Editor's note: This tour of small businesses across the country highlights the imagination, diversity, and resilience of American enterprise.
Dan Brown cried when the verdict came down. In a downtown Chicago courthouse, a federal jury had just validated Brown's patent on the Bionic Wrench, a spanner that grips like pliers with the squeeze of a handle. It also ruled that Sears and its vendor, Apex Tool Group, had willfully infringed on that patent.
Afterward, Brown's lawyers spoke to the jurors. "They said they could tell it was about principle for him because when he [broke down] no damage number had been read yet," says Sarah Spires, a litigation partner at the law firm Skiermont Derby, in Dallas. "He could have been awarded a dollar. It was just that, at that point, he felt he had justice."
Brown no longer feels that way. "They call this the justice system," he says. "They should call it the injustice system. The fact that I am here now is crazy."
In May 2017, Loggerhead Tools, the Chicago-based business of which Brown is founder, won $6 million in a patent infringement suit against its erstwhile customer Sears and Sears's vendor Apex. Apex manuf actures the Max Axess Wrench--which, like the Bionic Wrench, grips like pliers--in China. With enhanced damages Loggerhead's award might have tripled. "It was a fantastic day for us. A real David-and-Goliath thing," says Brown, who invested well over $100,000 out-of-pocket and endless hours pursuing his claim.
Eighteen months later, Goliath--albeit a wounded Goliath facing bankruptcy--is back on top. As part of the protracted legal battle, the judge ordered a new trial and, in a summary judgment in July, decided the case in favor of the defendants. The judge did not overturn the ruling on the patent's validity, but that could be challenged again on appeal. "If our patents were invalidated, we would be totally naked," Brown says. "Anybody can make a Bionic Wrench, and we would have no recourse."
The decision blindsided him. For Brown, a prolific inventor and college professor, the Bionic Wrench was the embodiment of his detailed design philosophy and staunch belief in American manufacturing. He's appealing, but he now fears for the fate of a company for which he risked his retirement savings and took out a new mortgage.
A matter of principle.
The case has taken a toll on Brown's business. Loggerhead, which employs five people, has sold roughly $60 million worth of wrenches since its launch in 2005. Today revenues are half what they were at the company's peak, and the lawsuit makes winning new accounts harder. "It's like doing business with a black cloud over your head," Brown says.
More painful, the patent battle is also an assault on Brown's most fervent beliefs. First and foremost he is committed to U.S. manufacturing, a stand that has cost him business. "I use American steel, American-made components, and American labor," he says. "But it has been a constant struggle to keep it that way."
Brown's other beliefs are more abstract. An entrepreneur and inventor with the soul of an academic, he has spent decades cultivating an exhaustive philosophy of competitive advantage, embodied in a process he calls Differentiation by Design. Brown originally created the wrench as the basis for a case study on that process. He wanted a product whose design, manufacture, commercialization, and protection he could document, step by step, so that he and others could teach it.
A meticulous, intense man whose curriculum vitae runs to 13 single-spaced pages---including 34 patents--Brown incorporated the Bionic Wrench case into a thesis that earned him a doctorate from the University of Coventry in 2017. He now teaches Differentiation by Design at Northwestern University, where he is a professor in the school of engineering.
"The only opportunity is to design something in a white space that creates value and competitive advantage and then protect it," Brown says. "That has not changed one iota in my mind."
Inventor for hire.
Brown's battle is playing out not far from where he grew up, on Chicago's South Side. His father worked in the stockyards. His mother was a nurse. Brown got his first job washing dishes at 13. On neighborhood garbage nights the family would drive around looking for TV tubes and copper wire to sell. They'd bring home discarded bikes to fix up.
Brown's father wanted him to become a plumber, but his first employer made polyurethane foam. He moved to a startup; then to a company that made kits for spraying foam insulation. While there, Brown developed a new type of foam dispenser, which his employer patented. He continued to update the product, spawning more patents in the process. But Brown had never gained much financially from the intellectual property he helped create. So at his next employer, "I told the owner that if I created any patents I wanted half of the benefits the company gets."
With the income from those patents Brown, in 1991, launched Consul-Tech, a product-development consulting firm. Winning repeat business was easy, but new business was tough. He could show off his growing patent portfolio but not the products created from those new technologies. Although his products won several awards, "I couldn't talk about it because I could not say I had developed that product."
Brown needed a showpiece of his own to dazzle prospects. He also wanted to create a case study documenting the Differentiation by Design process he'd been refining. For that he needed a product, "something people are willing to pay for, that solves a problem everybody recognizes," Brown says.
A beautiful tool.
In spring of 2002, Brown asked his teenage son to change over the family's mower from leaf-mulching to lawn-cutting mode. The son wanted to use pliers because the parts were covered in gunk and hard to grip. Brown objected that pliers would strip the nuts and bolts. "I thought, wouldn't it be great to have a tool that performs like a wrench but can grip like a pliers?" says Brown.
