Alex Eben Meyer for BuzzFeed News

The War of the Hoverboards

The gliding gadgets are suddenly everywhere, and someone is going to make a killing. Will it be the guy who patented them, the guy who imported them from China, or Mark Cuban?

The war of the hoverboards began in earnest in mid-February, in New York City, in the rainbow-colored halls of the 2015 Toy Fair. That much we know. Beyond that — where exactly in the Javits Center the first skirmish occurred, who the aggressor was, whether there were injured parties on the ground — that depends who you talk to.

Ask Shane Chen — holder of United States Patent No. 8,738,278B2, for “a two-wheel, self-balancing personal vehicle” — and he’ll tell you that things first heated up outside his booth. That’s where John Soibatian, the president of IO Hawk, the leading American distributor of the newly popular “personal mobility devices” (they’re all made in China) zoomed up to him aboard what Chen immediately recognized as a 2-foot-long knockoff. Chen’s lawyers had notified Soibatian at the Consumer Electronics Show the month prior that the IO Hawk violated Chen’s patent, and now Soibatian had come down to Chen’s booth — where he was showing off his device, the Hovertrax — to ask him to back off, to think about dropping it.

“I’ve had this idea since I was a kid,” Soibatian pleaded with Chen.

“Many people had this idea when they were a kid,” Chen responded firmly. “But they didn’t patent it.”

Ask Soibatian, who disputes most of Chen’s account, and you’ll get a different story. According to him, things got testy when Chen rolled over to the IO Hawk booth aboard a Solowheel, a kind of unicycle version of the hoverboard, which Chen has also patented. Chen informed Soibatian that he held the patent on devices of the type, and that this was how he made a living: by filing patents and waiting for other companies to violate them. Now that someone had built a salable version of his idea, he wanted to make a deal. Soibatian thought Chen sounded like a patent troll, like a scumbag. He told Chen he would have his lawyers look at the patent.

Later that day, after Chen wheeled away, one of the models Soibatian hired to scoot alluringly around trade shows reported that she had hovered by Chen’s booth and beheld a fiasco: people falling off the Hovertrax, lying on the floor. Soibatian mounted his IO Hawk and, model at his side, sped down to Chen’s booth, where he asked if he could give Hovertrax a try. Chen consented. Soibatian stepped aboard.

“I thought, Holy moly, what are you doing here, buddy?” Soibatian recalls. “It was garbage.” Why would he make a deal with the guy who built this piece of junk?

Chen, as you might expect, recalls the encounter differently. He stresses that Soibatian initially came to his booth, not the other way around. One person did fall down, but he was riding Orbit Wheels, another one of Chen’s inventions, one with a much steeper learning curve. And Chen says Soibatian never dismounted his IO Hawk. It was the model who tried Hovertrax, and she stayed upright the entire time. Chen agrees that he rode up to Soibatian’s booth, but not to make a deal; he went there to give the guy a break and offer him a few extra days to get patent-compliant.

Whatever the sequence of events, after the show, Soibatian says he showed Chen’s patent to his lawyers. “They told me I’d be crazy to pay him anything,” he says.

Four months later, Chen filed a lawsuit against Soibatian for patent infringement. The stakes of the war of the hoverboards had been set, and set high. Who had the right to profit off the future: the guy who patented the idea, or the guy who imported it in bulk from China?

And that was before Mark Cuban decided to get involved.

From United States Patent No. 8,738,278B2 Shane Chen / Via Google Docs

The 2-foot-long, two-wheeled, twin-motored plastic board that glided to the forefront of American popular culture this summer could be the skateboard of the young century. The similarities are there. It’s a zeitgeisty short-distance ride that has started to yield its own, self-sustaining viral culture. And you can definitely draw a line from the amateur videos that helped skate culture conquer America to the sudden tide of Vines and Instagram videos that have made the boards a phenomenon. Then again, the so-called hoverboards could simply be the Tickle Me Elmos of 2015 — ubiquitous, overpriced trinkets with a single holiday-season half-life. Time and the collective attention span of America’s teenagers will tell.

This much is certain: For some weeks or years to come, these devices will be part of the future. Celebrity endorsements on television and social media, enthusiastic word of mouth, and a sudden crop of internet distributors that can barely import the things fast enough to mark them up and meet demand have seen to that.

