RWIN IP
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`INTELLECTUAL PROPERTY LITIGATION
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`1333 Burr Ridge Parkway, Suite 200
`Burr Ridge, Il 60527
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`630-756-3101
`www.irwinip.com
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`Barry F. Irwin, P.C.
`To Contact Writer Directly:
`630-756-3101
`birwin@irwinip.com
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`April 4, 2016
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`The Honorable Lisa R. Barton
`Secretary to the Commission
`United States International Trade Commission
`500 E Street, SW
`Washington, DC 20436
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`Re: Certain Motorized Self-Balancing Vehicles, Docket No. 3129
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`Dear Secretary Barton:
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`these
`Proposed Respondent, Swagway, LLC (“Swagway”), respectfully submits
`comments in response to the Commission’s Notice of Receipt of Complaint; and Solicitation of
`Comments Relating to the Public Interest (81 Fed. Reg. 16214 (March 25, 2016)). The
`Complaint filed by Razor USA LLC, Inventist, Inc., and Shane Chen (“Complainants”) threatens
`to harm competitive conditions in the U.S. economy and U.S. consumers. Further, the requested
`relief, if granted, would harm the public health, safety, and welfare of U.S. consumers by
`excluding the importation of safer options that would not be otherwise available.
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`Swagway respectfully submits that the development of the factual record is necessary to
`properly resolve the impact the requested relief will have on the public interest. As a result,
`Swagway respectfully requests the Commission, should it determine to institute an investigation,
`instruct the Administrative Law Judge to permit discovery, develop a complete record, and issue
`a recommended determination on the public interest.
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`I.
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`Public Health, Safety, Or Welfare Concerns In The United States Relating
`To The Requested Remedial Orders
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`In their Statement Regarding the Public Interest, Complainants assert “many of the
`Accused Products in the Complaint appear to contain unsafe components and not to comply with
`U.S. safety standards.”1 This assertion is factually and legally inaccurate. There are no “U.S.”
`safety standards for hoverboards. Complainants presumably are referring to an Underwriters
`Laboratories voluntary standard, issued in early February 2016, pertaining to certain electrical
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`1 Complainants’ Statement Regarding the Public Interest, p. 3.
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`1
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`components in self-balancing scooters, which are defined in the standard to include, but are not
`limited to, hoverboards. Thus, to the extent that Complainants are asserting that failure to
`comply with safety standards warrants exclusion of the accused products due to public health,
`safety, and welfare concerns, Complainants’ own products would pose the same threat alleged to
`exist in the accused products, and would need to be excluded as well.
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`Moreover, Swagway, of its own volition, has taken considerable steps to increase the
`safety of its hoverboards. New safety features, as discussed in the media2 and shown in the
`comparative pictures below, include a battery safety enclosure, fire-retardant components, and a
`moisture barrier on internal electronic components. Further, Swagway is currently acting to have
`its hoverboards certified under the new UL voluntary standard. Tellingly, Complainants make
`no assertions as to the safety of their own products while accusing others’ products of being
`unsafe. If “[t]he exclusion of unsafe consumer goods from the United States market is in the
`public interest,”3 discovery should be permitted to verify if the goods sought to be excluded are
`indeed unsafe, and as to whether Complainants own products, which would remain in the U.S.
`market, would pose any threat to U.S. consumers.
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`Swagway’s Battery Safety Enclosure
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` Razor’s Unprotected Battery Pack
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`II. Whether Complainants, Complainants’ Licensees, And/Or Third Party
`Suppliers Have The Capacity To Replace The Volume Of Articles Potentially
`Subject To The Requested Exclusion Order And/Or A Cease And Desist
`Order Within A Commercially Reasonable Time
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`Complainants make a number of sweeping assertions that should be the subject of
`discovery and adversarial determination. For example, Complainants assert:
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`(1) Complainants have the capacity to meet the demand for motorized self-balancing
`vehicles protected by the ‘278 patent should the allegedly infringing products be
`excluded from the United States;
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`2 http://mashable.com/2016/01/07/swagway-ceo-swagtron/#zSNjNdv3lZq6 and
`http://www.besthoverboardbrands.org/best-hoverboard-brand-in-the-market/what-is-a-
`hoverboard/how-safe-is-a-hoverboard-in-2016/
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`2
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` Id.
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`(2) non-infringing motorized vehicles would be available from third-party suppliers;
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`(3) Complainants have the capacity to increase production of their motorized self-
`balancing vehicles should demand require; and
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`(4) motorized vehicles will continue to be available from non-infringing sources such as
`sellers of motor scooters, motorcycles, powered bicycles and the like.4
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`Complainants offer no support for any of these assertions. Rather, Complainants seek a
`general exclusion order and alternatively a limited exclusion order to exclude the products of
`over thirty (30) proposed respondents on the mere assertion that they will be able to meet the
`demand. Swagway produces hoverboards, which are a subset of the larger class of products
`sometimes referred to as personal transporters - generally defined as devices consisting of one or
`more coaxially mounted wheels mounted to a platform on which the rider of the device stands
`that are self-balancing. Hoverboards were one of the most popular items in 2015, and Swagway
`is one of the largest suppliers, estimated to supply 70% of the current U.S. hoverboard market.
