Fed-up Toy Company Responds to Knock-offs

After founding Viahart, a manufacturer of educational toys, in 2010, Molson Hart learned that its products were being manufactured illegally and sold by others. He realized that the problem of intellectual property theft went well beyond Viahart. And that prompted him to start his second company.

He told me, “I started Edison Litigation Financing in 2017 with my brother, who is a computer scientist. Our company finds companies affected by intellectual theft. There are many crooks who copy products.”

Edison locates potential violations, contacts the injured party, and arranges claims for damages. It deserves a fee for this service. Viahart mainly sells through Amazon. In 2021, it recorded nearly $9 million in sales.

Molson and I recently spoke about both companies. All of the audio of our conversation is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: Tell us about your company.

Molson Hart: I founded Viahart in 2010 as an educational toy brand. For the most part, everything we sell is about building children’s confidence and skills. Our main sales channel is Amazon, although we have an e-commerce site. We sell a building toy called Brain Flakes that can do things Lego can’t. It is for children between the ages of three and 13. We also sell Goodminton bats and Tiger Tale toys.

I have a second company, Edison LLC, that does e-commerce focused litigation funding for intellectual property theft.

We are based in Austin, Texas.

band wood: Let’s start with Goodminton. How did you come up with the name?

Hard: If you’re selling online, you need to have a brand. One of the best ways to create a good brand and take full advantage of word of mouth is to have a catchy name that sticks with you. We were selling a racquet game similar to badminton and I thought, “Can we come up with a name that’s funny, memorable and makes people laugh?” We chose Goodminton over Badminton.

band wood: What are the pain points of selling on Amazon?

Hard: Sometimes Amazon incorrectly identifies sellers as search or rating manipulation — a pain point that’s likely to come up on a quarterly basis. If we have a hero SKU like Brain Flakes, our top selling product, Amazon says, “Yes, we will put that in position 32 when customers search for your brand name because you rigged the search results.” There’s no recourse, and there is no explanation how to solve this problem.

When you start it’s pretty brutal because the shipping cost is high. It’s not bad for us because we’re scaled. When shipping from Asia to the United States, we use 40ft containers, so we have reasonable shipping prices.

We used to be able to do an email blast for reviews and the like, and now Amazon doesn’t have early review rewards, so you need pay-per-click ads and sponsored advertising. It can get expensive. We do not engage in paid social marketing to drive customers to Amazon. We only pay for ads on Amazon. A new product launch needs to be differentiated and innovative in some way.

band wood: How do you deal with counterfeiting and intellectual theft?

Hard: I used to have an office in China. The first fake we ever had was before our trademark was registered. Someone in China used our Brain Flakes brand for an interlocking disc product. I couldn’t do anything because our trademark wasn’t registered. It turned out to be someone in that office, one of my Chinese employees. I ended up suing her and two years later she did it again and I had to sue her again. I found out that another employee did the same.

I had three employees in China, and two of them faked me and sold our brand’s products on Amazon. The third guy wasn’t. When I finally found this out, he and I weren’t working together. I sent him $5,000 to say, “You’re the man who didn’t do that while the other two did.” He’s a good guy.

After suing my employees, I was able to stop the violation. I knew other people had these issues, so in 2017 I founded Edison Litigation Financing with my brother, who is a computer scientist. Our company finds companies affected by intellectual theft similar to what I just described. There are many crooks knocking off products.

We connect brands dealing with infringement with an attorney to handle the filings. The brand does not have to pay any money. We take a percentage of the money that comes back. Our business has evolved and now offers reporting, which is cool because we require a lot of clients to pay us for reporting, and if we see an opportunity for a lawsuit, we can use our reporting data in the case. We have a growing SaaS reporting business, and since my brother is good at coding, we have an excellent tech suite. Our lawyers use it and increasingly so do our clients.

We take all risks. In exchange for making some of the money when it comes back, we’ll pay all legal fees, and if you’re sued for that, we’ll deal with it. That’s the value proposition. We are turnkey so you don’t have to worry. We collect all the evidence and do all the analysis. I have a warehouse in Texas and hundreds of counterfeit products go into that warehouse every day. The items are delivered to this warehouse and we open them and take photos. These photos eventually become proof.

band wood: So you use your software to search the web and find infringers?

Hard: Yes. We are always looking for people with exceptional cases. If that happens, we’ll let you know. We also have a marketplace reporting service for $99 per month. For example, if you have a brand that sells on Amazon, you pay us monthly and we monitor Amazon and combine regular reporting with everything that goes into our lawsuits. So you get the best of both worlds.

We monitor all major marketplaces. We search Shopify, Amazon, eBay, AliExpress and Walmart for counterfeit product versions. One of our clients pays us for 15 different marketplace locations. Every company is structured differently. Some people are like us and mainly use Amazon. Others sell their retail with the big brands.

Another way our company makes money is through photo copyright management. People don’t know this, but if you take a photo and register its copyright and then someone else comes in and uses that photo, it depends on the context, but the damage to it is high. If I were to steal one of the Beardbrand photos to sell Molson beard cream, I’d be in a lot more trouble than if I bought Beardbrand from just any store and then sold it on Amazon. It’s not cool to steal people’s photos. Photography is expensive. It takes a lot of time and a lot of work. You will be compensated when people steal your photos.

band wood: Where can people find out more about you and get in touch?

Hard: My website is MolsonHart.com. you can follow me on twitter, @Molson_hart. We’re also on Viahart and Edison Litigation Financing.

Leave a Comment