Unlike most of the toy crazes of the past 20 years, however, hoverboards aren’t simply a case of a major brand developing a product followed by a rash of cheap imitators. Their popularity is weirder and harder to trace. Hoverboards have been part of the American popular imagination since at least 1989, when Michael J. Fox snapped the handle off of a little girl’s levitating scooter to escape from a gang of future toughs in Back to the Future Part II. Since then, like jetpacks and flying cars, levitating skateboards have been something between an expectation and a punchline, a time-capsule agreement that the future has arrived. The past 25 years have seen an intermittent series of viral pranks, garage-bound failures, and science projects that have made good headline fodder, but done little to bring Robert Zemeckis’s dream to the consumer masses.

This year, that changed. An army of stodgy literalists is quick to point out that today’s hoverboards don’t hover. But they do glide satisfyingly, and they’re easy to use, and most important, they’re mass-produced. As Wired reported earlier this summer, all of the dozen or so tiny American companies that sell the devices, including IO Hawk, buy from Chinese manufacturers like Hangzhou Chic Intelligent Technology (Chic) and make changes to the boards, typically cosmetic, before selling them in the States. Chic likely sold the first scooters directly, last summer, in Asia. But that doesn’t mean Chic invented them.

And it certainly doesn’t mean Chic, or any of the companies that sell Chic-manufactured boards, have anything like brand recognition in America. Confusion over the name of the product class — are they hoverboards? are they scooters? — bespeaks the fact that none of the brands is strong enough to become a household catchall for the boards, like, say, Jet Ski for personal watercraft. Commercial frenzies around toys patented by individual creators aren’t unique; both Furby and Super Soaker were patented by entrepreneurs who sold exclusive licenses to large companies that marketed them skillfully. But the difference here is the frenzy and the patent fight are happening at the same time. Money is flying thanks to the unparalleled marketing power of social media, but without a giant corporation to pull it all down.

It’s into this potentially enormously profitable vacuum that Mark Cuban, the billionaire owner of the Dallas Mavericks, entered last month when he signed a letter of intent to buy exclusive rights to Chen’s patent license. He has already started negotiating with PhunkeeDuck, the second-best known hoverboard brand after IO Hawk. And he has taken up the mantle of Chen’s lawsuit against Soibatian, with whom he’s traded barbs on social media. After the IO Hawk Twitter account posted a picture of one of the Dallas Mavericks posing with Soibatian and holding a new board, Cuban replied, “I’ll just see you in court. We will let the judge decide. #payme”

Despite his reputation as a happy warrior, Cuban isn’t joining the fray for the fun of it. If the wild demand for these thousand-dollar boards persists, vast amounts of money will change hands. And the owner of the idea behind them — if the idea can be owned at all — stands to make a fortune in licensing fees and reselling deals. “I think this could be a huge industry,” Cuban wrote in an email to BuzzFeed News. If he’s right, this suit may play the defining role in determining its shape.

Hovertrax Inventist / Via Kickstarter

On May 1, 2013, Shane Chen’s company, Inventist, started a Kickstarter campaign to fund the construction of Hovertrax. Promising an “Auto-balancing, electric transporter with gyro technology … [and] seamless gliding!” the campaign was charmingly no-frills. A promotional video opens with helmeted exurbanites, including Chen’s daughter, gliding around the largely deserted sidewalks of Camas, Washington, the Portland, Oregon, suburb in which Chen lives and runs Inventist. Then it cuts to an echoey interview with Chen in his brick-walled office. With his receding gray hair and slightly awkward aspect, dressed in a navy pullover, Chen looks like an eccentric soccer dad.

“Hi, I’m Shane Chen, and I like to invent things,” says the 59-year-old, then turns in his chair to acknowledge his brainchildren. There’s the AquaSkipper, which marries a huge human-powered spring to a hydrofoil, and which, when used to best effect, resembles a human riding a giant metal praying mantis across open water. There are the Orbit Wheels, foot-mounted plastic halos that let riders weave forward in tight sine waves. And there’s the Solowheel, a kind of self-powered unicycle that a rider clenches between their feet. Solowheels have become wildly popular in their own right and Chen has already — successfully — fought some of the dozens of counterfeiters in the Chinese courts.

