One day in 1965, Hoyle Schweitzer and Jim Drake were sitting around comparing the virtues and shortcomings of their favorite pastimes -- surfing and sailing. Suddenly, out of the California-blue sky, inspiration struck: Two sports would be better than one. Why not combine them?
Within a year they had figured out how to mount a sail on a surfboard and steer the device without a rudder. In March 1968, they drew up the specifications of their invention and applied for a patent. Twenty-two months later, in January 1970, U.S. Patent #3,487,800 was issued. It covered a "wind-propelled apparatus in which a mast is universally mounted on a craft and supports a boom and sail." The apparatus was the simple 12-foot-or-so plastic platform with the traingular sail that today abounds wherever there's enough water to float it. The two inventors called their creation a sailboard.
In concept, sailing a surfboard seems as unlikely as rowing a dining-room table. When Schweitzer and his wife first introduced their Windsurfer at boat shows in the early '70s, some practical jokers outfitted the sailboard with a huge steering wheel and a portable toilet. But the joke was on the jokers. Largely because the Schweitzers have been so dogged in promoting it, boardsailing has become the world's fastestgrowing sport. In Europe, where by the end of 1981 nearly 1 million boards had been sold, the sport is second only to skiing in the number of participants. According to Boardsailing U.S.A. figures, 50,000 sailboards were sold in this country in 1981, and the BUSA projects 50% to 75% annual sales growth for the next five years.
It should have been smooth sailing for Hoyle Schweitzer and his company, Windsurfing International Inc., of Torrance, Calif. (Co-inventor Drake was bought out in 1973 for a reported $36,000.) After all, Schweitzer had a patent, which bestows a 17-year virtual monopoly on its holder, and sailboards now retail for as much as $1,800.Windsurfing also won patents in Germany, England, Japan, Australia, and Canada.
But the problem with Windsurfing's patent was that the sailboard had already been invented -- a complication Schweitzer didn't discover until six years later. The existence of "prior art," as it's called in patent parlance, opened the gates to hoards of copiers and put Windsurfing's back against the wall. There, like a swashbuckler in a movie, it has challenged intruder after intruder in defense of its market dominance. But the challengers keep coming, and whether Windsurfing will emerge as the victor will soon be decided in federal courts. If Windsurfing succumbs, it won't be for not having put up a tough fight.
Windsurfing has so far spent half a million dollars on attorneys' fees in defense of its patent, says Schweitzer, 48, the company's president. He doesn't disclose much about his closely held corporation's financial status, but he acknowledges that the competition is so fierce that presently the company "is not making money." As a measure of that competition, the 1979 International Marine Trades Exhibit & Conference had only 2 sailboard companies; the next year it had 30. As of July 1981, 35 different sailboards were being marketed in the United States -- nearly all of them alleged infringers on Windsurfing's patent.
Overseas, there are now over 100 sailboard makers, most of them doing business without a Windsurfing license. Forty of them operate out of France, where, to Windsurfing's later regret, the company chose not to apply for a patent. In Germany, where patent laws are considerably tougher and patents more carefully drafted than in the United States, Windsurfing has won 40 suits against infringers. In England, it has sued 24 alleged infringers. And by the end of 1981, the company had named 20 manufacturers or distributors in patent infringement suits in the United States.
Schweitzer's opponents accuse him of crippling the growth of boardsailing in the United States so that his product, the Windsurfer, could take over the market completely. But that is, in fact, what a patent does. It enables a company to behave any way it wants. What ordinarily might be considered restraint of trade -- granting a license to one firm while denying it to amother -- is tolerable under patent law. And Windsurfing would have the market sewn up if it weren't for a 53-year-old sign painter and sometime inventor from Wilkes-Barre, Pa., named S. Newman Darby.
To appreciate Darby's importance in Windsurfing's history, you need some background in the U.S. Code, Section 101-103 of Title 35. To be granted a patent, an invention (1) must be a new and useful process, machine, manufacture, or composition of matter; (2) must not be known or have been patented by others nor have been published or publicly used by others for more than a year before the patent was applied for; and (3) must be sufficiently different from prior art -- that is, any similar product or process already in existence. Windsurfing found its patent being challenged on all three counts.
Much of the confusion over Windsurfing's patent stems from the way patent applications are handled in the U.S. Patent and Trademark Office. The process is entirely secret. All matters are thrashed out between the applicant and the patent examiner, a bureaucrat who may or may not possess the necessary expertise in the technology involved. (Not all patent examiners are duds: Albert Einstein was once a patent examiner.)
