XCraft, Shark Tank and the Importance of Patents

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Not long ago, October 19 to be exact, a new drone company, XCraft of Sandpoint, Idaho, made Shark Tank history. The ABC press release for this episode says: “In one of the most exciting moments of Shark Tank history, the ante is upped when the Sharks start to bid OVER the asking price for one product and the million dollar offers start to fly.” That product was XCraft’s soon-to-be released XPlusOne.

I spoke with JD Claridge, owner and founder of XCraft, as well as Melissa Coombes, Patent Attorney with Lee & Hayes of Spokane, Washington to learn a little bit about XCraft and their current projects, as well as to find out about why patents are important for innovators in the drone industry (or any industry, for that matter).

 

What is XPlusOne, and how did it come about?

JD: I had an idea for a new concept, a vertical take off and landing, high-speed drone. So I started tinkering with that idea on my own to kind of build a prototype but then brought that in under the consulting company I owned, and worked on it as a side project in the company a couple summers ago. The goal was to get a prototype flying by the end of the summer and we did end up doing that. During that time I also had a friend named Charles Manning who had a software company in the same town. We met together regularly, and I brought up the idea I was working on, and he said that it sounded like a great idea. He thought that drones are going to be the next big thing, and I agreed, so we decided to found a company around UAVs and that’s XCraft. That was about a year ago, and the first product we brought in to that company was the XPlusOne. The first thing we did was to apply for patents, so we’re now patent pending on the concept. Then we put the idea out there on Kickstarter and set a goal on Kickstarter of $50,000. We ended getting almost 300% of that project, so that was great. So it got us a lot of good exposure out there.

The XPlusOne is basically a drone that takes off and lands vertically and hovers, but then it can tilt 90 degrees and fly on a wing at speeds up to 60 mph. When it’s flying horizontally it is using its wing for lift and its motors for thrust, where the typical multirotor is always using its motor for both lift and thrust and not as efficient. So the XPlusOne is more efficient than the typical drone or multirotor but it does have the same capabilities to hover and take off and land vertically.

 

What kind of flight times can you get with that?

JD: Up to 25 min flight time, and primarily that’s because if you’re in forward flight you’re doing 60 mph or somewhere close to that, so you’re traveling a lot faster than your typical multirotors going somewhere more like 20 mph max. So, we’re covering a lot more ground, but you are getting lift from that wing which is helping efficiency.

 

Can you tell us about your appearance on Shark Tank?

JD: Well, we got a lot of exposure with the Kickstarter project for the XPlusOne and part of that was the producers of Shark Tank saw us out there. They were looking for a new innovative company out there in the drone space because they know drones are hot and they’ve never had a drone company on the show. They contacted us and asked us if we wanted to apply and we said sure. So we applied and went through the whole process to get there that everybody else has to go through. But they did end up selecting us to go down and tape. Yeah, that was definitely a new experience for me. Being a new company, we talked to investors previous to that, but never had an experience quite like that one where you’re standing in front of 5 billionaires, just staring at you with something like 30 cameras around and obviously knowing that you may be on national television, so, yeah, some pressure. I tried to keep my calm for the most part, but I was definitely nervous. My business partner Charles was there also, and he composed himself very well I think and I have to give him credit for bringing all the sharks in on the syndicate, all 5 sharks, which has only happened one other time in Shark Tank history, so that was a pretty good thing.

