Wednesday, June 27, 2007

OREM — An Orem company that was sued for copyright infringement for selling knock-off remote-controlled helicopters has admitted fault and agreed to pay $200,000 in a case settlement.

The online retailer HobbyTron.com was ordered last week by a California judge to stop distributing, selling or marketing any knock-off of the tiny helicopter, the Picoo Z, made by the Chinese-based company Silverlit Toys Manufactory Ltd.

"Silverlit does not take lightly when people try, outside of the real distribution channel, to copy their goods and erode what they're trying to create through their innovation," said attorney William Goines, who represents Silverlit.

HobbyTron.com's troubles began in January when the company was slapped with a lawsuit for selling helicopter knockoffs.

 Silverlit alleged that HobbyTron.com got slammed with orders for the popular toy during the holiday rush and ran out of legitimate helicopters. To meet the high demand, the company began importing illegal, inferior copies and selling them under the Silverlit name or even a different product name, the Picco Z, Goines said.

 "People were complaining to us for the product failures when it wasn't our product," Goines said. "That alarmed (Silverlit) a great deal."

HobbyTron.com was court-ordered in February to stop selling the products, and discussions to resolve the case began almost immediately, Goines said.

"Within minutes of the injunction being issued, counsel for HobbyTron.com suggested that we sit down and have a very, very serious negotiation to resolve this matter," he said.

As part of the resolution, HobbyTron.com admitted it willfully infringed on Silverlit's copyright by selling the nearly identical, inferior toys, Goines said.

Dozens of consumers purchased the product and tried in vain to return them to HobbyTron.com after the toys failed to work or broke soon after being opened. Many customers contacted the Deseret Morning News with stories of broken wings, dead batteries and refused refunds. Others spent months simply trying to get in touch with the HobbyTron.com customer support department.

Calls to HobbyTron.com's attorney were not immediately returned. HobbyTron.com's founder and spokesperson was out of the country and unavailable for comment.

Although the judge's ruling prevents the sale of illegal copies, HobbyTron.com isn't prevented from selling or advertising the Picoo Z, so long as it's the real Silverlit product.

However, there has been no communication between the two groups about HobbyTron.com being a potential outlet for Silverlit toys, Goines said.

Silverlit will destroy the remaining 2,140 illegal helicopters and get a certificate of destruction to ensure the toys don't end up back on the shelves, Goines said.

Posted on 2007-06-30