When Matthew and Mark McLachlan started crowdfunding for their product, the Fidget Cube, in August 2016, no one could have predicted its rapid success. The brothers, collectively known as Antsy Labs, had reached their $15,000 goal by the end of day one and raised a total of $6,465,690, making the Cube one of the top 10 most funded Kickstarter projects ever. They describe the product as a ‘high-quality desk toy designed to help you focus’. Each of its sides has something different to fidget with, allowing you to roll, slide, click, and spin its metal pieces and rubber buttons. 154,926 people backed the project and the first set of backers have been waiting to receive their Fidget Cubes since before Christmas. To their disappointment, they heard that the launch was delayed due to ‘issues with quality’; in the meantime, thousands of counterfeits flooded the market – before the genuine product was even shipped. According to an investigation carried out by the World Trademark Review, The Fidget Cube case is only the tip of the iceberg and Kickstarter has become a ‘treasure trove of product designs’ for counterfeiters.
The danger of China’s copycats
Although the first, genuine Fidget Cubes have since been shipped, fakes continue to appear on Alibaba, Amazon, eBay and even 3D printing marketplaces; some listings offer a wider variety of colours and more functionalities than the original cube, usually for a fraction of the price. In a statement, Antsy Labs warned their backers of scams and emphasised the superior quality of the genuine product: ‘there is a right way to test and manufacture a product and this process can’t be rushed, especially when it comes to how important the tactile ‘feel’ is’. While they are counting on their customers’ loyalty and patience, they admitted that the issue of counterfeits caused them ‘anxiety’ and they have probably suffered a significant loss of potential revenue.
The Fidget Cube appears to be the most heavily counterfeited project launched on a crowdfunding platform, but it is by far not the only one. Copies of STIKBOX, a smartphone case that unfolds into a selfie stick, appeared on AliExpress only a week after the project hit Kickstarter; the first counterfeits of the Pressy, a product for Android devices, also ended up shipping in the same month as the genuine version. The World Trademark Review’s investigation found several other examples of fake products based on successful Kickstarter and Indiegogo projects, including a smartphone controlled paper plane, ‘cat ear’ headphones and a cat-shaped fried egg mould.
The entrepreneurs behind these inventions became victims of China’s copycats. Most high-tech manufacturing takes place in China and the skill and know-how of the country’s factories is unparalleled. They can easily spot a design idea on Kickstarter, figure out how it is made and start churning out counterfeits. In other cases, the factory trusted to manufacture the product produces extra units and sells them on for additional profit. If brand owners have not made the necessary steps to protect their creations, fraudsters can operate in a legal vacuum.
Crucial steps for crowdfunding entrepreneurs
Unlike large companies with expert brand protection teams, start-up founders often lack the resources and know-how to protect their intellectual property. If they enter the world of crowdfunding, where a product can go from unknown to world famous overnight, they are especially at risk of having their IP infringed. In their haste to rush to the market quickly, many fail to think about protecting their design. As patents are only granted if an invention is novel (and has not been disclosed to third parties), it is too late to file one after a product goes online.
A crucial first step for brand owners seeking to reduce the risk of getting copied is to file patents and trademarks that are valid in the countries one hopes to sell – this should be done before the product first appears online. The creators of the Fidget Cube were in a better position than most entrepreneurs, as they had at least filed for a trademark for FIDGET CUBE at the United States Patent and Trademark Office (USPTO) in August 2016. However, it does not guarantee trademark protection anywhere else (in fact, a trademark for the term was later filed in the UK by a third party).
Enforcing IP in China is notoriously difficult. However, signing so-called “NNN agreements” with factories before revealing any intellectual property increases entrepreneurs’ chances of protecting their product. These contracts prevent partner factories from using the intellectual property themselves (“non-use”), sharing it with others (“non-disclosure”), or signing a partnership and then selling extra units on their own (“non-circumvention”).
The message is clear: investing in early IP advice and protection is crucial for any entrepreneur considering using a crowdfunding platform.