I had the opportunity to speak with Scott Jordan, the Technology Enabled Clothing entrepreneur who appeared on last Friday's Shark Tank. This is the second in a series of three posts based on that discussion.
Scott Jordan's plan is to license his patented Technology Enabled Clothing system- he would get money from clothing manufacturers who use his system. In explaining his idea of licensing TEC, Scott made an analogy to Gore Tex– the nearly ubiquitous waterproof outerwear fabric. Gore Tex is a privately held company that employs around 9500 people worldwide-200 of which work at the company HQ near Newark, Delaware. Gore Tex claims $3 Billion in annual sales- that's BILLION with a “B!” While Gore Tex does sell its own line of outerwear, they license their technology to outerwear manufacturers world-wide; they make more money from licensing than they do from selling their own apparel. Licensing the technology comes with a commitment by licensees to uphold certain standards in their manufacturing processes, like using heavy-duty zippers, taping all seams, standards for stitching, etc. This keeps the value of the brand strong as Gore Tex is associated with quality standards. Even thought their patent is expired, the strength of the brand and the quality of the product have kept the business strong, profitable and innovative since Gore Tex was invented back in 1976. Scott envisions a similar type of licensing for his TEC– companies that incorporate the technology into their outerwear would need to adhere to similar quality standards and there would be an identifying TEC tag on all clothing using the technology. Based on Gore Tex's numbers, the sharks really could have missed out on a billion dollar idea!
The validity of Scott's business aside, he's taking a lot of heat for his behavior on the show. People are saying he came off as a real jerk. When I said to him that he should expect people to come down hard on a lawyer, his response was an emphatic “absolutely right!” As a lawyer, he's accepted the fact that not everyone will like him; after all lawyers are pretty easy fodder for jokes and ridicule and I certainly have poked fun at the profession in the past. Scott initially built his law practice as a legal malpractice attorney: he sued other lawyers for malpractice. That didn't make him too popular amongst the brotherhood. His professional Life became so stressful, he went into the entrepreneurial game and came up with TEC. But he couldn't shake the lawyer tag last Friday, which led to Cuban's diatribe about “frivolous lawsuits.”
Actually, Scott Jordan has only taken adversarial legal action twice with regards to his clothing patents. In one case, there is a Chinese company that has completely ripped off his entire retail clothing line, name and all. This Chinese company is selling cheap knock offs of ScotteVests and even uses the same logo! Another example he gave me was a company was using a pocket system called the “George Pocket” Scott had patented. He became aware of the infringement and contacted the company, seeking to approach them as a licensing partner- a strategy he uses anytime he becomes aware of an infringement. So far, this strategy has been a success. In this case, he was completely ignored and the company continued to violate the patent and he was forced to sue.
Ironically, he's been sued for copyright infringement in relation to the name “ScotteVest.” Scott,USA the ski gear maker, sued Scott Jordan for trademark infringement which resulted in a “gentlemanly” settlement and a redesign of the ScotteVest logo. IBM, in a rather heavy-handed lawsuit, sued him over the “e” symbol in the ScotteVest claiming the “e” would confuse consumers into thinking ScotteVest was somehow associated with IBM's “eSolutions.” Now that's a frivolous lawsuit.
Come back tomorrow for part three of The Shark Tank interview.