Only after this private ritual are outside parties made aware that an invention has been patented. Until recently, there was no provision for protest except to test the enforceability of the patent granted by infringing on it. So it's been a dictum among patent lawyers that an American patent is little more than a license to litigate.
S. Newman Darby, it turned out, had been dabbling in boardsailing devices since the late 1950s, when he harnessed a sail to a pair of water skis. That attempt failed miserably. But by 1963, Darby had progressed to a single board with a sail mounted on a mast that was stuck into a socket. Thus was born the first, albeit primitive, sailboard. Because of the expense involved, Darby didn't bother to file for a patent.
In 1965, Darby published an article in Popular Science titled "Sailboarding: Exciting New Water Sport." Pictures and text described Darby's device, now advanced to the point where the mast could be seen to be attached with a rudimentary universal joint -- actually, a piece of rope -- that allowed the rig to fall into the water when released by the user. Documenting the existence of prior art even more irrefutably, the craft became a nationally televised prize that year on "The Price Is Right."
Nearly every invention arises from prior art of some kind, however. The fact that a similar "wind-driven apparatus" had been previously developed doesn't in itself pull the rug from under Windsurfing's device. Schweitzer maintains that his Windsurfer represents something novel beyond the prior art; the infringers think he's wrong.
In point of aesthetics, there's no comparison between the two sailboards. Darby's hull looks less like a surfboard than a door, and is powered by a kite-like sail of the sort that ice skaters use to blow themselves around ponds. The Windsurfer, on the other hand, is streamlined and incorporates the familiar fore-and-aft rig of modern sailing vessels.
But in fact the boards are strikingly similar. Both are steered by a single user who maneuvers the sail, which is connected to the hull by a universal, or swivel, joint. Both rigs are designed to fall completely down when the user lets go of them. Schweitzer's patent states: "In the event that a sudden surge of wind threatens to capsize the surfboard, the user may merely release the sail and it will fall free into the water, completely removing the danger. The sail is provided... with a rope so that the user can readily pull the sail back into sailing position." Darby's Popular Science article addressed the problem similarly: "If you feel the wind is too strong for you, simply throw the sail kite overboard (make sure it's secured by a lanyard so you can retrieve it once the gust has passed)."
The substantive difference between the two is in the sail-carrying rig. Darby's is single-boomed. When the board is "tacked," or its bow maneuvered from one side of the wind to the other, the sail reverses itself (in sailing parlance, the luff becomes the leech). The Windsurfer's rig utilizes a wishbone, or double boom. Its sail remains in the same position, as on a modern sailboat. On the basis of this difference Schweitzer argues, "It's clear that Windsurfer is a major step." Replies Darby, "Any sail would work. It's not yet known which is best."
Incredibly, Darby and Schweitzer never heard of one another's inventions until late in 1976, when some editors from a German boardsailing magazine visited Darby and revealed that his idea had been duplicated and patented. Darby went to Washington to examine the patent, and was "startled," he says, to find that its descriptions were "almost identical" to his own. He brought the similarities to the attention of patent officials, but they were apparently unimpressed. He returned to Wilkes-Barre, where he continues to turn out custom sailboards. (Because Darby incorporates a kite-sail rig of his own devising, Windsurfing doesn't consider his cottage industry an infringement on its patent.)
Early in 1977, Darby was hustled off to Germany by the magazine editors. He was brought to a party held in connection with a boat show where a number of sailboards were being displayed. There he showed a movie describing his invention, and answered questions about it. One of the guests was Windsurfing International. Darby's home movie didn't make it to the big screen, but the world now knew that severely limiting prior art existed to confound Windsurfing's patent.
Unfortunately for Windsurfing, its ignorance of Darby's craft had left many of its patent claims too broadly stated. The claims described Darby's invention as well as Windsurfing's. The claims of a patent are purposely constructed to range from the broadest definition of the invention to the narrowest, turn-of-the-screw details. The problem is to distinguish the invention from the art that preceded it, but not make the descriptions so restrictive that a competitive product or process can move in right next door. Though Windsurfing's claims might be marginally acceptable within a patent, they could prove unenforceable in a court case. Windsurfing's patent, Schweitzer realized, needed to be modified. He decided to apply for a reissued patent, in which the discovered flaws of an original patent may be corrected.
This tactic became all the more urgent when an American hopeful in the field discovered the Popular Science article. The prospective company, Sailrider Inc., of Providence, R.I., had inquired about obtaining a license. Sailrider says it never heard back. According to Windsurfing, the inquiry was dismissed because "their business proposal was preposterous." Windsurfing principals now suspect Sailrider's inquiry was a gambit to gain an inside look at Windsurfing's manufacturing techniques. Sailrider denies the allegation, pointing out that the board they later were to market was made by a totally different process.