Chen says he got the idea for Hovertrax in September 2011, while trying to think up ideas for new toys. He knew the learning curve for the Orbit Wheels and the Solowheel was high, and that easier-to-use transporters like the Segway were bulky. What if he could make a device that was light, small, and could be mastered in minutes — one that joined two independently controlled motors at the center, so it could turn subtly, with only the input from a rider’s feet? With two electric wheelchair motors, Chen built the first prototype, which he took to Toy Fair 2012 after filing a provisional patent. A year and half later, when it was clear to him no one else had built anything like the Hovertrax, Chen decided to launch the Kickstarter.

Inventist raised over $80,000 in two months, more than doubling its funding goal. Chen spent the next year getting his operation in China up to speed: choosing a motor manufacturer, adjusting the self-balancing software, and starting to build prototypes at a factory in Yuyao, a city of 800,000 two hours from Shanghai. There were the usual backer grumblings; some were upset that Hovertrax was featured in SkyMall before arriving in the States. But the units eventually began to roll out, first, in October 2014 in Asia and then, after a longshoremen’s strike in Tacoma, Washington, delayed shipping containers, in December 2014 in the United States.

Chen presents himself in interviews and on Kickstarter as a humble tinkerer who just wants to focus on turning his flights of fancy into mechanical reality. That’s only part of the picture. He’s also clearly a savvy businessman with a sophisticated understanding of the value of intellectual property.

Trained as an agricultural meteorologist, Chen moved to the U.S. from China in 1986, when he was 30, with “only $200 in his pocket,” according to the Hovertrax Kickstarter. Within five years he had started a business designing and selling agricultural instruments; he sold it for $2 million in 2009. Chen says Inventist, which he started in 2003 to manage his side projects, currently employs eight people and makes in the low millions in yearly revenue from sales and licenses. Today he holds dozens of patents, among them the one for a “two-wheel, self-balancing personal vehicle” granted by the U.S. Patent and Trademark Office on May 27, 2014, 15 and a half months after he filed the paperwork.

Chic Smart S1 Chic

In August 2014, two months before Inventist started shipping Hovertrax to its Kickstarter backers, Shane Chen came across a video announcing the Chic Smart S1. It’s a little dopey by American car commercial standards, but it was still everything the Inventist Kickstarter video wasn’t: slick, with actors, a generic indie-rock soundtrack, and computer graphics. It ends with a man and a woman side by side, holding hands, hovering into the sunset.

Chen wasn’t mad, exactly. He estimates there are more than 150 knockoff Solowheels in China, where intellectual property protection is much weaker, and so he more or less expected the Hovertrax to be copied. He just didn’t expect it to happen so soon, before competitors could even buy the thing off the shelf to break it down and study it. One of the reasons Chen moved to the U.S. 30 years ago, he says, is because he didn’t think he could support himself as an inventor in China, where his ideas could be copied without consequence.

Chen thinks Chic reverse-engineered the Hovertrax from his Kickstarter campaign, which in addition to the video of the device in action featured conceptual drawings and technical specifications. He points to Chic’s business selling knockoff Segways (the company’s website shows four such vehicles, the Chic-Golf, Chic-Jazz, Chic-Cross, and Chic-LS) as evidence that Chic knows how to seize onto a promising product and copy it.

Navigate to Chic’s English-language website and you’ll find something curious: Before displaying the homepage proper, with drop-down menus for the full complement of Chic devices and an application to become a Chic distributor abroad, the page auto-loads an official looking popup screen titled “Patent Statement”:

According to Google, Chic applied for these patents (for an “electric balance swingcar” and a “longitudinal double-wheel vehicle body”) on June 13, 2014, almost two months to the day before it posted the first YouTube video for the Chic Smart, 13 months after Shane Chen began his Kickstarter campaign for the Hovertrax, and 15 months after a man named He Chen filed Chinese Patent No. CN203158157U, for a “two-wheel electromobile.” He is Shane Chen’s cousin; Chen says he files his Chinese patents under He’s name for reasons having to do with local legal status, and that He sells them back to him. That, Chen says, gives him standing to sue for patent infringement over hoverboards in China, which he plans to do. And when Chen first saw the video of the S1, he probably thought the fight over hoverboards would be a lot like the fight over the Solowheel: a matter for the Chinese courts.

But then IO Hawk started bringing Chic’s hoverboards to America.

Io Hawk Io Hawk

John Soibatian hadn’t even meant to get into hoverboards. Sure, he was looking for business opportunities abroad. He had always “moonlit,” worked on his own projects, even when he was a solutions architect at Verizon, evaluating emerging technology from around the world for use with the telecom giant’s corporate clients. “I’ve never been one of those people who only does a nine-to-five,” Soibatian says. A wandering mind may simply be one of the consequences of a 160 IQ, which the 33-year-old reports.