His solution was the Bionic Wrench, based on the opening and closing mechanism of an SLR camera shutter. The adjustable tool has two handles like a pair of pliers rather than one, like a wrench. It grips a bolt on all six flat sides, removing the strain on the corners to prevent stripping. It also multiplies the hand's gripping force to make tightening and loosening easier.
The Bionic Wrench debuted in 2005 at the National Hardware Show in Las Vegas. When the best-in-show awards were announced, Brown's wrench walked away with Popular Mechanics' Product of the Year. It scooped up additional honors in national and international design competitions, producing a landslide of retail inquiries. Potential customers loved the product's novelty and design. Then came the sticker shock.
Loggerhead's initial suggested retail price was $32.95: more than twice as much as traditional adjustable wrenches. (Today the Bionic Wrench is priced between $19.95 and $24.95. Many regular wrenches sell for under $10.) Brown was pressured to lower the price, which would mean outsourcing. "I said, 'This is an American-made product,'" he says. "I refused."
So Loggerhead sold through QVC, Amazon, and its own website, as well as a few retail clients, such as the hardware cooperatives Ace and True Value. Dan Harris, who owns two Ace Hardware stores in the Chicago suburbs, has carried the Bionic Wrench since its introduction, and says its higher price hasn't affected sales. "The fact that it's designed and made in the USA is a very strong reason for people to buy it," he says.
The Sears honeymoon.
For a few years, Loggerhead grew steadily. But the recession "was a punch in the gut to us," says Brown. The business had been investing in several product iterations and had introduced Bit Dr, an ergonomic screwdriver with 21 heads. For all the products, Brown insisted on American-made tooling, which was expensive. The company had built up inventory that no longer moved. Retailers were glacially slow to pay.
Loggerhead struggled for a year or two. Then in 2009, Sears asked to test the wrench. It ordered 15,000 units that year and 70,000 the next. In 2011, Sears ordered 300,000 wrenches, which sold out before Christmas. Brown spent about $500,000 on television ads driving customers to Sears, which he says at one point asked to up its order to a million wrenches. Still, he adds, throughout the conversations, Sears kept up the drumbeat: "We can sell so much more if you go to China."
Loggerhead stopped pursuing new clients to give Sears near-exclusivity and began setting up a U.S. supply chain to handle the increased volume. So Brown was unnerved when, in June 2012, Sears suddenly stopped communicating. "Radio silence," he says.
The Sears divorce.
In the fall of 2012, Brown received an email from a consumer who was a fan of the Bionic Wrench. "It said, 'Congratulations on getting your tool into Craftsman. But I am upset that you went to China with it,'" Brown says. "I emailed him back and said, 'Can you explain that?'"
Brown's correspondent reported seeing what he assumed was the Bionic Wrench in a Christmas display at Sears. Brown asked the man to buy one and overnight it. It was labeled Craftsman, the tool line originally owned by Sears. Also: made in China.
Brown told his story to The New York Times, generating enough media attention to interest a team of lawyers willing to work on contingency. For five years, his lawsuit wound molasses-slow through the system. The original judge died. Three months later, Loggerhead won at trial. Sears and Apex requested a new trial on the damages.
The first judge on the case had defined the patent's claims on which the jury would rule. The judge who took over after his death let those claims stand but later decided she disagreed with them. In December, she granted a new trial based on her own construction of the claims. Both parties requested a summary judgment instead. In July the judge found in favor of Sears and Apex.
(Sears responded to an interview request with a statement: "Sears is pleased with the Court's decision. We look forward to next steps and putting this case behind us." Apex also responded with a statement: "Apex Tool Group is pleased with the district court's ruling, holding that our product does not infringe Loggerhead's patent as a matter of law. We expect that this non-infringement judgment will be upheld on appeal.")
Brown says he had always assumed the case would go to appeal. But he never thought Loggerhead would be the one appealing. "It's like a Kafka novel," he says.
An uncertain future.
Spires expects it will be another year before the appeals court rules. Sears' bankruptcy filing will not affect the outcome, she explains, because an indemnity agreement exists between Sears and Apex, so Apex is the one liable. Meanwhile, Brown and his son, Loggerhead's director of business development, prospect for new customers and try to pay down the company's debt.
Brown had envisioned churning out a whole family of innovative tools, and he has several ideas for new products. But he can't afford the American-made tooling. He says he is trying to stay positive as the wheels of justice grind. He talks about the prospect of landing a big Christmas promotion. He loves his teaching job.
At Northwestern, Brown's students often question him about the case. "I say to them that if you don't fight, you lose by default," he says. "We are going to continue to fight."