take years and cost millions," said McKenna, an Indianapolis-based patent attorney. "Amazon, to its credit — and it's not a perfect system — set up a very quick arbitration process between patent owners and the alleged infringers. It puts the burden on foreign sellers who have no intention of acting responsibly."
Amundson's successful patent defense has achieved InstaTrim the powerful "trusted seller" status at Amazon.
"Amazon will act on InstaTrim's [next] complaint within 48 hours and take copycats down at a much faster rate," McKenna said. "That's important."
Amundson is pleased because InstaTrim products in days have regained top visibility and traction on Amazon, including new "project kits" that sell for more than $30 and are generating incremental sales. He and his family, no longer hemorrhaging money, also are less stressed.
"Amazon used to be approximately 80% of our overall revenue, and sales have started to turn upward recently," Amundson said. "And our diversified marketing strategy and winning the APEX case this month are already showing sales improvement."
InstaTrim is spending more on marketing and selling through its own website and Amazon Europe, Home Depot, Lowe's, eBay and Etsy websites. Dealing with more retailers also has increased costs.
Amundson, who ran a custom-built home business, is a bootstrapped entrepreneur who only a few years ago moved InstaTrim from his Scandia garage to a warehouse he bought amid several years of double-digit sales gains.
Today, Amundson also pays much closer attention to "Amazon copycat products" that have a whack-a-mole way of returning under new ID numbers.
"We are energized and feel good about our direction,'' he said. "We realize that our Amazon sales will not rebound to previous levels without increased marketing and time. The Chinese sellers continue to sell numerous flexible-trim products. As long as their profiles do not copy our patented designs, all is good.''