For the price of a mold, market share was lost. That pretty much sums up what happened to Georgena Terry, who learned the hard way why small entrepreneurs probably need to think twice before doing business in Asia. Terry claims her Taiwanese manufacturer, Velo Enterprise Co. Ltd., sold her patented, ``upscale'' bicycle saddle to third parties without her permission. Now she is left with a lawsuit on her hands.
Her company, Terry Precision Bicycles for Women Inc. of Macedon, N.Y., is a 10-year-old business. Velo's owner approach-ed Terry about manufacturing the saddle, telling Terry that ``we women have to work together,'' Terry said in a telephone interview.
``At the time, I wasn't concerned about intellectual property theft issues,'' she said. ``[The manufacturer] was a woman, making women's products, and I trusted her.''
Although Terry was not excited about having the saddle manufactured half-way around the world, she felt she did not have many options. The only two makers of bicycle saddles in the United States were mass merchandisers, and Terry needed a custom manufacturer.
Secondly, the base of the bicycle saddle is injection molded and the cost of the mold was more than Terry wanted to pay. Velo already was making bicycle saddles and had a mold base from which it could make Terry's special saddle.
For three years things went well. Then, in 1994, Terry attended a trade show and found a saddle with her name on it at a competitor's booth.
Terry said that when confronted, her manufacturer admitted to shipping 4,000 of the saddles to another distributor.
``The woman apparently saw no problem with selling the `Terry' saddle to my competitors,'' Terry said. ``In [the manufacturer's] eyes, she saw it as a way to expand my market.''
Her competitors then resold the saddles for less money than Terry charged.
In a letter written in September 1994 to Terry, Velo acknowledged that it had sold the Terry saddles to third parties, including Terry's competitors, without her permission, according to Chris Di-Pasquale, a lawyer with Harris, Beach & Wilcox based in Rochester, N.Y.
``Velo was basically looking for Terry's approval to sell the saddle to other distributors, including [Terry's] competition, and admitted that they did indeed owe royalties to Terry for saddles sold to these third parties,'' DiPasquale said.
A lawyer for Velo, contacted last week, declined to comment, citing pending litigation.
In the letter, Velo agreed to keep good records and pay royalties to Terry. However, Terry wrote several letters advising Velo that they were not allowed to sell saddles with Terry's name on them to any third parties without her permission.
Recently, Velo filed a suit against Terry in New York Supreme Court alleging nonpayment of finished goods delivered. DiPasquale said Terry has answered the complaint against the company and submitted counterclaims.
``We've defended the claim on the basis that Terry is entitled to, at the least, unpaid royalties for the sale of Terry products, and any amount Terry owes [for finished goods] should be reduced by the amount of the unpaid royalties,'' DiPasquale said.
DiPasquale said the counterclaim alleges Terry's revenues decreased in excess of $150,000 due to business interference on the part of Velo. The amount in dispute on Velo's claim is about $136,000.
Terry since has moved manufacturing of the saddle to Italy, where she pays more for the saddles.
``I went to Italy with a manufacturing agreement in hand and they were insulted that I would question their integrity,'' Terry said. ``Now we're doing business on a handshake and a smile.''
``In the end, I think we'll come out on top of this,'' she said.