Raffel Systems files complaints against Man Wah with government agencies

Filings seek action on alleged unfair trade practices following jury award of more than $106 million related to patent infringement case

GERMANTOWN, Wisc. — Motion furniture control mechanism producer Raffel Sytems has followed through on its plans to ask federal agencies to investigate the business practices of motion furniture manufacturer Man Wah Holdings.

Earlier this month the company revealed it sent letters to the United States Consumer Product Safety Commission, the International Trade Commission and the Federal Trade Commission regarding specific allegations against Man Wah.

The letters follow a Milwaukee, Wisconsin jury’s award of more than $106 million to Raffel after it agreed that Man Wah was liable for willful trade dress infringement, misappropriation of trade dress, false patent marking and willful patent infringement related to Raffel’s integrated cup holder developed for motion upholstery.

The jury awarded $97.5 million in punitive damages and $8.7 million in actual damages. While the court is still reviewing the jury decision, an actual award could be closer to $11 million based on a cap on punitive damages in the state of Wisconsin.

However, Raffel has pursued its plans to contact the federal agencies as stated during a June 29 press conference reported by Home News Now. All three letters it sent were dated Aug. 31.

The  letter to the CPSC alleges that the company has violated the agency’s requirements to disclose potentially risky and defective products.

“Man Wah’s non-disclosure of known, potential consumer safety risks were discovered only after several years of litigation involving our allegations that Man Wah intentionally infringed on Raffel’s proprietary multi-functional cup holder,” the letter said. “During a recent jury trial in Milwaukee, Wisconsin’s federal court, evidence was introduced proving that Man Wah was aware that the counterfeit Raffel cupholders led to hundreds of consumer complaints, including emails from its American subsidiary’s then-CEO acknowledging them. We also discovered that some of these complaints might have included electrical risks, creating the possibility of consumer injuries.”

The letter to the ITC asks that the agency examine whether the company committed violations of Section 337 of the International Trade Commission and other federal statutes forbidding the theft of intellectual property and other acts of unfair importation.

“Section 337 expressly forbids unfair importation, which is violated if any importer engages in theft of intellectual property or patent infringements,” the letter said. “It has been written that Section 337 violations ‘most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods.’”

The letter to the FTC seeks an investigation into apparent violations of Section 5 of the Federal Trade Commission Act, 15 USC 45.  This act forbids “unfair or deceptive practices in or affecting commerce.”

“For years, Man Wah operated a campaign to counterfeit and sell Raffel’s proprietary multi-functional cup holder for motion furniture,” the letter said. “This was confirmed by a federal jury in Milwaukee, Wisconsin, on June 17, 2022, which found that Man Wah maliciously and willfully stole Raffel’s intellectual property. We believe this jury verdict and the corresponding evidence demonstrate clear violations of Section 5 and possibly other provisions of the FTC Act and similar regulations, and thus, that an investigation into Man Wah’s behavior is warranted.”

It was not immediately clear what will happen with Raffel’s requests moving forward. A law firm representing the company told Home News Now the only response it has received thus far is from ITC.

“We had preliminary conversations with the Commission and are now considering options for Raffel’s path forward,” said Lanny Davis, with the law firm of Davis, Goldberg & Galper, which represents Raffel in the case.

Ultimately, the company believes the allegations will be addressed.

“We believe that the ITC, the FTC and the CPSC will take our requests seriously because they have an interest in protecting businesses and consumers from anti-competitive behavior and unsafe products,” Davis said. “In my view, unfair competition under U.S. law is defined by a jury verdict finding Man Wah stole Raffel’s intellectual property.”

In a statement, Raffel executive chairman Paul Stangl said the company believes it was necessary to ask for the government’s involvement at this time.

“Though it is of critical importance, defending intellectual property can be extremely expensive and burdensome for a small business like ours,” he said. “That’s why we are asking for the U.S. government to step in and investigate Man Wah’s blatant theft of our proprietary technology.”

Man Wah declined to comment on this development, noting that it is now waiting for a judge’s final ruling on the jury award, which it expects to occur in November.