The Heartbreaking Tale of the Company Behind the World's Greatest Wrench
Loggerhead Tools exulted over its $6 million judgment against Sears and a
supplier for copying its Bionic Wrench. Now that decision is gone and
the company's fate is back in flux.
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 manufactures 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."
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