Family Business Took on Walmart Over Alleged Patent Infringement

The settlement averts a federal trial

Just days before federal trial was to begin, terms of a settlement have been reached in the case of a patent infringement lawsuit against the retail giant Walmart, NBCLA has learned from attorneys on both sides.

The suit was filed in 2011 by a Temecula-based company that developed a product it calls the Solar Sun Ring, an inflatable vinyl cover for spas and pools. Family-owned Solar Sun Rings, Inc., contended a "Solar Pad" sold by Walmart infringed on the design patent for the Ring.

Walmart would discontinue selling the Solar Pad, according to Sepehr Daghighian, attorney for Solar Sun Rings.

Other terms of the settlement, characterized as "confidential," were not disclosed.

Jury selection for trial before Federal District Judge Phillip Gutierrez had been scheduled for Tuesday morning.

It was while operating a pool maintenance business that Richard and Lora Rosene developed the Solar Sun Ring, with the help of her step-father David Bartoli.

Looking to improve on traditional blanket-type covers, they said the ring offers convenience and safety advantages, and its quilted surface not only insulates, but also focuses the sun's rays to heat the water.

The Solar Sun Ring went on the market in 2004.

More than 3 million have been sold, the company said.

When Walmart began selling the Solar Pad in 2010, it was priced at under $12, later $14.97, but still well under the $29.95 list of the Solar Sun Ring.

The Rosenes and Bartoli acknowledge they had previously approached Walmart about bundling a Solar Sun Ring with a small children's play pool, but no agreement was reached.

Walmart expressed interest in selling the Ring as a stand-alone product, according to the family. But they said they declined out of concern that would gut sales through their original retail network of small pool supply stores.

The family contends that is in fact what happened when the Solar Pad came on the market.

"They destroyed the core of our business," Bartoli said during an interview with NBCLA in November.

"We know for a fact they copied our product," Lora Rosene said.

Late in 2010 Solar Sun Rings notified Walmart of the infringement allegation, and Walmart in turn contacted its supplier, Polygroup Limited, a multinational based in China.

"We were not previously aware of your design patents," Polygroup CEO Lewis Cheng told Solar Sun Rings in a December 2010 email.

Cheng proposed a licensing arrangement with a royalty of 2.5 percent per item, but Solar Sun Rings did not accept the offer.

Though Polygroup was named in the original filing, it was never officially served, and therefore never became an actual defendant in the case.

In August, Wal-Mart Stores awarded Polygroup "Supplier of the Year 2012," according to an announcement on Polygroup's website.

In court filings, Walmart had offered a number of defenses against infringement, citing differences between the two products.

Solar Sun Rings characterized those differences as insignificant.

The initial suit cited four patents, but the trial was to have focused on only one for design.

Saturday, Walmart spokesman Randy Hargrove confirmed that a settlement had been reached, and later  provided a written statment:

"Walmart respects the intellectual property rights of others. Three  patents were dismissed from the case before trial.  While Walmart was confident the remaining patent had not been infringed, on Friday the parties reached a confidential agreement to end the case that made sense for our company."

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