`Further, the extensive list of proposed respondents exhausts most known suppliers of
`hoverboards, and would mean that Complainants alone are left to fill the gap undoubtedly
`created by the relief requested. Excluding hoverboards produced by Swagway would negatively
`impact U.S. consumers by limiting the options of U.S. consumers to only hoverboards that lack
`these important safety features. At the very least, discovery should be permitted as to
`Complainants’ alleged capacity to meet the demand for the accused products.
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`Complainants’ assertion that motorized vehicles will continue to be available from non-
`infringing sources such as sellers of motor scooters, motorcycles, powered bicycles and the like
`is a non sequitur absent any proof that these products are viable substitutes. The tremendous
`popularity of hoverboards while other purported substitutes were available speaks loudly against
`these other modes being the “substitutes” that Complainants assert. Indeed, Complainants have
`offered no proof that motor scooters, motorcycles, powered bicycles, and “the like” are
`reasonably interchangeable or that those products would otherwise serve any purpose in satiating
`the demand for hoverboards. Like the matters concerning Complainants’ alleged capacity to
`meet demand, discovery should be permitted as to this matter to better determine if the requested
`exclusion would create a shortage.
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`III. How The Requested Remedial Orders Would Negatively Impact United
`States Consumers
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`Complainants assert that “U.S. consumers will have available to them in the United
`States marketplace a wide variety of motorized vehicles, including genuine Hovertrax™ branded
`motorized self-balancing vehicles should the Accused Products be excluded from the United
`States.”5 This assertion runs afoul of the same concerns addressed above. If (1) the other
`varieties of motorized vehicles named by Complainants are not adequate substitutes, and (2)
`Complainants cannot meet the demand for hoverboards, then there will be a shortage of
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`4 Id.
`5 Id. at 4.
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`3
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`hoverboards in the United States leading to a marked increase in the price to consumers for
`hoverboards, and, assuming that substitutes would even exist, a marked increase in the price to
`consumers for those substitutes. The current sale price of the Inventist Hovertrax is already
`$995, compared to the Swagway model, which sells for $399. Contrary to Complainants’
`assertions, an exclusion order will absolutely negatively impact U.S. consumers. Indeed, these
`are some of the very reasons for tailoring an exclusion order contemplated by the Commission.
`Certain Microprocessors, Components Thereof and Products Containing Same, Inv. No. 337-
`TA-781, Initial Determination (Public Version) at 374 (Jan. 15, 2013) (recommending tailoring
`an exclusion order based in part on a potential shortage, lack of substitutes, and increased prices
`to consumers). As such, discovery should be permitted as to the potential negative impact the
`requested relief will have on U.S. consumers.
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`IV. Conclusion
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`For the foregoing reasons, excluding hoverboards identified by Complainants or
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`ordering proposed Respondent, Swagway, LLC, to cease and desist the sale of the same would
`negatively impact competitive conditions in the U.S. and harm U.S. consumers. Proposed
`Respondent, Swagway, LLC, respectfully requests the Commission, should it determine to
`institute an investigation, instruct the Administrative Law Judge to permit discovery, develop a
`complete record, and issue a recommended determination on the statutory public interest factors.
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`Respectfully submitted,
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`/s/ Barry F. Irwin, P.C.
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`Barry F. Irwin, P.C.
`Jared E. Hedman
`Adam J. Reis
`Irwin IP LLC
`1333 Burr Ridge Parkway, Suite 200
`Burr Ridge, IL 60527
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`Michael D. Marston
`Garrick T. Lankford
`Botkin & Hall, LLP
`105 E. Jefferson, Suite 400
`South Bend, IN 46601
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`Counsel for Proposed Respondent
`Swagway, LLC
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`Dated: April 4, 2016
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`CERTIFICATE OF SERVICE
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`I, Barry F. Irwin, hereby certify that on April 4, 2016, copies of the foregoing,
`PROPOSED RESPONDENT SWAGWAY, LLC’S COMMENTS RELATING TO THE
`PUBLIC INTEREST, were filed and served on the following as indicated:
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`☐ Via Hand Delivery (8 copies)
`☒ Via Overnight Federal Express
`☐ Via First Class Mail
`☐ Via Facsimile
`☒ Via Electronic Filing (EDIS)
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`☐ Via Hand Delivery
`☐ Via Overnight Federal Express
`☒ Via First Class Mail
`☐ Via Facsimile
`☒ Via Electronic Mail
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`The Honorable Lisa R. Barton
`Secretary to the Commission
`United States International Trade Commission
`500 E Street, SW
`Washington, DC 20436
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`
`
`Jonathan J. Engler
`Evan H. Langdon
`ADDUCI, MASTRIANI & SCHAUMBERG, L.L.P
`1133 Connecticut Avenue, N.W.
`Washington, D.C. 20036
`Telephone: (202) 467-6300
`Facsimile: (202) 466-2006
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`Bruce Wessel
`IRELL & MANELLA LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, CA 90067-4276
`Telephone: 310-277-1010
`Facsimile: 310-203-7199
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`Counsel for Complainants Razor USA
`LLC, Inventist, Inc., Shane Chen
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`5