Sailrider's first board appeared in 1977. Three years later, on September 17, 1980, Windsurfing slapped a suit on the fast-growing company -- its first against a manufacturer or distributor in the United States. For its part, Sailrider sought the advice of a patent attorney. "We investigated the patent carefully," recalls Sailrider's founder and president, James Walter. "We believed it wasn't enforceable. We felt then and we feel now that it's not viable," says Walter. "They read right on the Darby teachings." In other words, Sailrider believed Darby had already fully invented what Windsurfing was claiming in its patent.
Predictably, Sailrider was a protestor when, in May 1978, Windsurfing filed for a reissued patent. (Under recent changes in patent proceedings, applications for reissued patents are published and opponents to the reissue may file briefs.) Though it sought to revise many of the original claims, Windsurfing also wanted to preserve at least one claim from the original patent. This was critical to Windsurfing's attempts to collect maximum damages, because if all the original claims were denied, then no boards built or sold before the reissued patent would be subject to infringement suits. On this point stood hundreds of thousands of dollars in possible damages. And though Schweitzer maintains that even a completely revised patent would insure dominance, Windsurfing's control of the American market would probably erode sharply. Windsurfing has carefully cultivated that market with proprietary boardsailing schools, special clothing, and other related products.
On February 29, 1980, the patent examiner handed down his decision: All of the patent's original claims were rejected, along with all of the revised ones. The most significant rejection was that of Claim 11 of the original patent -- by now as crucial to sailboard marketers as the 21st Amendment to the Constitution was to distillers. Claim 11 sets forth the uniqueness of Windsurfing's combination of a boom on each side of the sail (the "wishbone") with the universal joint that allows the mast to be moved to any direction, steering the board. Though there was prior art touching on each element separately, Claim 11 asserts that the Windsurfer combined both elements for the first time. Claim 11 was the key to the enforceability of the original 1970 patent.
Windsurfing appealed the Patent Office's ruling to the Patent Office Board of Appeals. Meanwhile, competitors smelled blood. In 1980, Windsurfing hurled two suits at giant AMF Inc., which had entered the promising field through its Alcort division by importing boards without a license. One suit named AMF itself in New York, while the other was against an AMF board dealer in Dallas. (Patent law holds that anyone involved in making, selling, or using the patented article is subject to an infringement suit. For example, the dealer can be sued for selling, the supplier of raw materials for contributory infringement. Even the end user can be considered an infringer, simply by using the article. In this chain, the "deep pocket" theory of litigation holds: Go after the entity with the most money.)
At the New York Boat Show in January 1981, no fewer than 12 new putative infringers cheekily showed their sailboards. When the Coliseum opened, one of the first through the doors was a deputized messenger, who presented each exhibitor not already being sued by Windsurfing with a document announcing that it was about to be. These brought the number of defendants named by Windsurfing in patent infringement lawsuits in the U.S. to 20.
On March 6, 1981, the Patent Office Board of Appeals heard Windsurfing's case, and agreed that Claim 11, as well as 10 other claims, should be allowed. The company's head was now above water, and though the Patent Office's response to the Appeal Board's recommendations was still to come, Windsurfing struck out for share. It was further buoyed by a substantial award of damages handed down by a Munich court against one of Windsurfing's most persistent German antagonists. The sum was $748,800, a figure that ought to have put fear in the hearts of other would-be infringers. In a June 1981, news release, the company threatened: "Windsurfing International again restates its original position that it will vigorously pursue the assertion of its patent rights on the sailboard by seeking an injunction, treble damages, and attorneys' fees against all infringers." As if to flex its muscle, it listed the 20 firms named in U.S. infringement suits.
Windsurfing also placed advertisements in trade journals, repeating its challenge to infringers. ML Imports Inc. of Gloucester, Mass., picked up the challenge. It had just begun importing the Windglider, manufactured by a German concern, Windglider-Fred Ostermann GmbH. Ostermann was a special irritant to Windsurfing, since the Windglider had been selected as a onedesign class for the 1984 Summer Olympics in Los Angeles (see box, Page 57).
ML's attorneys dispatched a gruff letter to the publishers of the trade papers, requesting that they "cease and desist" from printing a Windsurfing licensee's ad. They pointed out that a request for a rehearing had been filed by Sailrider (but they failed to note it had been denied) and that the decision of the Board of Appeals had not been accepted or rejected by the Patent Office. "Please be advised," ML's lawyers wrote, "that at the present time anyone can 'legally' sell their products in the United States in the accepted manner of commerce and need not fear reprisals, penalties, damage, nor other punitive or criminal sanctions from anyone, including but not limited, to Hoyle Schweitzer, Windsurfer [sic] International...."
