Reprinted from THE WALL STREET JOURNAL

TUESDAY, AUGUST 27, 1996  Dow Jones & Company, Inc. All Rights Reserved.


Inventors, Heed Tale of Flip-Phone Flap

By Quentin Hardy, Staff Reporter of The Wall Street Journal
Garry Haltof thinks electronics giant Motorola Inc. has flipped out.
Mr. Haltof of Rochester, N.Y., was dreaming of riches two years ago. He had created a cellular-telephone holder he called the "Flip Clip," and Motorola, the world's biggest cellular-phone maker, was talking to him about possible deals.
Now Motorola not only says it developed the product but also is trying to squash Mr. Haltof's trademark on the name, claiming that when it comes to cell phones, Motorola owns the word "flip."
The flip flap could take years to straighten out. Mr. Haltof, who gave up his work as a design consultant and took out a home-equity loan to pursue his Flip Clip vision, calls the situation tragic. "I'm going to be driven out of business and it's not right," he says.
His story is a cautionary tale for entrepreneurs contemplating deals with big companies. According to Mr. Haltof, Motorola's accessories division was initially keen on the Flip Clip. The plastic cradle is designed to hold the cellular handsets with flip-down mouthpieces advertised as "flip phones" -- particularly the kind made by Motorola -- inside a car. But last year, Motorola asserted that engineers elsewhere in the company had already drawn up a similar phone cradle, Mr. Haltof says.
"Their general patent counsel called me after I'd showed (the product) around," says Mr. Haltof, who claims that talks had just culminated in Motorola requesting a price for 100,000 Flip Clips. "'Don't talk to us anymore,' (the lawyer) said, 'we think we may have invented your product."'
Motorola, based in Schaumburg, Ill., declines to comment on the specifics of what it sees as a potential patent dispute but notes that it gets hundreds of product ideas from outside contractors every year. Each company must agree in writing that Motorola doesn't necessarily think the idea is original and won't necessarily buy it. Haltof, too, signed the agreement.*
Indeed, Motorola has tens of thousands of engineers with notebooks full of drawings for products they've dreamed up. Product managers, such as the ones Mr. Haltof contacted, don't know a fraction of what is in those books or whether an engineer's doodle might eventually be a product.
Soon after Motorola spurned him, Mr. Haltof applied for the trademark* "Flip Clip" for the product, which once appeared in this newspaper's "Form and Function" column. Motorola contested Mr. Haltof's application, asserting that the word "flip" is closely tied to Motorola's flip phones.
Mr. Haltof's company, Haltof Product Design Inc., has exactly one employee -- him. Motorola has 142,000. But the corporate Goliath has one big disadvantage compared with Mr. Haltof. Motorola earlier this year lost its own trademark application for "flip phone."
The U.S. Patent and Trademark Office determined in April that the word was in common usage among several cell-phone makers, such as Sweden's AB LM Ericsson, which makes a similar phone. Motorola is appealing the decision.
Meanwhile, the trademark office did clear "Flip Clip" for Mr. Haltof, apparently deciding that this was a unique term. Motorola filed in opposition to that trademark decision, and Mr. Haltof's lawyer is now battling it out with Motorola's lawyers.
Motorola maintains that Mr. Haltof's trademark is invalid because the Flip Clip gets its identity from Motorola's marketing of flip phones. "The term 'flip' is identified with products from Motorola," says Jonathan Meyer, corporate counsel for Motorola.
Mr. Haltof says Motorola has offered him $5,000 for the rights to the term "Flip Clip." (The company won't comment.) Not enough, he says. "I've already spent $30,000 developing this," he says. "If they added two zeros (to the offer), we'd be talking."
The worst part of it all, Mr. Haltof says, is that he feels his dealings with the company were "by the numbers." The small print on the Flip Clip's instructions even reads, in both English and Spanish, "Flip Phone and Motorola are trademarks of Motorola Inc." Motorola was applying for the trademark at the time, Mr. Haltof explains.
"I was being polite," Mr. Haltof says. "Of course, I printed that long before Motorola came after me."

*(editors note: Haltof had applications pending for two patents and a Flip-Clip trademark before showing his design to Motorola)