In 2012, Soibatian and his childhood friend Kazar Beilerian — they grew up together in Los Angeles — had a startup idea for a public safety device that they quickly realized was beyond them financially. But their research put them in contact with Innoworks, a big Chinese company Soibatian knew of through his day job. Like a lot of big businesses in China, Innoworks was part of a nebulous private-public partnership, and it had a bunch of sister companies. One of them is Chic. And the people at Chic had a proposal for an American with some money to spend.

In the summer of 2013, shortly after Shane Chen posted the Hovertrax Kickstarter, Soibatian flew to Hangzhou to meet with engineers and salespeople at Chic. They wanted him to distribute their Segway knockoffs in America. Soibatian wasn’t interested in that, but something else did catch his eye: a prototype, not yet useable, of the S1. They asked him if he would be interested in selling it in the States when they had built a consumer version. Soibatian said: Yes!

After a year of email and Skype, in August 2014, the S1 was ready. Chic posted the promo video to YouTube. And Soibatian flew back to China to see the finished device. “I was extremely excited,” he says. “This was a few tweaks away from being a product that we could put in the U.S. market.”

Those tweaks were an upgraded battery (the S1’s battery is cheap, Soibatian says), motherboard (the S1’s motherboard is glitchy, Soibatian says), and motor. According to Soibatian, the IO Hawks are manufactured by Chic, but on an assembly line dedicated specifically to IO Hawk and the U.S. market. Soibatian and Beilerian invested their own money in improving Chic’s board, and that’s why it bothers them so much when internet commenters say the IO Hawk is just a rebranded S1.

“That’s the most retarded thing,” Soibatian says.

Back then, they were calling the boards “Smart Wheels.” The name reflected both the board’s origins and Soibatian’s ambitions for the device, to which he had planned to add cellular connectivity so parents could track a gliding brood. Shortly before their big debut at CES 2015, though, Soibatian and Beilerian had a change of heart.

“The name was too generic,” Soibatian says. “We needed something powerful.”

They came up with IO Hawk, for the predatory bird native to Beilerian’s beloved Hawaii. An image macro on the IO Hawk Instagram account explains the raptor’s significance:

instagram.com

Holy messenger or not, the IO Hawk was an instant hit at the show. “IO Hawk is part skateboard, part Segway — and it’s strangely wonderful,” Mashable raved. CNN named it one of the seven coolest things at the CES. No less an impartial judge than Consumer Reports anointed the board “Segway’s new rival.” Videos from the event show a beaming Soibatian, natty in a tailored gray suit, black bangs gelled up to a 6-inch-high plateau, zooming to and fro on the purple carpet of the Las Vegas Convention Center.

There was only one snafu. On Friday, Jan. 9, the last day of the show, Inventist flew a representative to Las Vegas to meet with lawyers from the Consumer Electronics Association, which puts on CES, in order to give IO Hawk notice that it had infringed on Shane Chen’s patent. When Inventist arrived at IO Hawk’s booth, Soibatian says, it was the first time he or anyone on his team had ever heard of Hovertrax.

A month later at Toy Fair, Chen and Soibatian finally came face-to-face.

Shane Chen

Getty Images

 

Shane Chen, Mark Cuban, and John Soibatian.

If Chen and Cuban’s lawsuit goes to trial, Soibatian’s lawyers will have a hard time painting the patent holder as a troll. For one thing, Inventist is a real company with real employees that makes real devices, in some cases in large quantities. And though the IO Hawk is by some reports a better device than Hovertrax, Hovertrax does exist. Soibatian can’t claim that Chen simply had a vague idea and never did anything about it.

Another thing going against Soibatian, says Brian Love, co-director of the High Tech Law Institute at Santa Clara Law School, is that the devices look pretty damn similar. Technically that shouldn’t matter — Chen’s is a utility patent, not a design patent or a copyright — but appearances can be enough to sway a jury. The lawsuit itself includes color photographs of both devices, which Love says is unusual and may indicate that the plaintiff’s attorneys plan to go that route.

