A Prescott souvenir maker has filed a federal lawsuit accusing an Illinois firm of copying its products and claiming they are made in the United States when they are actually made in China.
LaserGifts, owned by Orion Photo Industries Inc. in Prescott, is seeking at least $12.7 million in damages for trademark infringement and unfair competition from Heartwood Creation Inc. of Rockford, Ill., according to the lawsuit filed June 24 in U.S. District Court in Phoenix.
Both wholesalers are in a niche of about a dozen U.S. manufacturers that make personalized souvenirs, such as key chains with a landscape photograph on one side and a common name on the other side, for sale at national parks and other tourist spots.
In 2004, owners of the Prescott company began noticing that Heartwood and its subsidiary Wayne Carver Woodworking were producing items similar to its offerings, including all of the solar-powered souvenirs the Prescott company invented, and selling them at lower prices, the suit said. It names three individuals, including two who used to sell products for LaserGifts, and alleges they leaked confidential information to the competitor.
"We consider what they are doing to be piracy," said Dave Mudrick, owner of Orion and LaserGifts. "They kind of stole the whole look of our company."
Heartwood also claimed in advertising and product labels that its products are "proudly made in the United States," according to the lawsuit. The Heartwood Creations Web site says the company "has established itself as a group of talented craftspeople from America's heartland."
The lawsuit includes some bills of lading showing that a number of products from Heartwood Creations were made and imported from China.
In one case the Illinois firm sent a copy of one of the Prescott company's key chain ornaments and sent it to a Chinese manufacturer and asked how much it would cost to make the same product, the suit said. Warren Slabaugh, president of Heartwood, said he would make no comment because he had not seen the lawsuit.
Luke Santangelo, a Ft. Collins, Colo., attorney representing Orion, said federal law requires products made outside of the U.S. to be labeled as such, unless a small part of the product is made abroad. The law can be enforced by the Bureau of Immigration and Customs Enforcement, Federal Trade Commission and by companies suing other firms under federal laws that forbid unfair competition.
Santangelo said the problem of mislabeling products is "probably bigger than ordinarily meets the eye" because of the difficulties and practicalities of enforcing the rules.
Mudrick said his base products are made in China and then personalized in Prescott and are labeled as coming from China.
The company makes pens, key chain ornaments, pocket knives, magnets and picture frames as well as solar-powered key chains that feature a screen that flashes a name, such as SeaWorld or Zion National Park.
Mudrick said it hurts his business when a company with products made abroad advertises them as U.S.-made offerings because some retailers, such as the National Park Service, favor American-made products.
He and his wife started making souvenirs as a hobby in his basement in Lakewood, Colo., before they moved to Prescott in 1994 to create a fulltime business. They now have about 35 fulltime employees and up to 100 part time workers, depending on the season, he said. Source: azcentral.com
