Everett mirror maker says knock-offs have cost it millions

EVERETT — Electric Mirror is fighting to protect manufacturing jobs in Everett, where it is based.

The family-owned business makes tech-infused mirrors for high-end buyers, such as luxury hotels. After helping create the niche market, the company says it has lost millions of dollars in sales to firms importing knockoffs made overseas.

Electric Mirror has filed complaints against five companies with the U.S. International Trade Commission. Despite its general obscurity, the federal court can order patent-infringing imports be seized at the border. The company also filed for damages in U.S. District Courts in New York and Washington state.

The company is “still growing, but I can say that the lost orders have cost jobs and hurt wages,” President and Chief Executive Officer Jim Mischel Jr. said.

Electric Mirror told potential customers that competitors were piggybacking on its innovations and selling knockoffs. “We’ve found a lot of people ignored that,” he said.

The Mischel family started making mirrors that did not fog in 1997 in Lynnwood. They struggled to find buyers at first and barely survived the first few years. They helped launch a new market among high-end hotels looking to offer distinctive amenities.

Since then, the company has turned mirrors into interactive devices that can play music and video, among other tricks. It has more than 40 patents. In 2016, the company had about $50 million in sales.

For the companies named in the complaint, their “business model is duplicating things in China and bringing them in,” Mischel said.

A few years ago, when it was clear Electric Mirror needed more space, most people he asked recommended moving manufacturing overseas, Mischel said. “From a business standpoint, we could make more money manufacturing our products in China.”

But Electric Mirror has always been more than just a business to the Mischels, a tightknit, low-key and deeply religious family.

“Part of our values is investing in our local community and creating American jobs,” Jim Mischel Jr. said.

In 2016, the company opened a new production plant in Everett, where most of its 385 employees work.

While more than half of Electric Mirror’s sales are in North America, it sells around the world and has sales offices in London, Dubai, Hong Kong and Miami, serving Central and Latin America. In 2016, the White House recognized the company for its success selling U.S.-made goods abroad.

Early last year, the company began investigating the companies named in the complaint. Electric Mirror employees checked into hotels that had bought from the competition and photographed the alleged knockoffs.

The company and its attorneys with Capital IP Law Group in Washington, D.C., have spent more than a year building the case, which was filed in March.

Proving that a competitor is stealing a patented design can be difficult, said Aarti Shah, an intellectual property attorney in Washington, D.C. Prior to joining the Mintz Levin law firm, she worked in the International Trade Commission’s Unfair Import Investigations Office.

Any significant difference in design can sink a claim of patent infringement, so the commission only receives a few dozen complaints such as the one filed by Electric Mirror, she said.

Most intellectual property litigation is filed in U.S. District Court. But a company can wait years before its case is heard, and by then, the market might have moved on, Shah said.

The commission moves much faster. First, the commission rejects or accepts a case. That vote usually comes within a month after a complaint is filed. At that point, the clock is ticking. There is a hearing in about nine months and a judge issues a decision about three months later. Then the commission reviews it. The whole process takes about 16 months.

To win with the commission, “you have to prove that the goods are imported; you have to prove that there is infringement; and you have to prove that you have a domestic industry,” meaning you have invested money and you employ people in the U.S., she said.

If Electric Mirror wins, the commission — unlike U.S. District Court — can issue an exclusion order, banning the infringing mirrors from entering the country. Only about a dozen such orders are issued each year.

“If you win, the resources of the U.S. government are used to protect your intellectual property rights,” Shah said.

While few people have heard of the U.S. International Trade Commission, huge sums of money often are at stake.

But the commission “can’t do anything about a competitor selling overseas,” she said.

Companies have to file patents wherever they are doing business. How vigorously those are protected varies by country, though.

Despite the high bar, Jim Mischel Jr., a former patent lawyer himself, said he is confident about Electric Mirror’s chances.

One company tentatively has agreed to settle. Electric Mirror declined to give details about the terms. None of the companies named in the court filings responded to emails requesting comment.

“This is about our commitment to our community and employees,” Mischel said.

“I try not to take things too personally, but when it affects the people I work with, yeah, it becomes personal,” he said. “They are counting on me doing my job right.”

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.