Raffel Systems retains former Clinton counsel to pursue further action against Manwah

GERMANTOWN, Wis. — Raffel Systems, Inc. has hired the law firm of Lanny Davis, former counsel to President Bill Clinton, to represent the company in its bid to press a federal investigation into Manwah Holdings LLC’s business practices.

Raffel held a press conference on June 30 to discuss its plans. It announced that Davis’s firm, Davis Goldberg & Galper PLLC, will be pursuing investigations into “illegal and unfair trade practices” with the Federal Trade Commission and the International Trade Commission. Raffel alleges that Manwah is still selling its “counterfeit” lighted cupholder that was found to be in violation of patent law by a federal jury in June.

In addition, the firm indicated that it will pursue a review by the Consumer Products Safety Commission regarding allegations of failed electronics in the copied cupholders.

In mid-June, a federal jury awarded Raffel $8.7 million in damages and an additional $97.5 million in punitive damages for what they found to be Manwah’s willful trade dress infringement, misappropriation of trade dress, false patent marketing and willful patent infringement of Raffel’s patented, lighted cupholder, according to the ruling.

Manwah has previously said that it will appeal the ruling.

The cupholder in question was invented by an employee of Raffel in 2005 and patented in 2010, according to Paul Stangl, executive chairman of Innovative Motion Technologies, who was on the call.

Stangl said that Raffel alleged in its lawsuit that Manwah attempted to pay a low-level Raffel employee $60,000 to say that he had invented the cupholder. Stangl also said that Manwah filed retaliatory lawsuits in China “as a distraction” as soon as Raffel was set to win various legal actions in the U.S. around the infringement case.

Guy Ray

John C. Scheller, counsel for Raffel who tried the patent case in federal court, stated that the trial revealed Manwah’s “two-supplier plan” was developed to lower costs by having two suppliers for every component piece used by Manwah and that Raffel was unaware of this. Guy Ray, former CEO of Manwah, “admitted, under cross examination, that this two-supplier plan was nothing more than a corporate plan to copy,” according to Sheller, reading from the trial transcript.

According to Scheller, “Manwah was ordering 10% to 20% (of these cupholders) from Raffel … and 80% to 90% from their Chinese supplier. Manwah’s copying was so exacting they even placed Raffel’s patent numbers on the counterfeit cupholders, and Manwah USA’s head of quality assurance could not tell the difference between the real Raffel cupholders and the fake cupholders for several months.”

In discussing Raffel’s next steps and why it is choosing to pursue further action at the federal level, Davis said: “There is one issue with all the divisions and difference of opinion in Washington that everyone knows about, there is one issue that brings everyone together, Democrats, Republicans, liberals, conservatives, it’s the one unifying issue which is: ‘Thou shalt not steal intellectual property.’”

“When we ask for investigations by federal agencies, we don’t do this just because it’s a headline or an innuendo of wrongdoing. We only do it because a jury has rendered a verdict of guilt, of theft,” said Davis.

According to Davis, the FTC investigation could result in an enforcement action against Manwah with financial penalties and a bar against Manwah conducting business in the U.S.

Similarly, Davis indicated an investigation by the ITC could potentially result in action that bars Manwah from importing products into the U.S. Davis added, “Usually when you approach a federal agency you have to prove wrongdoing, and that has already occurred — there has already been a jury verdict.”

The potential investigation with the U.S. Consumer Product Safety Commission could result in a recall of any products bearing the counterfeit cupholders. Raffel leadership indicated there could be safety issues involving what they see as faulty electronics in the cupholder knock-offs. Davis said, it is a “violation of federal law if any company knows of a potential risk to a consumer without immediate disclosure — and I mean immediate.”

Natale, Gabriele 6-07
Gabriele Natale

Manwah USA President Gabriel Natale responded to the news saying in a statement, “Manwah is proud of our reputation for excellence and innovation earned over three decades as one of the world’s largest furniture manufacturers, and we stand firmly behind the quality and integrity of our furniture and business practices. As itself a holder of more than 300 patents, Manwah respects and abides by the intellectual property rights and is proud to work with and support scores of small business suppliers in the U.S and internationally. This case involves a single component, made by a third party that was discontinued more than three years ago, and the Manwah product at issue represents a minute percentage of Manwah’s hundreds of offerings.

Regarding the allegations of product failure and consumer safety, Natale said, “As independent testing has verified, there is absolutely no evidence of any safety issues with these products, and we reject any such claims as false. Though we believe Raffel’s publicity-driven push for an investigation is meritless and entirely unwarranted, we are fully prepared to openly discuss our operations with any government authority.”

Raffel Systems is a wholly owned subsidiary of Innovative Motion Technologies. Cathay Capital, a global investment firm supporting companies at every stage, invested in Innovative Motion Technologies in 2016, per Cathay’s website.

Davis, whose previous clients included Martha Stewart, Michael Cohen and Dan Snyder, is a veteran of Washington D.C.’s legal, lobbying, crisis management and regulatory scene. From 1996 to 1998 he served as special counsel to President Bill Clinton. He is a co-founder and partner of the public relations firm, Trident DMG. He is also co-founder and partner at Davis Goldberg & Galper PLLC. Davis is also an author and television commentator, having provided political and legal analysis for MSNBC, CNN, CNBC, among others. His “Purple Nation” column appears regularly in The Hill, FoxNews.com and The Huffington Post.

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