SHARK TANK - "Episode 705" - In one of the most exciting moments of "Shark Tank" history, the ante is upped when the Sharks start to bid OVER the asking price for one product and the million dollar offers start to fly. But will greed burst the bubble before a deal is set? Another pitch prompts a brutal brush-off from an irate Shark. Two parents from Salem, Massachusetts pitch their novel idea for managing Trick-or-Treaters' excess candy with a children's book and gifts; two men from Pacific Palisades, California tout their premium beef jerky made from filet mignon which has the Sharks swooning over the taste and the price point; a woman from Sand City, California pitches a full-length mirror designed to build self-esteem, and two men from Sandpoint, Idaho claim they have redefined drones with inventions that fly up to 60 mph and as high as 10,000 feet. In addition, in a follow-up on the NYC-based Bantam Bagels, the company in which Lori Grenier invested last season, we see how their unique stuffed bagels fare when given a national stage, on "Shark Tank," FRIDAY, OCTOBER 23 (9:00-10:01 p.m. ET) on the ABC Television Network. (ABC/Beth Dubber) JD CLARIDGE, CHARLES MANNING (XCRAFT)
SHARK TANK – “Episode 705” – In one of the most exciting moments of “Shark Tank” history, the ante is upped when the Sharks start to bid OVER the asking price for one product and the million dollar offers start to fly. But will greed burst the bubble before a deal is set? Another pitch prompts a brutal brush-off from an irate Shark. Two parents from Salem, Massachusetts pitch their novel idea for managing Trick-or-Treaters’ excess candy with a children’s book and gifts; two men from Pacific Palisades, California tout their premium beef jerky made from filet mignon which has the Sharks swooning over the taste and the price point; a woman from Sand City, California pitches a full-length mirror designed to build self-esteem, and two men from Sandpoint, Idaho claim they have redefined drones with inventions that fly up to 60 mph and as high as 10,000 feet. In addition, in a follow-up on the NYC-based Bantam Bagels, the company in which Lori Grenier invested last season, we see how their unique stuffed bagels fare when given a national stage, on “Shark Tank,” FRIDAY, OCTOBER 23 (9:00-10:01 p.m. ET) on the ABC Television Network. (ABC/Beth Dubber)
JD CLARIDGE, CHARLES MANNING (XCRAFT)

Where do you, Mel, and Lee & Hayes, fit into the picture here?

Mel: So, JD and Charles came to us from XCraft with the idea of XPlusOne, and essentially they came in as a small client seeking advice on patentability and they said, hey, here we are a small company and we need to keep costs down, because we’re still building capital, but here, this is our idea and we think that it could be very popular. So we counseled them on building a patent portfolio. Essentially the patent portfolio means getting multiple patents for a business and really truly building the intellectual property assets of a business. And they decided to go forward with the first patent. We wrote the one on XPlusOne, and then two months later they came through with the PhoneDrone idea, and we drafted up the patent for them on that as well.

Essentially where we come in for any small business, or any business in general is that we provide services that allow companies to grow based on their intellectual property. We’ll file patents for them, give them advice on how to proceed with their patents and where they want to go with their inventions. So often inventors get single-minded on what they see as their invention, and we try to get them to think more broadly into the future and to think what could possibly transpire and what could develop out of the singular thought that they had originally, and then they go and build off of that. We draft and prosecute the patent work for them, and then we’re also kind of a one-stop shop for businesses in that we can also do trademark work for them and corporate work, so we can help them build their business. We’ve done securities work to contract work for our clients, and we basically help the small businesses or medium sized businesses grow, and try to bolster the economy that way.

 

So, to talk about patents a little bit, at what point should someone developing a new drone idea try to get a patent?

Melissa Coombes croppedMel: Patent law has recently changed to a first to file system. It used to be a first to invent. So when you came up with an idea, you could kind of sit on it for awhile while you were trying to reduce it to practice and come up with that prototype. Now we suggest that if somebody does come up with an idea and they know based upon being experts in their field and being inventors in that field, they know that it’s a new idea or an improvement on what’s out there, and is new and novel and not an obvious change on what already exists, then we encourage people to seek patent counsel as soon as they can. And that’s basically so that they can protect their rights. And even if it’s sort of a non-provisional patent application that you do quickly, it gives you a year to continue building on the idea even if you don’t have it completely hammered out. But the important thing is to get in and protect rights as soon as possible.

 

What has the process been like for you of getting your ideas patented?

JD: The process for us, well obviously we were developing the IP (Intellectual Property), the design, for probably two years, well actually about a year and a half prior to applying for the patent. When we applied for the patent we went to Lee & Hayes, because they’re a reputable firm and worked in Aerospace, so they were a good fit. I think that process took roughly two months from the time we first engaged with them until we had actually applied for the patent.

 

How long does the patent process take?

Mel: Typically, anywhere from about 1-2 months. It’s actually quite fast since the law changed in 2013. It used to be, if you filed a patent in 6 months you were doing well. But now we have clients that literally walk in the door and need something in 2-3 weeks. Generally we like to say about 4-8 weeks.

 

Why is a patent important?