In point of patent law, however, this position was incorrect. Throughout the back-and-forth bickering with the Patent Office and despite the discovery of prior art that Windsurfing's competitors believed would render the patent unenforceable in court, the original patent technically remained in force. If Windsurfing had cause to bring action under it, it could. The company, however, was waiting for the patent to be reissued, and requested and won stays of six actions it had placed before the court.
Then, in June 1981, the Patent Office rejected many of the Appeals Board recommendations. Claim II was banished again. The ruling cited additional prior art unearthed by Sailrider -- an article in a 1935 sailing magazine that, Sailrider argued, fully anticipated the claim. Schweitzer says he was "surprised." He complained, "It's a Catch 22! The most unbelievable farce in the whole world."
But the final act of the farce has yet to be played. Windsurfing's attorneys wrote a petition to the Patent Office questioning the examiner's "rightful ability to act" and asking the commissioner to rescind the action and place the matter before the Board of Appeals again. The petition succeeded: The claims of the new patent, and with them Claim 11, were scheduled for an appeals hearing early in 1982, with a decision to be handed down a few weeks later. Which is where the patent rests today.
Little else is at rest, however. Windsurfing continues to demand its rights -- in some instances overdemanding them. When Windsurfing went after an allegedly offending dealer, claiming that it marketed infringing boards, AMF countersued, alleging the patent to be invalid, and got Windsurfing to agree out of court not to press its accusations without fully disclosing that the Patent Office had rejected claims contained in the original patent.
AMF also succeeded in "unstaying" the suit against one of its dealers in Dallas. "We told the judge, 'Windsurfing's been going after a reissued patent for three years," says AMF's patent attorney, "'and they're back a second time on appeals. That's long enough." The judge agreed. The Texas hearing will be the first court test in the United States of the enforceability of Windsurfing's patent -- in whatever form it has it at the time. Recognizing the suit's importance, AMF has intervened and is a party in the lawsuit. Its attorney feels Windsurfing is "making as much smoke as possible before the roof falls in." He's convinced that the patent won't hold up, even if Claim 11 is ultimately allowed. "What to the Patent Office is one thing," he notes, "to a court is another. The only difference between Darby and Schweitzer is the manner of rigging. No one can stop AMF or anyone else from using Darby's rigging or Darby's sail, if it comes to that."
And if AMF should lose? Then, AMF's patent attorney says, the company will probably go to another type of rig, perhaps a Darby-like sail. But, he adds, "I don't expect to lose." One other large company, Coleman Co. of Wichita, Kans., has already decided not to chance a ruling against the alleged infringers. "It was the cleanest, clearest, most businesslike way," said a spokesperson. It chose to pay Windsurfing for the rights to the product, payments that reportedly include an up-front licensing fee and some 7 1/2% royalties against wholesale sales. Coleman says it wanted to avoid the risk of setting up dealerships without the assurance it was in business to stay. There are now eight U.S. licensees.
If Windsurfing carries the day at the Patent Office and Claim 11 is reinstated, its potential ability to collect large damages will be greatly improved. At that point, its attorneys predict, many smaller companies would throw in the towel and withdraw from business. But even if Windsurfing should lose Claim 11, according to Schweitzer, the Patent Office has promised to grant a reissued patent on at least some of the revised claims. Though damages from suits now pending would be restricted, Schweitzer says the reissued patent would still be enforceable and his company would continue to dog infringers. "All sailboards as we now know them infringe," insists Schweitzer, "even on the new claims."
The first trial to determine which way the wind is blowing will be Windsurfing International Inc. v. Inland Boats Inc. (the AMF dealer) in Dallas next month. But that is expected to occur before the final Patent Office decision is published, and the last word will not have been spoken. Equally important, perhaps, will be Windsurfing's case against Sailrider, now stayed in New York. Presumably, the final patent issuance will have been made by then. Should Windsurfing lose, it will have done so to its major competitor, an aggressive company that has already established some 400 dealerships, about as many as Windsurfing, with a four-year growth rate of nearly 2,000%.
The most complex problem of all is: What will a judge do if he finds in favor of Windsurfing? For example, even if the alleged infringers are judged to be infringers in fact, a court possibly could rule that they have been in business so long that they should be allowed to continue, thus undermining the protection of the patent. If Claim 11 is allowed, it may rule that they must pay so large a settlement that they will be forced out of business.
Until the patent dispute is settled -- and though it's gone on for a decade it may take nearly another to be fully resolved -- no one knows who the gainers and losers will be. So far, the only clear winners are the lawyers.