Soibatian says the idea that any of “his” engineers — he hired a handful of Chic’s engineers to work full time on IO Hawk — copied the Hovertrax is preposterous, and that even an uninformed observer, presented with the components of the IO Hawk, could see that it was using much different parts. That doesn’t matter, according to Chen. Soibatian Corporation is still importing devices into the U.S. that Chen says infringe on his patent.

“We didn’t patent lights or wheel size,” Chen says. “We patented function.”

IO Hawk’s counterargument: You can’t patent a function as broad as a self-balancing two-wheel device with independent motors. “This technology has been around forever. Saying he patented the function of the device is like him saying he patented the functionality of a tank — it’s too vague,” Soibatian says. “If that’s his contention, good luck trying to file a lawsuit against everyone who rolled a tank out in World War I.”

Managing to be vague and broad while still defining an invention is part of the art of a good patent, Love says, but even then, Soibatian may have a defense. That’s because, according to Love, the so-called heart of the invention and the most impressive thing about the hoverboards — how they actually balance — is hardly described in Chen’s patent. That may be why Soibatian stresses how hard the Hovertrax is to use. It may also be why Cuban says that the Chic boards “explode” and “break so much,” to complicate the question of quality and usability.

Each side alleges unscrupulous behavior. Chen and Cuban claim that IO Hawk avoided process servers in order to forestall the lawsuit, going so far as to list an abandoned building as the company address. Soibatian says the first office was simply in a bad neighborhood and that IO Hawk moved. And Soibatian, for his part, says he has heard rumors about Chen, that he has family in China, a brother who scours the streets for new inventions to patent in America before they can make their way across the Pacific. Chen says that Soibatian has it backward: After he patents an invention in America, he always has his cousin, not his brother, patent it in China.

Cuban and Chen are coy about how they met. Both men will say only that they were introduced by “a mutual friend.” But if Cuban goes through with the purchase of the exclusive patent license, points of patent law notwithstanding, Inventist has a major advantage: Cuban’s endless coffers.

The defendant is unfazed. “I think Shane sold him a fake dream and Mark bid on it and now he’s headfirst into it,” Soibatian says. “He can bring all the fancy attorneys he wants. I‘ll go to court by myself and prove what I say. I have no fear.”

From United States Patent No. 8,738,278B2. Shane Chen

It’s entirely possible, even likely, that both Chen and Soibatian are telling something close to the truth. Chen certainly doesn’t see himself as a patent troll. And Soibatian legitimately may have thought he was bringing a unique invention to the States and was totally blindsided by Hovertrax. In that sense, it may be Chen’s experience with the chaotic world of Chinese manufacturing that gives him the advantage.

He’ll need it. Last Friday, Segway Inc. sued Chen, alleging that the Hovertrax infringes on its patents related to balance. There’s recent bad blood between the two parties. In March, a Chinese company called Ninebot acquired Segway for an undisclosed amount. The Los Angeles Times reported that Chen had months earlier turned down a $5 million dollar investment from Ninebot in Inventist; two months later, Ninebot released the “Ninebot One,” one of the many devices Chen claims infringes on his patents related to the Solowheel. Today’s lawsuit can be seen, in this context, as retribution.

Soibatian may be learning lessons about doing business in China the hard way. He has confessed to being disappointed by the country’s professional standards. On spot visits to his assembly line in Hangzhou, where he now spends half his time, he says he has caught workers building extra boards. He suspects this may be to ship to other American distributors, of which there are now dozens.

“It’s infuriating,” Soibatian says. “In China there’s no integrity for anything. They have zero loyalty to anybody. They don’t understand the concept of business the way we do.” Soibatian says he’s considered changing manufacturers, but has concluded that some degree of double-dealing is simply the cost of doing business in China.

Plus, he has big plans for his board: He still wants to connect the IO Hawk to the internet of things. It’s entirely possible that the boards will have changed, or “iterated” in patent-speak, enough by the time a possible trial and appeals are finished that the IO Hawk will no longer violate Chen’s patent, if it is found to at all.

Still, that Chinese assembly line is pumping out 5,000 IO Hawks a month. And Soibatian may ultimately have to compensate a billionaire for each of these $1,500 slabs of the future. It almost seems unfair. But then again, when was the race to profit off the future ever a fair fight?









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Joe Bernstein is a senior technology reporter for BuzzFeed News and is based in New York. Bernstein reports on and writes about the gaming industry and web culture.
Contact Joseph Bernstein at joe.bernstein@buzzfeed.com.
 
 

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