JD: For one thing, it’s definitely something of value in your company to own a patent because it’s something that can be stood upon to say this is our IP and we’re protecting it, and I think it’s just a good thing to do from that stand point. I will say that there’s definitely a camp that thinks that patents have kind of lost their importance. But I don’t agree. You know, just because there’s so much copying going on and there are a lot of problems with people getting around patents and then the patent trolls out there, and it’s just difficult to do. But I think there’s still definite value in it. But we will continue to innovate as we’ve already done, in the process. I think that’s the other answer – we will be securing our IP through patents but we’re also staying ahead of the market as far as innovation, and then getting our products to market as fast as we can and beating the rest of the competition to market.

Mel: Intellectual property in general is basically estimated at 50-60% of Fortune 500 companies – their worth is in their intellectual property. What it does is provide you with protection for your ideas so that you can build a business and make money off of it. A patent specifically gives you the right to exclude others from making, using, selling, or offering to sell a knockoff of your product. So, somebody couldn’t go to China and say, hey can you make something that looks exactly like this, and I’m going to sell it for $20 cheaper than you’re selling it. It protects you from having people do that and basically steal your idea and sell it at a cheaper price so that it potentially gets more popular than the original.

 

Mel, have you had any cases where you’ve had to do a patent dispute or infringement?

Mel: Yes, we actually have one ongoing now that we can’t discuss a lot of the details, but ongoing litigation. A client who literally had somebody steal their design, go to China, get the product made, the exact same thing made, in a large factory in China for cheaper, and then they imported them into the United States for a discounted price. So that litigation has been ongoing for awhile, but our client has been very successful thus far in all of the decisions by the court.

 

How much room do you see in the drone industry for new immerging players? Do you see a lot of new ideas coming out from the unknown companies?

Mel: Honestly, I think XCraft is a great example of that, you know, just here in a small little town in Northern Idaho, you’ve got guys that have come up with two amazing ideas that are on the cutting edge of the UAS industry. So I’ve got to think that if these guys here in a small town have an idea, then other people in other parts of the country, or even here in Spokane, would also have different ideas. And since it is such a new industry, I think there’s probably a lot of room for growth, and a lot of new ideas that are coming out daily.

 

What’s next for XCraft?

JD: Well, we’ve got a new project that we actually just launched on Kickstarter about 2 weeks ago. It’s called PhoneDrone Ethos and it’s a device that allows your smart phone to fly essentially. You take your smart phone, either Android or iOS and you snap it into this drone, and the drone uses the camera, the processor and other sensors on your smart phone to control it and take images from the air. It can be tethered to another device like another phone or another tablet for control and also streaming video back or it can operate fully autonomously, where you just set up a mission right on the device that’s in the drone. You draw your flight plan, you set your altitude, and other events you want to happen along the way like snapping pictures, and then hit go and it will automatically fly that and then fly back to you and land. It also has follow-me functions. It can follow another device and actually track the GPS position of that other device at your selected altitude. And then obviously there’s another companion app that goes along with this device for both iOS and Android, and then the drone itself. For that project on Kickstarter, our goal was $100,000 and we just, I just looked it was about $275,000 and we still have I think 18 days left. So it’s doing pretty well. That one is definitely more of a consumer drone, and I would call the XPlusOne a high-end consumer drone.

Phone Drone on rock 2

I think the opportunity long term is for commercial and military use. Commercial is very young right now and it’s difficult to get into that field, but drones are hot in consumers’ minds right now, so we’re following that opportunity where it’s going. But, long term definitely the strategy is for enterprise UAVs that are tailored for commercial missions.

 

Thank you so much JD and Mel for sharing your time and insights. Anything else you’d like to add?

JD: We do have several other projects in the tube behind these two. Our focus is really the vehicle itself. That’s what XCraft does. Our mission is to develop small powerful flying machines that change the world. So it’s really all about the vehicle itself and that’s where we are innovating, in that space.

Mel: I would just say, to put out to people who are coming up with new ideas, it’s really a good idea as you’re building a business to think long term and to think strategically about intellectual property decisions, not just patents, but also trademarking their particular ideas. It’s definitely important to get in and to seek counsel so that they can actually benefit from their innovation, which is the whole idea behind the patent industry and patent law in general. So, I think that’s probably the most important thing, to make sure that they seek counsel and get help and protect their rights.

 

 

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