North Sails future is uncertain
The future is uncertain for the Minden plant of North Sails, after a federal judge ordered the company stop all production of its racing yacht sails.
A federal court in Hartford, Conn., ruled March 31 that Windway Capital Corp., parent of North Sails Group, Inc., and North Sails, were infringing on three sail technology patents awarded to Sobstad Sails. U.S. District Judge Dominic Squatrito ordered payment of 7 percent in royalty fees of all 3DL – three-dimensional laminate – sales.
Minden plant general manager John Welch said the company is already preparing its appeal.
“We are going to appeal. We are going back to court on Friday, and we’ll take it from there,” Welch said Tuesday.
He refused further comment, referring instead to a statement about the court’s order from Tom Whidden, president of North Sails Group, Inc., that was posted on http://www.sailingsource.com Monday.
Whidden, who was at the Minden plant on Heybourne Road Tuesday, said not only was he disappointed the judge took 31 months to issue a decision, but also that the judge ordered the injunction begin immediately.
“I spoke to the whole group (of employees) this morning, telling them we will continue to fight for them and will do everything we can to keep this plant open and keep our Minden friends in jobs. We will also do everything we can to honor customers and employees,” Whidden said.
In the Internet statement, Whidden said “North Sails is naturally disappointed by the decision. North feels that the decision is an incorrect one and will continue to pursue vigorously its position through an appeal. It will also immediately seek a stay of injunction in order to honor its contractual commitments to its many customers during the busiest period of the sailing business year.”
Whidden said the product in question, 3DL sails, which stands for three-dimensional laminate, was patented by North Sails in 1992 and 3DL sails first appeared during the America’s Cup competition in the spring of 1992.
The court will determine how much Windway and North Sails must pay, based on sales information that the company is ordered to deliver to the court by April 28.
Whidden said if their appeal is denied, the company will have to pay about $3.7 million. The company makes about $55 million a year. Industry insiders say that is about 38 percent of the worldwide sailmaking market.
The court ordered Windway and North Sails to immediately discontinue all new production of North’s infringing 3DL sails. Whidden said the company has between 200-300 pending orders because this is the beginning of the racing season.
The 3DL sails are noted for their strength and light weight. In a February interview with the Tahoe Daily Tribune, North Sails Director of Product Development Bill Pearson said the sails are made of lightweight polyester Mylar material and heat molded. The one-piece sails are stiffer and about 30 percent lighter than traditional sails that are stitched together.
This is the major point of contention, Whidden said.
“We think our technology is quite different. Ours is a one-piece molded composite sail. The sails we supposedly infringed upon are made with panels. Their sails are many pieces and are more conventional in construction,” Whidden said.
The sails are only made at North Sail’s 59,000-square-foot plant in Minden, which employs about 120 people. Windway owns a controlling interest (81 percent) in, and substantially finances, the operations of North Sails, according to a press release from Sobstad Corp. in Greensboro, Ga.
“I am very pleased with this ruling,” said inventor Peter Conrad, president of Sobstad. “It has been a long, arduous battle by our small company against the world’s largest sailmaker, but this is a decisive result. It is important for the sailing world to understand, as the court found, that Sobstad pioneered the revolutionary structural sail technology used in high-tech racing sails.”
Sobstad filed suit against Windway and North Sails in July 1992. According to court documents Whidden, a former Sobstad employee, was listed as one of the defendants. Whidden served as North Sail’s president since February 1987 and is also the director of the corporation. He worked for Sobstad from 1972 until September 1986. When he left, he was vice president and worked on projects “which matured into the patents at issue in this litigation,” according to court documents.
However, the court found North Sails did not purposely steal the design.
According to the Sailing Source Web site, some industry insiders say the purpose of the suit was not about money, but about a personal grudge between Conrad and Whidden. Sailing Source said Whidden was fired in 1987 because of a “power struggle.”
Whidden said if there is any grudge, it is not on his part.
According to the court documents, both North Sails and Sobstad distribute sails internationally. North Sails is the dominant seller in this market and Sobstad is the second largest seller, but its sales are substantially less than North Sails.
North Sails’ 3DL sails were used by 10 out of 11 competitors at the last America’s Cup race and advertisements declare there is “no substitute.”
Sobstad filed in 1984 and 1985 for their “airframe” patents that provide the structural reinforcement of sails, according to Sailing Source.
The judge, in his statement, wrote, “The court finds that the 3DL sail infringes the patent. The 3DL sail has helped North gain approximately 90 percent of the “high end” or “grand prix” market. North, a national and international sailmaker, would have required a world-wide license, especially as Sobstad Sailmakers applied for and obtained patent protection in the most significant foreign markets.”
The staff of the Tahoe Daily Tribune contributed to this story.